Wages in Irish small and medium enterprises have fallen by an average of 13 per cent over the last six months, according to a new report.
A survey by the Irish Small and Medium-sized Enterprise (ISME) association of 400 firms found half had frozen pay levels and 41 per cent had cut pay.
Isme chief executive Mark Fielding said the survey covered the six-month period since September when the impact of the downturn started to significantly impact on small firms.
He said unions had “lost the plot” in terms of their lack of understanding of the pressures facing businesses and was also critical of employers' representative body Ibec, claiming it was concentrating on the concerns of the semi-state organisations, banks and insurance firms.
Mr Fielding said the Government should take a lead from the SME sector and cut public sector wages by a further 10 per cent in the budget "to reflect some of the reality of the economic slowdown”.
Building firms implemented the highest pay cuts with wages down 15 per cent with seven out of ten firms reducing salaries.
In the retail sector over two-thirds of firms have frozen wages with average pay cuts of 11 per cent. A quarter of manufacturing firms have cut wages with an average reduction of 12 per cent.
The highest percentage wage cuts were in the smallest firms - those employing ten people or less - where wages have declined by an average of 16 per cent since September.
Four out of five firms that introduced a pay freeze said they expected it to remain in place for at least a year.
Mr Fielding also said small firms faced significant difficulties securing loans from banks. “They have big ads in the papers saying they are open for business but the reality is they have raised the bar so high in terms of the conditions that must be met to secure a loan that very, very few firms are managing to do so”.
