SMEs urged not to increase wages

Irish small and medium sized enterprises are being urged to hold wages level, despite growing momentum favouring wage hikes.

In its wage rate expectation survey ISME, the Irish Small and Medium Enterprises Association, said that almost three quarters (71%) of SMEs expect to leave employee wage rates unchanged in 2015, as it cautioned against unrealistic pay expectations.

A survey from business and employers group Ibec today showed that more than one in two of its member companies expect to increase their employees’ salary levels in 2015.

Mark Fielding, ISME CEO, said that while there are signs of stability and possible growth in the domestic economy, the situation for SMEs "remains precarious".

“ They have been struggling to stay afloat and owner-managers in particular have borne the brunt of the pain by taking huge pay cuts, and in some cases no salary at all, in an effort to keep their businesses afloat,” he said, adding that the majority of SMEs “will not be in a position to increase wages during 2015 and in a small percentage of cases further reductions will be necessary”.

Referring to the IBEC survey results, Fielding advised caution. “ The headline figures have created an unrealistic pay expectation and cannot be used across the economy as the more recent ISME survey of almost 1,000 SMEs proves.”

The survey from ISME shows that of the 26 per cent who anticipate wage increases in 2015, the increase averages at just above one per cent. Some 70 per cent of SME owner-managers do not expect to change their own wage rate, while 15 per cent believe they will have to further decrease their salaries in the coming year.