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|Small Business remains the backbone of Northern Ireland economy in 2016|
|Friday, 08 January 2016|
Northern Ireland has the highest concentration of SMEs in the UK, producing the highest contributions to turnover, employment and GVA in the private sector.
Paramount to economic recovery and growth in the local economy, is the small business, micro-business and self-employed. Furthermore, with 80% of local, small businesses, intending on growth, there are tangible, future returns to the Northern Ireland economy to be realised.
In launching the FSB Northern Ireland Assembly Manifesto 2016, entitled Realising the Potential of Small Businesses, the recommendations advanced were directly based upon the calls of small businesses throughout Northern Ireland. At the foundation of the manifesto, was the recently published research report, commissioned by FSB from the Ulster Business School, The Contribution of Small Businesses to Northern Ireland.
One of the primary concerns of SMEs was the lack of political stability in Northern Ireland that directly impacted upon economic stability. With the agreement of A Fresh Start: The Stormont Agreement and Implementation Plan incorporating confirmation of a date and rate for corporation tax of 12.5% from April 2018, there has been positive developments which will enable increased business confidence.
FSB has been at the forefront of campaigning for the devolution of corporation tax to Northern Ireland, to encourage inward investment and enable indigenous businesses to reinvest and grow. Official UK Government figures have revealed that with the lowering of the rate from the UK figure of 20%, 34,000 businesses in Northern Ireland will directly benefit, including 26,000 small businesses.
The decision to lower the corporation tax rate demonstrates that the NI Executive has accepted that it is a means of boosting growth. However, FSB NI is concerned that the delay of the implementation until 2018 does challenge opportunities for growth in the next two and a half years.
The Economic Policy Centre (EPC) at Ulster Business School has projected that 22,000 net jobs will be created between 2014 and 2018 in Northern Ireland. Of this figure, 19,500 will be within SMEs. With unemployment figures in Northern Ireland consistently topping the UK average, there is a need for the business environment for SMEs to be as conducive to job creation in Northern Ireland as it is in the rest of the UK.
Employment costs, the threat of legal disputes and challenges and onerous regulations all are factors in deterring SMEs from taking on employees, consequently deterring business growth. Unlike larger companies, 95% of small businesses state that they will not leave their local area, thus providing stable, long-term employment and investment in a particular area. This is particularly evident following the devastating losses resulting from relocation by JTI Gallahers followed by the closure of the Michelin factory, both in Ballymena.
However, over a third of small businesses find employment costs and regulations to be a major barrier to their growth. Support is required through reducing the amount of employment regulations and paperwork required from employers. More concerning, is the fact that those small businesses that are ready to take on staff, are not being able to find the appropriately skilled candidates that are required.
The Contribution of Small Businesses to Northern Ireland research found that 61% of SME employers in Northern Ireland are not confident that they will find the candidate with the right skills for the job that is being advertised. 46% of respondents stated that they feel that this is due to education provision in Northern Ireland not preparing young people to a sufficient standard for employment.
The development of education and skills is integral to establishing the Northern Ireland economy. Last year, there were a large number of cuts made to further and higher education places and there remain continued budgetary pressures. FSB urges the NI Executive to protect investment in further and higher education and apprenticeship schemes, as well as increasing interest in practical, vocational education and STEM topics. In determining the skills that are required, pathway options should be developed with SME guidance so that skills that will ensure long-term employability and career success are captured.
In terms of the future, there is a need to capture the potential, talent and creativity evident within Northern Ireland, by encouraging new start-up businesses. Since 2009, Northern Ireland has persistently been below the UK average in terms of the net change in the number of business registrations, with consecutive annual decline in the total number of businesses that are registered. This is all the more concerning given that in 2005, Northern Ireland had the highest start-up rate in the UK.
To redress this situation while encouraging the wealth of local talent and creativity, business skills and alternative routes to employment should be focussed on in both curriculum and career guidance at secondary level education.
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