These are not easy times for ISME members but ISME’s Chief Executive Mark Fielding’s head is seldom below the parapet when it comes to stating things as they are – or as he sees them. He hasn’t minced his words when describing bankers in the past, believing that they’ve misled past governments about the state of their institutions.
“Despite being found out as, at best, mistaken incompetents and at worst self-serving liars, the Government continues to persist with a naive belief that the banks have the ‘good of the economy’ at the centre of their policies and insist on a hands-off approach,” he stated recently, “This attitude will only prolong the cycle of greed and malpractice in the banking sector and delay any economic recovery.”
His views haven’t changed.
“Our guys had their Celtic Tiger in the 90s along with the benefits of this: increased jobs, benefits and wealth creation. But the banks got into that and killed it off,” he explains, “We’d hoped that that would have been able to continue but many of us got seduced by bankers with what seemed like free money and tales of derring-do in Bulgaria or Spain, so now we’ve a massive overhang of property debt not core to the business in hand.”
We also labour under a number of misapprehensions beginning with the ‘soft landing’ that economists had predicted about 18 months to two years ago…. “If that was the case, we should’ve been well out of recession by now,” says Mark, “So many businesses put their own personal wealth into the mix to keep the business going and retain staff. In some cases that funding is running out and they’ve still another year or three of recession depending on what this Government’s going to do about it.
“Access to finance has been a killer and continues to be, despite the untruths being told by the bankers bending the facts,” he claims, dismissing bank talk of a 92 per cent success rate for ‘full formally-completed applications’ as being, “Balderdash! We know that 92 per cent of people are not getting funding!”
Strip out agriculture and refinancing (converting overdraughts into term loans, for example) and the figure is much lower.
“Our figures show a 58 per cent refusal rate down to 49 per cent now, but demand remains the same, it’s not down as the banks claim.”
Mark, who’s been ISME’s Chief Executive since 2001, knows what he’s talking about having been involved in the SME sector throughout his working life: the printing, food, biotech, recruitment and property sectors as well as being a senior partner in an accountancy and management consultancy firm specialising in SMEs. He’s worked in the UK, France and Ireland too. A member of the Company Law Review Group, the High Level Group on Business Regulation and the Advisory Group on Small Business, he sits on the administrative council of UEAPME, the European body for SMEs.
With 8,750 member firms nationwide employing in excess of 225,000 ISME claims to be the only independent business organisation solely representing small and medium businesses and their owners whose membership comprises “a very broad church” as Mark puts it, spread across retailing, wholesaling, distribution, manufacturing, importing and exporting.
“I think we’ve about 14 per cent of membership in the retail trade, around 120 of them in the licensed trade,” he says.
“Everything that happens in ISME is mirrored in the Irish economy,” he says, “For the last number of years the whole focus has been on survival.” Prior to that it was pushing for wealth generation on the back of a false notion of the Celtic Tiger, he explains.
“There’s been a shift in membership in that 12 years ago some 40 per cent of our members would have been in manufacturing. Now that would be down at 22 per cent. There’s been a vast rise in the service industry so our membership has changed dramatically.”
Mark’s very much in favour of ‘joined-up thinking’ from central government, something that’s yet to show itself, he asserts.
“For example, take Germany’s Anuga Fair. People go over from the Department of Agriculture while the Tourism sector goes off and does its own thing there…. If Tourism goes to it in the first place.
“We’re such a good country for Irish quality food. Why not use this shop window to encourage people to holiday in Ireland? At Government level there needs to be an Irish ‘brand’. There’s no point in going at it ‘piecemeal’ where the different departments don’t talk to each other.”
Competitiveness remains a problem.
“The wage bill is still about 15 per cent too high compared to our main competitors in the UK and other parts of Europe and the US” he points out, “yet Joan Burton is talking about increasing wage costs again via the four weeks’ sick pay scheme and the increase proposed for PRSI.
“From a retail point-of-view, the consumer’s just bamboozled with uncertainty at the moment. The ink wasn’t dry on last year’s Budget before ministers started flying kites about the next one!
“About 24 per cent of SMEs have an existing sick pay scheme so that means 76 per cent don’t. If this is brought in – we’ve figures to prove this – absenteeism will soar when covered in this way.
“While our competitiveness has probably increased, we lost 38 per cent of competitiveness in the ‘made’ years and although we’ve regained around 17 per cent of that, we’re still a long way away from where we should be. An electrician here costs over €35 an hour compared to one in Liverpool costing £12 an hour. It’s the wages that we’re paying,” he emphasises.
Thanks to excise duty and VAT on fuel the cost of transport is another factor derailing competitiveness. More than half the price goes to the Government. An island economy like ours needs to have its goods travel but instead we end up with one of the dearest countries in Europe for transport, he points out.
“The top three things in exports are wages, the cost of transport and energy – we’re the third-most expensive for electricity in Europe for SMEs – all Government-influenced.
“While we can do a lot to get our own competitiveness back, we need the Government to play their part. We’ll always be dependent on the global market for recovery.”
The austerity measures and the Croke Park Agreement are creating another major problem which he goes on to enunciate: “We’re borrowing €1 billion a month to pay the public sector bill.
“Social welfare is costing us €20 billion and also needs to be addressed,” he believes, “People on Social Welfare are telling us ‘It’s not worth my while to work’.
“Any jobs paying less than around €30,000 are not worth it for them in terms of State income being almost equivalent — and they still have seven days to work in the booming Black Economy.”
He points out too that the hospitality sector went through this six or seven years back when it couldn’t get an Irish person behind the bar.
So pubs that Mark gets the most enjoyment from are those where the barmen are career bar people rather than part-timers, someone who “looks the part”, as he puts it, “…. where there’s continuity in that every time you go in you don’t have somebody different serving you”.