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More small firm owners expect to get pay rise as mood improves

ONE in ten small business owners now plans to give themselves a pay raise this year, while nearly a third will cut their wages amid Covid-19 losses, according to the Irish SME Association.

Isme’s survey of 237 members identifies growing confidence among a minority of small firm owners that their enterprises will survive the pandemic, a shift in attitude reflected in their own planned pay packets.

Just three months ago, in the first weeks of lockdown, Isme’s quarterly survey found that only 4pc of owners in small and medium-sized companies planned to hike their own wages this year. That has now risen to 10pc, including 2pc who plan at least a 5pc raise for themselves.

While 30pc of owners still plan to cut their own pay this year, according to the survey, that number has fallen from 47pc who had expected to do so three months ago.

Nearly three in five owners surveyed now plan to maintain their own pay on 2019 levels, up from 49pc.

Nearly 23pc of firms also plan to raise pay for employees this year, half of them by at least 2.5pc.

But two-thirds have ruled out any pay hikes, while 11pc still intend to cut wages, mostly by more than 5pc.

Isme also found that most members had yet to tap extra financial resources beyond the State’s payroll supports. More than one in 10 had funded their own firms with directors’ loans.

While nearly seven in 10 were supported by the Wage Subsidy Scheme, and nearly a quarter had availed of Revenue forbearance on taxes due, most had not sought support from their own bank.

Isme CEO Neil McDonnell described this as “surprising”.

Small firms getting payment breaks on business mortgages and business loans totalled 10pc and 16.5pc respectively.

Less than 8pc had tapped the Strategic Banking Corporation of Ireland’s Working Capital Scheme – and barely 1pc the State-backed Credit Guarantee Scheme, billed by the Government as a core pandemic support for firms.

Nearly three in five owners of small and medium companies said they had not contacted their bank for additional finance or payment breaks, while a quarter said that they were receiving “flexibility and forbearance” from their bank.

One in 20 said their bank was “being unhelpful or refusing my request for help”.

The survey chiefly involved firms that employ fewer than 50 people. Most are located outside Dublin. They overwhelmingly bank with either AIB or Bank of Ireland.

When asked how long their firm could survive amid current trading conditions, 52pc said more than nine months.

Nearly 17pc said they could last six to nine months, 20pc three to six months, and 9pc one to three months. The remaining seven firms in the survey said they either had ceased trading or would within the month.

More than one in four firms said their outstanding debts, including unpaid Revenue bills, topped €100,000. Another quarter said they had debts below €10,000.

“We are delighted to see business sentiment rise in the current environment. But there is a long road ahead for many SMEs,” Mr McDonnell warned.

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