ISME has this morning written to An Taoiseach to highlight issues around the impact of the proposed 12.4% increase to the national minimum wage (NMW) in 2024.
The association, which represents over 10,000 small and medium enterprises in Ireland, argues that the measure will create a financially unsustainable situation for many businesses.
The Chair of ISME Marc O’Dwyer noted that while very few of ISME’s members pay staff at the minimum wage, the rate serves as an “important benchmark and relativity for most incomes up to around €30,000 per annum.
The proposed increase in the minimum wage is the largest since 2012, and the ISME said it would come on top of a raft of other payroll cost increasing measures introduced or about to be introduced, which “have not been adequately evaluated.”
“In the absence of the opportunity to adequately represent these views in the Labour Employer Economic Forum (LEEF), we fear your government might press ahead with an unaffordable and unsustainable increase in payroll costs in January,” wrote Marc O’Dwyer.
“The retail members of ISME estimate that the 12.4% wage impact of the NMW will add between 1% and 2.5% to grocery bills, depending on store size.
“ISME understands that some of the impetus for NMW increases comes from the EU under the directive for adequacy of the minimum wage.
“However, as we pointed out to the Department of Enterprise in our submission on the NMW 2024, the use of the 50% of mean/60% of median metrics are clearly problematic in an economy where there is such a wide distribution in incomes by enterprise size.”
He said that there have been suggestions that businesses may be supported by government in delivering the increased minimum wage in January.
“We consider this possibility unwise. If proposed increases in the NMW are so large that businesses require state support, they clearly should not go ahead,” said O’Dwyer.
“In our view, the social wage and social welfare supports should be used to bridge identified gaps, not an increase in the NMW.
“Research the government has already seen suggests that where businesses cannot afford to pay NMW increases, they simply reduce employee hours worked, negating the justification for the increase in the first place.”
