HRLocker survey reveals Irish SMEs grapple with ‘red tape’ of 2024 legislative reforms

Business owners across Ireland are deeply concerned over the swathe of upcoming legislative changes in 2024. That’s according to HRLocker, a leading provider of global HR compliance solutions for mid-sized, scaling and international businesses, which surveyed 500 Small and Medium Enterprises (SMEs) in December. The survey highlights growing concern over the financial strain and administrative challenges posed by the new laws.

Red tape and rising costs

According to the survey, Irish SMEs are facing a challenging environment, with half (50%) reporting that the impending legislative changes will negatively impact their growth and recruitment plans. Additionally, 40% of businesses anticipate a significant rise in administrative costs due to the introduction of new compliance requirements.

The survey also reveals that 62% of SMEs expect their operational efficiency to be compromised, as resources are increasingly diverted towards managing regulatory demands, while 46% anticipate it will lead to a substantial increase in operational costs. This shift in focus from core business activities to compliance and administration is a major concern for 33% of surveyed businesses, who believe it will hinder their ability to innovate and adapt in a competitive market. With such a landscape, SMEs are bracing for an environment where navigating legislative complexities could become as critical as managing their day-to-day operations, potentially impacting their long-term growth and competitiveness.

This surge in red tape is particularly burdensome for smaller enterprises, where efficient resource allocation is crucial. Of those employing less than 20 people, one in eight (12.2%) expressed that the new legislation threatened the viability of their business. The necessity to navigate a complex web of new regulations and compliance measures is looming large, threatening to divert critical resources from core business activities to procedural adherence. This shift poses a substantial risk to the sector’s agility and growth, leading many SMEs to adopt a more cautious stance on expansion and recruitment, potentially slowing down the overall momentum of business development in the Irish market.

When asked about an increase in the Cost of Business Grant, 64% of respondents stated they do not believe it will offset their rising operational costs.

Exposed industries

The legislative changes slated for 2024 are poised to impact various industries differently, with some facing more acute challenges. In the Hospitality Sector, 68% of respondents expressed some sense of apprehension regarding the Minimum Wage Increase and the upcoming Living Wage Implementation. This concern stems from the sector’s heavy reliance on minimum wage workers.

Meanwhile, 54% of those in the Retail Industry expressed significant concern over the increased administrative load, particularly in managing enhanced leave benefits and adapting to changes in wage structures.

In contrast, 28% of SMEs in the IT Sector are anticipating substantial challenges associated with the Auto-Enrollment Pension Scheme.

“While we welcome these legislative updates and the improvements they will bring to employee welfare, it’s crucial to address the considerable pressure they place on SMEs, the backbone of our economy,” says Crystel Rynne, COO at HRLocker. “Greater support for these businesses is essential. There’s no doubt digital solutions can significantly relieve the burden on SMEs, automating many of the administrative and compliance tasks, but the Government needs to ensure it is equipping businesses with the tools to succeed and not burying them in red tape.”

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