Isme report finds half of all firms cutting staff

Almost half of all firms in the small and medium sector reported a fall in employee numbers in the last three months, according to a survey published today.

The Irish Small and Medium Enterprise (Isme) latest quarterly trends survey, which attracted a response from over 600 companies, found that 47 per cent of firms employed less people now when compared with the third quarter. Only 13 per cent of respondents said employment levels had increased.

Construction has seen the sharpest falls in employment, with almost three-quarters (73 per cent) of respondents in this sector saying staff numbers were lower now than during the same quarter last year. Among manufacturing firms 57 per cent said they had reduced staff.  

Employment prospects for next year look bleak with half the firms surveyed planning to cut staff and only 14 per cent considering recruitment.

While the construction, retail, manufacturing and distribution sectors are under severe pressure, jobs in services look among the most secure, with just 17 per cent of firms in this area planning to reduce staff numbers.

According to the Isme report, a fifth of firms have "orders, production capacity and markets unserviced for want of working capital", an indication of the difficulties some companies face when seeking credit.

A dip in sales is contributing to the fall in employment with more than 60 per cent of firms reporting a drop in turnover and 73 per cent saying sales and orders have fallen.

In the equivalent survey last year 33 per cent of companies had reported an increase in turnover. According to Isme this contraction highlights the sharp reduction in economic activity over the last 12 months.

Almost half the firms surveyed have had orders cancelled in the last quarter, with four out of five coming from indigenous firms.

Jim Curran, head of research with Isme, described the survey as "disastrous" with the worst results ever in almost all categories.

"There has been a sharp deterioration in the last quarter, with jobs in the sector imploding, sales plummeting, investment non-existent, exports falling through the floor and confidence at an all time low."

With sterling breaking through the 93 pence to the euro mark today Mr Curran said businesses exporting to the UK are "are in serious trouble".

"While the sharp downturn over the last number of months was unprecedented, unfortunately the indicators are that things are going to get worse before they get better", he said.

On the basis of the survey results, Mr Curran expects redundancies and company closures to increase early in 2009. "It still remains absolutely incredible that at a time when the country is in its worst recession in a century that we are continuing to reward ourselves with a 6.5 per cent pay increase, a ludicrous situation," he said.