Productivity and business development potential are being curtailed across many small enterprises due to emerging skill gaps.
The Small Firms Association (SFA) has published a major new report detailing key policies required to address the growing productivity and skills gaps emerging between small and large firms in Ireland.
Small Business: Ireland’s Future 2025 provides an extensive suite of policy recommendations aimed at strengthening the competitiveness capacity of Ireland’s small business sector and preparing businesses for the future amidst the intensifying costs of doing business.
“Digitalisation is increasingly coming to the fore of the small business community. We need to ensure organisations have the necessary skills to adapt and thrive in the new digital world”
These recommendations include targeted supports in upskilling and training in leadership, digital readiness, and financial management skills, each of which is increasingly seen as crucial to a vibrant small business community.
Digital skills gap
Speaking at the launch of the report, SFA Director Sven Spollen-Behrens said: “The small business community is a vital contributor to the Irish economy, employing almost half of the private sector workforce.
“However, productivity and business development potential are being curtailed across many small enterprises due to emerging skill gaps.
“Research shows that the ‘value-added’ productivity marker per person employed in Ireland is €295,665 in large firms. In comparison, workers in small and medium firms contribute just €74,164 gross value-added, less than a quarter of that of operations with over 250 employees.
“Digitalisation is increasingly coming to the fore of the small business community. We need to ensure organisations have the necessary skills to adapt and thrive in the new digital world. We are urging the development of meaningful voucher schemes to cover investment in hardware, software and cybersecurity for what is now an essential aspect of practically every business operation, as well as business funding for establishing an online presence.”
Among the key observations and recommendations in the report are:
- Investment would be encouraged by reducing the general CGT rate to 20%, while also increasing the lifetime limit for CGT Entrepreneur Relief to €15 million. Simplifying the administration procedure for the R&D Tax credit is also advocated.
- Introduction of a tax relief for non-domiciled new hires by small business.
- Introduce an increase in the APSS limit (approved profit- sharing scheme) of €12,700 to encourage employee retention, and the introduction of a workable share option scheme for small businesses.
- Introduce measures to ensure easier access to bank and non-bank finance for small firms, boosting competition and reducing the high interest rates paid by businesses.
Graham Byrne, SFA Chair and CEO of Flender, added: “The business landscape has changed radically in the last three years, but our small businesses have the flexibility and determination to meet the challenges head-on and grasp opportunities. However, this ambition needs to be backed by Government.
“’Small Business; Ireland’s Future 2025’ advocates for the creation of a dedicated SME State Agency with responsibility for the administration and development of programmes and resources for small business. In addition, we need to see greater coordination from Government in how they deliver the raft of labour market initiatives and anticipated new EU and Irish legislation.
“Statutory sick pay, auto-enrolment pensions, extended family leave, a new national minimum wage, the right to request remote working, and new requirements around gender pay gap analysis will all add administrative and payroll costs to small firms, and it is imperative that these are delivered in a more coordinated manner than the piecemeal fashion we have seen to date.”
Damien English TD, the Minister for Business, Employment and Retail said: “I welcome the SFA’s new strategy which highlights the crucial role that small firms play in driving employment and economic activity in Ireland. Small businesses who are embedded in our communities have demonstrated remarkable resilience over the last few years. Government is committed to supporting them to meet the ongoing challenges they face, and we will focus on the implementation of the SME Growth Plan priorities.
“We are committed to helping ambitious small businesses to navigate their transition to a digital, low carbon economy, to reach new markets, to attract and upskill their talented people. All of this will ensure a more competitive business environment and lead to further job creation opportunities around the country. I look forward to ongoing engagement with the SFA and their continuing contributions on behalf of their members.”
Main image at top (from left): Minister of State at the Department of Enterprise, Trade and Employment Damien English TD; Geraldine Magnier, SFA; and Graham Byrne, SFA chair and CEO of Flender