Small Firms Association Welcomes Government Measures for Small Businesses

SFA also welcomes the increase in employer PRSI threshold.

• Small Businesses are defined as having fewer than 50 employees.
• 43 percent of employees in Ireland work in small businesses.
• Small businesses account for 98 per cent of the total number of businesses in Ireland.

Wednesday, 15th May 2024 - The Small Firms Association (SFA), the representative body for businesses employing fewer than 50 people, has welcomed the Government’s new support package for small businesses.

In particular, the SFA welcomes the double ICOB payment introduced for businesses in the retail and experience sectors is also welcome as a targeted support for those businesses most in need.

The increase the employer PRSI threshold from €441 to €496 is also welcome. Although it is disappointing that this will not take effect from 1 October 2024. This measure will ensure that employers with employees earning the weekly equivalent of the national minimum wage will pay the lower rate of employer PRSI rate of 8.8%. Additionally, the employer PRSI threshold will be explicitly considered as part of the Low Pay Commission deliberations and is reviewed on each occasion that the minimum wage is increased. The SFA still maintains that a targeted PRSI rebate is the most efficient way to get money into hands of hard-pressed business owners’ pockets.

Some of the other measures that the support package for SMEs includes the following:

• Implementing an enhanced ‘SME Test’ on business cost implications of future Government decisions.
• Reopening the Increased Cost of Business Scheme for another 14 days.
• Launching a second phase of the Cost of Business Scheme targeted at businesses in the retail and hospitality sectors.
• Increasing the maximum amount available under the Energy Efficiency Grant Scheme to €10,000 and reducing the business contribution rate from 50% to 25%
• A new online National Enterprise Hub for SMEs to access information on the wide range of Government business supports.
• Utilising the €1.5bn surplus in the National Training Fund to future proof workforce skills in SMEs.

Reacting to the announcement, David Broderick, Director of the Small Firms Association said:

“This is encouraging news from the Harris administration. The supports announced by Government will hopefully stem the rising tide of business costs. These costs have threatened the viability of small businesses across the country. Small businesses account for 98 percent of all businesses in the country and are the lifeblood of our communities.”

“The SFA has been making a solutions-based case to government about how to best support small businesses which was published in its Policy Priorities document a few weeks ago. Eight of the SFA’s prioritised are specifically acknowledged in this package. In addition to the increase of the PRSI threshold, the SFA is very pleased to hear about the enhanced ‘SME tests’ on business cost implications of future Government decisions.

“Recent increases in the National Minimum Wage and the incoming Living Wage rates have significantly increased input business costs. Along with high energy costs, unstable supply chains and fluctuating commodity prices, many small firms have struggled for viability in the aftermath of the pandemic era.”

In response to recent increases to the National Minimum Wage, the Department of Enterprise, Trade and Employment published a report in March which confirmed significant and cumulative increases facing the business community, with small businesses being less likely to absorb the current and incoming labour costs over the next two years.

Furthermore, in March PWC published its Insolvency Barometer which showed a 41% increase in insolvencies, with SMEs accounting for 85% of all business failures. According to the PWC report many restaurants have closed over recent months with hospitality having three times the equivalent business failure rate per 10,000 businesses compared to retail. Additionally, Deloitte Ireland’s Insolvency & Restructuring Statistics show that the corporate insolvencies increased by 47% in the first quarter of 2024 compared to the same period last year.

ENDS

For more information about the SFA, please contact SFA Public Affairs Lead, Jonathan McDade (jonathan.mcdade@sfa.ie).