Business costs are rising more quickly in Ireland than in other competitor countries, the Small Firms Association (SFA) reported today.
In its sixth annual business survey, the SFA said rising labour costs remained the biggest expense, as smaller companies report an escalating skills shortage.
Rising utility costs, particularly for energy supplies, is another major concern with overall inflation in the Irish economy also causing worries, it said.
SFA director Patricia Callan said: "It would be "foolish in the extreme to underestimate the potential impact of frictional problems such as inflation, energy prices and inefficient public service delivery."
Over the last ten years Ireland's ranking in the World Competitiveness League has slumped from 5th to 14th and the only way to respond to this was to bring costs under control, she said.
"Major threats have now emerged in the burden of inflation, energy costs, skill shortages and red tape/increasing legislation," said Ms Callan.
"The cost of labour is still the most significant issue, with 13 per cent of respondents citing labour costs as their single biggest threat and 87 per cent as a major business problem."