The Minister for Enterprise, Trade and Employment, Micheál Martin, yesterday announced the creation of a forum aimed at improving the working environment for small companies.

The body, which is being chaired by Joe Macri, managing director of Microsoft Ireland, will investigate the marketplace for small businesses and report back to the Minister next March.

Speaking at the launch of the forum yesterday, Mr Martin said that while the market for small businesses in Ireland had improved "significantly" over the the past decade, there was no room for complacency.

Small firms account for 60 per cent of GDP and more than half of private sector employment in Ireland. Over the next eight months, the forum will examine whether Ireland has been successful in developing a "spirit of entrepreneurship", as well as how the environment for small business in the Republic compares to that in other countries. According to the Small Firms' Association, which yesterday welcomed the forum's creation, small businesses in Ireland pay 34 per cent more for labour , 25 per cent more for electricity and VAT rates 4 percentage points higher than they would in competitor countries.

The forum will also examine the availability of finance for small businesses and assess whether guidelines are needed to help businesses find funding. Mr Martin said he expects the forum's report to lead to new regulatory guidelines for small businesses and the likely creation of more small firms.

"We have an economy conducive to developing small businesses," said Mr Martin, citing low interest rates, low corporation taxes, low inflation and effective full employment.

"However, there is no room for complacency and the work of the forum will ensure that over the next decade small business will play a central role in our ongoing economic development."

Mr Macri, who was responsible for Microsoft's small business division in the UK, said at the launch that he was confident the forum would develop a report which would make a strong contribution to ensuring the success and vibrancy of the small business sector for the future. He will be joined on the forum by 12 other people from the business community, including a representative from Enterprise Ireland and individuals nominated by Isme and the Chamber of Commerce.

Isme chairman Robert Berney welcomed the forum, but urged the Government to support its work so it does not become a "talking shop" with no power.