THE IRISH SMALL and Medium Enterprises has called on trade unions to hold off on demands for wage increases.

In the wake of figures showing sluggish inflation in the economy released by the CSO yesterday, ISME said that it will resist what it termed:

“Premature and unsustainable union calls for wage increases as many SMEs continue to struggle with high costs and low consumer demand.”

ISME chief executive Mark Fielding said that the cost of doing business is outstripping inflation, meaning that struggling businesses could be sunk by any increase in the minimum wage.

In a statement, ISME said that services inflation is marching ahead at a rate of 3.1% per year.

Average prices across the economy were 0.4% higher in May than 12 months previously.

Fielding said: ”Employers must guard against the dangers of wage-led inflation. Economic recovery is far from assured and unsustainable wage increases will hamper growth.

“The emphasis must be on productivity and enhanced competitiveness, not on increasing the already high cost base of struggling companies.”

He said that the “mad cap logic of increased wages being the answer to the recession must be scuppered once and for all”.

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