Concern among SMES over minimum wage increase
Many small and medium enterprises in Ireland are very concerned about the proposed 12.4% increase on the National Minimum Wage in 2024.
ISME, the Irish SME Association has this week written to the Taoiseach to highlight issues around the impact of the proposed 12.4% increase pointing out that the measure will create a financially unsustainable situation for many small and medium businesses across Ireland.
The letter from the Chair of ISME, Marc O’Dwyer, follows representation from many of ISME’s Association members and affiliated trade bodies.
ISME represents over 10,000 SMEs. These voices are not heard in the Government’s existing industrial relations structures, say ISME.
Marc O’Dwyer noted to the Taoiseach that while very few of ISME’s members pay staff at the National Minimum Wage (NMW), the rate serves as an important benchmark and relativity for most incomes up to approximately €30,000 per annum.
It is the largest proposed increase in the NMW since 2012, and it comes on top of other payroll cost increasing measures introduced or about to be introduced. These include:
The St Brigid’s Day Public holiday introduced in 2023.
Three days statutory sick pay rising to five days in January, seven days in 2025 and ten days in 2026.
Gender pay-gap reporting (150 employees in 2024 down to fifty employees in 2025).
Five days of Domestic Violence Leave.
The employment measures above are laudable and welcome. However, in its letter, the ISME Chair stated that the cumulative effects of these entitlements and increases have not been adequately evaluated, and there appears to be no regulatory impact assessment carried out on them.
“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,” said the the ISME Chair.
“The current earnings in small business average €720.33 per week, or €37,457 per annum, and we genuinely feel the hard work done by the Low Pay Commission lacks context around the fact that the majority of Irish workers are employed by SMEs, with earnings that are reflective of this, and not the exceptional premiums earned in FDI businesses and the public service.
“Many of our affiliated groups, in areas such as childcare, nursing homes and animal collection, operate in sectors where the overseeing department regulates the pricing in the sector, or caps commercial charges within it. Whilst trying to negotiate rate increases already in a difficult climate, with their parent department, these services will enjoy no scope to negotiate payment of the NMW.
ISME are not keen on reports that businesses may be supported by Government in delivering the increased NMW in January. They consider this “unwise” as “if proposed increases in the NMW are so large that businesses require state support, they clearly should not go ahead,” Mr O’Dwyer added.