Ibec survey finds costs rising ahead of inflation

The employers' body Ibec has again stated that Irish business is becoming uncompetitive as a new survey showed costs in key areas rising well ahead of inflation.

Ibec's survey of business costs found that energy costs increased by 17 per cent in 2005, as against 8.2 per cent in 2004.

It also found the cost of professional services increased by 15 per cent in 2005, following on from a 16 per cent increase a year earlier.

These increases contrasted with inflation in 2005 of 8.1 per cent.

The survey monitors eleven business costs headings. It found that insurance costs fell by 8 per cent in 2005, bringing them back to just below the level they were at in early 2004.

However, postal costs (0.9 per cent) and telecommunications (0.3 per cent) increased at less than the rate of inflation last year, the survey found. Yet in eight of the eleven areas costs outstripped inflation.

The organisation said the cost of doing business in Ireland was "spiralling out of control and threatening the viability of both indigenous and multinational companies".

Ibec director of enterprise Brendan Butler said the scale of the increases was both indefensible and unsustainable. "Unless meaningful action is taken to address this imbalance, the ability of Irish business to compete will be seriously threatened and this will ultimately put jobs at risk."

The plan put forward by Ibec to address cost issues includes the avoidance of increases in indirect taxes, the reduction of excise duty on fuel in the 2006 Budget, and resisting increases in local authority charges and instead seeking greater efficiencies.

The group is also urging that wage increases should not exceed the levels obtaining in other European countries, and that there be a more aggressive implementation of competition policy in sheltered sectors.

"The move to a high cost, high wage economy must be matched by a significant increase in the value of the goods and services we provide," said Mr Butler. "To date this has not been achieved."

The survey covered more than 220 companies with a combined 83,000 employees.

• Meanwhile, the small and medium-sized business association Isme has published the results of its first quarterly business trends survey for 2006. The survey found high levels of optimism, with a significant number of respondents anticipating increased levels of employment and investment for the remainder of 2006.

The survey, which received responses from more than 500 companies, found that 42 per cent were more optimistic about business prospects over the next twelve months, as against 15 per cent who were not. It found the most positive sectors were distribution and services.

Retail and construction were the least optimistic sectors, with only a net 5 per cent of construction companies more positive about the next twelve months.

On employment, 42 per cent of respondents confirmed increased employment levels while 16 per cent reported job losses.