Sunday Business Post
19 January 2010
By Emma Kennedy
Almost two-thirds of Irish business reduced wages last year in order to stay in business, according to a new report on international business.
The Grant Thornton International Business Report 2010 is based on a survey of more than 7,400 private companies in 36 countries.
It compares the level of business optimism and the response to recession across a number of international economies.
Some 65 per cent of Irish respondents said they had cut staff pay in the last year, with 59 per cent of those saying pay cuts more than 5 per cent were implemented. “The fact that businesses have reduced wages is a clear sign that the private sector believes that re-establishing cost competitiveness is essential for economic recovery”, the report said.
Some 71 per cent of Irish businesses said they had cut prices in the last year.
Of these, almost four in five reduced prices by more than 5 per cent. Some 45 per cent of Irish businesses expect selling prices to decrease further in 2010.
The report said Irish firms ranked “very favourably” when it came to taking important business decisions in response to adverse trading conditions. Three-quarters of Irish businesses have considered targeting new markets to boost their business, compared with an average of 51 per cent of businesses looking at this option across all 36 countries surveyed. Irish businesses were more likely to consider new target markets than those in any of the other 35 countries surveyed.
Irish businesses rank fifth in terms of their willingness to consider new products and services, and sixth in terms of developing new skills among their workforce. However, the survey found that business optimism in Ireland lagged behind the rest of the world.
Two-thirds of Irish businesses say they are slightly or very pessimistic about the year ahead, compared with 28 per cent of global respondents. A significant proportion of Irish businesses believe that it may be at least a year before the global economy recovers.
Click here to download the Focus on Ireland report 2010