Job losses in Irish family businesses due to the Covid-19 pandemic have been more than three times that of their European counterparts, while more than two-thirds have seen revenues decline, according to new data.
A new report from the Step Project Global Consortium and KPMG Private Enterprise has tracked the impact of Covid-19 on nearly 2,500 family businesses globally, including 59 in Ireland.
The family businesses surveyed in Ireland were predominantly larger businesses, with 68 per cent having more than 200 employees, and a further 22 per cent having between 51 and 200 employees.
Respondents spanned industries from services, manufacturing, construction, agriculture, fisheries and mining.
In Ireland, 68 per cent of family businesses say that revenues have decreased due to the Covid-19 pandemic, trending slightly ahead of the rest of Europe at 64 per cent, and marginally behind the global picture, where 69 per cent indicated revenues have decreased.
Just 5 per cent of Irish family businesses said Covid-19 has resulted in revenue increases, compared with 9 per cent globally and 11 per cent in Europe. Some 27 per cent of Irish businesses said revenues were unaffected (27 per cent), compared with 22 per cent globally and 25 per cent in Europe.
The findings show that employment in Irish family businesses was more severely impacted, with 15 per cent saying there was a decrease in the number of employees in their business compared with pre-Covid levels, versus 8.5 per cent globally and just 4.3 per cent in Europe.
The survey also examined what specific actions businesses took to mitigate the impact on their business.
In Ireland, actions predominantly focused on reducing labour costs (35 per cent), followed by reducing operating costs or planned investments (34 per cent), actions to restructure costs or payments (23 per cent) and reducing top management compensation (8 per cent).
Globally, there was a similar focus on reducing labour costs (36 per cent), but a greater emphasis made on operations costs and planned investments (41 per cent).
When asked which actions were taken to reduce labour costs, Irish respondents indicated that they favoured placing employees on furlough above implementing a hiring freeze or reducing pay.
The report noted that this was perhaps reflective of the range of supports provided by Government over the past 12 months, to support retention of employees.
Similarly, Irish family businesses sought to consider alternative types of incentive compensation for top management during the crisis above deferring or reducing executive pay, which was the main strategy implemented by family businesses globally.
Almost half (46 per cent) of Irish businesses surveyed were a third-generation business, and a further 13 per cent comprised of a fourth or subsequent generation.
This compared starkly with the global businesses surveyed, where the majority (42 per cent) were first-generation businesses and just 14 per cent were third-generation businesses.
Olivia Lynch, a partner at KPMG Private Enterprise, said it was “clear that the impact on Irish family businesses has been substantial”.
“The supports offered by Government over the past 12 months have no doubt contributed to keeping family businesses in Ireland afloat, but what comes next in supporting the reopening of our economy will be critical for their long-term survival,” she said.
“This is perhaps even more stark when we consider that most of these businesses have stood the test of time and are now third generation, employing substantial numbers of people.
“It is interesting to note in the survey that Irish family businesses were more likely to look externally than their European and US counterparts for new collaboration opportunities with customers and suppliers in response to the crisis.
“This demonstrates their agility and willingness to adapt and I have no doubt that with the right supports, Irish family businesses will use the benefit of their multi-generational experience to bounce back strongly from this crisis.”