In this week’s public policy bulletin, we examine the latest wage growth statistics from November together with the latest from Government on its revised enterprise policy and progress in relation to the National Digital Strategy. We also take a look at the launch of a review into late payments made to small businesses in the UK as well as a series of new proposals from the European Commission aimed at harmonising corporate insolvency rules across the EU.
Slowdown in wage growth seen in November
According to a new report jointly developed by economists from the Central Bank and recruitment site Indeed.com, wage growth slowed across economies in Europe during November – with this slowdown being most acutely felt in Ireland, Italy and the Netherlands. The Indeed Wage Tracker measures growth in wages and salaries advertised on Indeed job postings across eight advanced economies, made up of six euro-area countries, the UK and the US.
While in 2022 growth in posted wages in job ads on Indeed accelerated sharply as labour markets continued their recoveries from the pandemic, November data suggests that this period of accelerated wage growth “could be coming to an end”. As set out in the report, wages rates across the six-euro area countries tracked fell from an annual rate of 5.2 percent in October to 5.1 percent in November, the first decline in 19 months.
Enterprise policy direction to 2030 announced
This week the Government approved a ‘White Paper on Enterprise’ effectively setting out the State’s policy direction on enterprise to the end of the decade. Framing it as “a plan of adaption rather than a major departure” from current Government policy in the area, the paper sets out a range of ambitious objectives as part of the strategy.
Included amongst these objectives is a 20 percent increase in IDA client expenditure by 2024, a target of 2.5 percent average annual growth in Irish-owned enterprise productivity by 2024 as well as an overall spend of 2.5 percent of Gross National Income on research and development by the year 2030.
Progress report on National Digital Strategy
This week the Government issued a progress report on its National Digital Strategy, ‘Harnessing Digital – The Digital Ireland Framework’. Launched in February of this year, the aim of the strategy is “to drive and enable the digital transition across the Irish economy and society” across four key dimensions – enterprise, infrastructure, skills and public services. Outlining the progress that has been made across each of these dimensions since the strategy’s launch, the report highlights how Ireland retained its strong position of 5th out of the EU27 in the EU’s 2022 Digital Economy and Society Index.
Some of the milestones highlighted by the report include:
- the launch of an €85 million Digital Transition Fund to support companies at all stages of their digital journey;
- a new digital training scheme for SMEs, ‘You’re the Business’, in partnership with Google; and
- the publication of a revised Statement on the Role of Data Centres in Ireland’s Enterprise Strategy in July
The report makes particular mention of the importance of accelerating Ireland’s digital development in view of the “economic headwinds” currently facing Irish businesses and households together with the recent job losses seen in the technology sector.
UK Business Secretary launches review into tackling late payments to small businesses
UK Business Secretary Grant Shapps this week announced an in-depth review into payment practices to small businesses aimed at reducing late payment of invoices by larger companies which has led to significant cash flow problems in the sector and an estimated £23.4 billion in current outstanding invoices owing to the UK’s 5.5 million small businesses.
The Payment and Cash Flow Review will consider the progress made in specific sectors of the economy in combatting late payment and will also include an in-depth examination of current payment reporting regulations and the Prompt Payment Code. Also within the scope of the review is the role of technology-enabled accountancy platforms in tackling late payments and promoting a better understanding of prompt payment measures within the small business community.
EU Commission issues new proposals on corporate insolvency as part of Capital Markets Union initiative
The European Commission this week put forward a series of proposals designed to further develop the EU’s Capital Markets Union initiative and break down barriers between the bloc’s financial markets. Amongst a suite of new proposals, the Commission is aiming to harmonise certain corporate insolvency rules across the EU with a view to making these more efficient and helping to promote cross-border investment.
As part of the suggested changes, the Commission has proposed a simplified regime for microenterprises across the EU to lower the costs of winding them down and to enable the companies' owners to be discharged from debt, granting them a fresh start as entrepreneurs. Moreover, the Commission’s proposals also include measures to introduce ‘creditors' committees’ as part of the insolvency process to ensure a fair distribution of the recovered value amongst creditors as well as specific new rules designed to preserve the insolvency estate (i.e. avoiding actions by debtors that would reduce the value that creditors can get).