THE IRISH Small and Medium Enterprises Association (Isme) has announced the results of its most recent survey of its members, showing that small businesses are continuing to struggle during the recession.

The survey of 2,000 firms showed that 49 per cent of the businesses surveyed had implemented pay freezes, while a further 46 per cent had cut wage levels by an average of 13 per cent since the start of the year.

Half of the firms also said they had been forced to cut working hours, and just over a quarter (26 per cent) said they were preparing to lay staff off in the next three months.

In response to the survey, Isme chief executive Mark Fielding said: “The fact that many of these companies are implementing redundancies and reducing working hours is indicative of the drastic measures that have to be introduced just to stay afloat.

“Unless the cost of labour in this country is dramatically reduced,” he continued, “many of these companies will simply cease to exist.”

Mr Fielding went on to suggest that wage levels in the public sector were too high and had been pushing up the cost of labour, making redundancies in the private sector a necessity.

He suggested that pay cuts needed to be immediate in order for them to have any effect in assisting the private sector.

“Contrary to union objections, a cut in labour costs is required across the economy and not just in the private sector,” he said.

“This means that cutting the public sector pay bill is now a necessity. However, we cannot wait for a new benchmarking process, as recommended by ‘An Bord Snip’.

“While further cuts are inevitable over the next number of months, the Government must take a lead from the private sector and address its cost of labour.

“Not alone is it exorbitantly expensive and a drain on resources,” Mr Fielding went on, “but it also creates inequalities and inappropriate comparators for the private sector.”