Retail sales down 1.5 per cent in April. And the solution?

There’s a brilliant paradox at the heart of the statement by Mark Fielding of ISME at the news that the volume of retail sales 1.5 per cent in April. This fall was most pronounced in hardware, but it’s pretty much across the board. What does Fielding say though? Under the heading ‘Retail “Wipe Out” Threatened’ we are treated to the following outline of the situation:

…the figures were “shocking” and confirmed that consumers were still cutting back when it came to spending in shops.
“More than three quarters of retailers are stating that the very viability of their business is under threat, with a third of them expecting to reduce staff in the next year,” Isme chief executive Mark Fielding said.

Indeed. And what answer does he point to to staunch this?

“The excess capacity, reduced consumer spending and rising government influenced costs in retail, is placing the industry in crisis. The biggest costs to retailers, such as inequitable commercial rates, unrealistic rents and uncompetitive labour costs must be tackled as a matter of urgency.”

Uncompetitive labour costs? What could they be? The answer may be provided by The Voice of Small Business: A Plan for Action, from the Advisory Group for Small Business released this last year. One of those on the Advisory Group is one M. Fielding.
If one goes to P.12 one will find the following:

We would like to see a coordinated national labour market policy developed and implemented as a
matter of priority with the objective of restoring labour cost competitiveness and incentivising work and
recruitment. The policy should incorporate aspects of:
 Social welfare;
 The national minimum wage;
 Maintaining a competitive tax wedge;
 Other wage setting mechanisms that are still in place; and
 The Industrial Relations (Amendment) Bill currently being drafted.

Now I’m guessing that they don’t want to see social welfare or national minimum wage increases. And given the rhetoric more broadly about the narrowness of the tax base and the necessity widen it I’m also guessing they’re not talking about lifting the ‘burden’ of taxes. Nor, in truth, does it seem likely that they’re big fans of wage setting mechanisms.

So, precisely how does Mark Fielding imagine that uncompetitive labour costs can be ameliorated. Quite a puzzle – eh?

Mind you no more of a puzzle than the following Press Release which ISEM and Fielding issue 29th June last year.

ISME, the Irish Small & Medium Enterprises Association, reacting to the latest Retail Sales figures issued by the CSO today (Wednesday 29th June), called on the Government to establish a Retail Strategy Group to address the issues impacting on the sector, particularly the rising costs to business.

According to ISME Chief Executive, Mark Fielding, “Today’s figures confirm that retail sales volumes are down almost a quarter since 2007, with the sector in ‘freefall’ unless drastic action is taken to arrest this decline. The Government must recognise the valuable contribution that retail makes to the economy and address the current negative trend in sales, together with the high costs imposed on retailers.”

“More than three quarters of retailers are stating that the very viability of their business is under threat, with a third of them expecting to reduce staff in the next year. The excess capacity, reduced consumer spending and rising government influenced costs in retail, is placing the industry in crisis. The biggest costs to retailers, such as inequitable commercial rates, unrealistic rents and uncompetitive labour costs must be tackled as a matter of urgency,” continued Fielding.

“It is high time that the Government took the threat to one of the most significant contributors to the economy more seriously. We need the immediate formation of a Retail Strategy Group to address the risks to the sector and recommend immediate policies to tackle the cost base, in order to secure the remaining 250,000 jobs in the Retail industry,” concluded Fielding.

And something of a puzzle too to read from January 15th 2009 the following press release from ISME and Mark Fielding in relation to a small drop in inflation that month.

“It should not be forgotten that as our inflation rate sharply reduces, the rate of our competitors’ is reducing at an equal pace. The key issue therefore, from an SME perspective, is that costs, which are currently well in excess of the rate of our competitors, are brought into line, in order to improve competitiveness. We need to dramatically cut the costs of doing business in Ireland. This includes scrapping the national pay agreement, forcing sharp reductions in electricity and gas and ensuring that there are no increases in local charges to businesses”.

Hmmm… none of that seems to have worked either.