The Local Jobs Alliance, which represents an umbrella group of seven leading trade organisations – the VFI, the LVA, RGDATA, the CSNA, ISME, the IHF and the RAI – commissioned the report. Its members make up 24,850 businesses employing 448,000 people throughout Ireland, operating in every town, village and community across a range of sectors.
Economist Jim Power prepared the report, entitled Significance of the SME Sector in the Irish Economy, which says that this new State body should be established now to drive and support SMEs to re-boot the economy. The author points out that SMEs will become an engine to drive urban and rural regeneration, to build social capital, to deliver a circular economy and contribute to much of the social cohesion and community endeavour so evident since the Covid-19 outbreak hit Ireland.
“The pubs, hotels and restaurants represented by the RAI, the LVA, the VFI and the IHF are the backbone of the very economically significant Irish tourism sector,” states the report, “The retailers and other businesses represented by CSNA and RGDATA account for a very significant component of the grocery and convenience sector. ISME has a footprint across many small businesses across the economy.”
The report points out that the IDA and Enterprise Ireland fulfil an important role in achieving their objectives for Foreign Direct Investment companies and Irish companies offering services abroad, but there’s no such agency for SMEs primarily servicing the Irish market.
These SMEs make a significant contribution to the country’s employment and to the economy. For example the LVA’s 550 members support 12,500 jobs in the Dublin economy and collectively sell more than 25% of all the on-trade alcohol sold in Ireland while also playing a very important role in the business, social and cultural life of Dublin.
Similarly, with 3,800 members the VFI represents publicans outside Dublin who’re estimated to employ at least 30,000 people in both alcohol and food services.
“The one thing SMEs have in common is that they provide local employment in the cities, towns and villages throughout the country, they represent the lifeblood of regional economic activity,” explained RGDATA Director General Tara Buckley, “They receive no support from agencies of the State and get very little recognition in official policy-making. This is in marked contrast to the FDI component of the economy.”
According to the report, “Hotels, restaurants and pubs are key components of the Irish tourism product and have been integral to the success of Irish tourism over the past decade. These sectors are now under significant pressure due to a variety of factors, but Covid-19 has presented a very real and potentially fatal threat to these sectors.”
The Alliance report believes that a range of measures are now necessary to ensure that as many small businesses as possible survive the shock posed by Covid-19 as they will have to play an essential role in re-building the Irish economy as the virus passes and the economy is re-opened.
In a paper entitled National and Regional Employment in the Drinks and Hospitality Sector in 2019: Structure and Performance authored by Anthony Foley for the DIGI, it was estimated that the drinks sector (which includes pubs and other bars, the manufacturing sector, the off-licence sector, fully-licensed and wine-licensed restaurants, wholesalers and other distributors and drinks-related visitor attractions) provides direct employment to 64,000 full-time and part-time workers. This employment has a strong regional footprint with Tony Foley estimating that bars employ around 42,000 people.
“The hospitality sector needs to become fully functional once the restrictions end,” states the Alliance report which adds that hotels, restaurants, pubs and other food service activities are the most important components of the tourism product and are the key reason why 10.8 million overseas visitors came to Ireland in 2019.
“Specific Covid-19 measures need to be introduced to cover issues such as liquidity and solvency supports, fiscal grants, lower VAT rates, reduced Excise Duties, a commercial rates holiday for 12 months, a commercial rent scheme and insurance cost alleviation measures, “ said Jim Power, adding that, “The agenda of an incoming government must include measures to nurture, support and grow the SME sector, which makes such a strong regional and national economic contribution and which will play an essential role in re-building the economy.
“SMEs dominate the Irish economic landscape and account for 99.8% of the total number of business enterprises and 68.4% of total employment in the private business economy.”
Jim Power concluded that, “a specific action plan needs to be included in the Programme for Government that gives due recognition to the very significant role the sector plays in Irish economic life at both the national and the local level”.