What you need to know about the new OECD roadmap for Irish SMEs

The review was launched today with recommendations from the Paris-based think tank.

By Laura Roddy Reporter, Fora

IRISH SME POLICY is set for a shakeup as the Department of Business, Enterprise and Innovation launched a new roadmap to push the indigenous sector forward. 

Earlier today the state released a study by the Organisation for Economic Co-Operation and Development (OECD) which undertook a major review into government policy around small businesses and entrepreneurship in Ireland. 

The report states that Ireland is a “successful generator” of high-growth firms and its SMEs are innovative, while attitudes toward entrepreneurship are also positive overall.

However, it found that business dynamism and the startup rate are relatively low, while Irish SMEs are not very active in international markets and SME productivity growth is stagnant. It also identified weaknesses in SME management skills, capital investment levels and technology adoption.

What is the review?

The OECD was commissioned in March 2018 to undertake a review of Irish SMEs, taken at a scale “never seen before in Ireland”. 

The Paris-based think tank has identified policies and strategies that would improve Irish SME productivity levels, resilience and potential for growth on a domestic and international scale.  

It includes best practice examples from other countries that have similar challenges to Ireland and the research will form the basis for the government’s strategy on SME and entrepreneurship – set to be published by the end of the year.  

What does Ireland needs to focus on?

Coming in at 286 pages, there is plenty in the OCED’s study for the State to chew on.

The review found that startup rate for Irish SMEs is “relatively low” and pointed out that the sector is not very active in international markets. It also has details around how SME productivity growth is stagnant.

Access to finance is another issue discussed in the review, with the think tank stating that it remains “problematic” and that incentives should be strengthened to increase investment in SMEs and entrepreneurship.

Skills shortages are also rising, implying a need to monitor the success of recent apprenticeship and skills development policies. 

It identified that SMEs can fall between the support offered by Local Enterprise Offices (LEOs) which focus on smaller businesses and Enterprise Ireland, which is focused on firms that export. 

What does it recommend? 

The OECD highlighted that local level policies need to be enhanced to build networks of enterprises working on common skills and innovation projects. It added that SMEs in more remote areas should become part of larger ecosystems in urban areas.

It also pointed out a number of recommendations to help SMEs get access to finance, including expanding current access to credit initiatives and the simplification of the approval procedure for R&D tax credits to encourage companies to participate. 

The OECD also recommended ramping up current SME initiatives for companies to scale globally and a tax relief for workers from abroad to help Irish SMEs attract international labour. 

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A unified national SME and entrepreneurship strategy document is cited as a way to increase policy visibility while an action plan is also needed for financial education to strengthen skills needed for small business owners and managers. 

What was the reaction?

Dublin Chamber said that it welcomes the findings and asked the government for a timeline on when it would implement the recommendations. 

Director of public and international affairs Aebhric Mc Gibney said the organisations has been “making the argument” for an increased focus on SME help for some time and is “heartened to have the backing of the OECD”. 

“The government needs to back our indigenous businesses – such firms are critical to the success of the all-island economy,” he said.

Chambers Ireland also welcomed the review, its CEO Ian Talbot called it “an ambitious step” in building a “comprehensive strategy for SMEs to develop and prosper long-term”. 

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