ISME warns against minimum wage hike

SMALL firms lobby group, ISME has slammed calls for an increase in the minimum wage, saying that rising wages among small and medium-sized enterprises (SMEs) are already seriously threatening the sector’s competitiveness.

According to ISME’s latest annual wages and conditions of employment in SME’s survey, published yesterday, wages amongst small to medium sized enterprises — across all business sectors — grew by an average of 5% in the last 12 months, which is twice the European average.

“The most significant impact of rising labour costs is on competitiveness. This is particularly the case for smaller businesses that have a far higher labour to value added ratio than bigger companies, normally 48% in comparison to less than 10% for the multinationals,” ISME chief executive Mark Fielding said. “Consequently any increase in wage rates has a disproportionate effect on SMEs and, as confirmed by recent ISME surveys, labour costs continue to pose one of the biggest threats to the viability and sustainability of the small business sector.”

The ISME survey showed that IT staff and sales staff saw the largest average wage increases in the last 12 months — of 5.6% and 5.3%, respectively.

Earlier this week, the Irish Congress of Trade Unions (ICTU) announced it was officially calling for an increase to the minimum wage — currently €8.65 per hour. Employers’ body, IBEC criticised the call, saying that any increase would cost jobs.

Mr Fielding added: “The difficulty is that many businesses are still under pressure due to the ratification of the national wage agreement, which ludicrously is implementing a 6.5% wage increase over the next 21 months, particularly as the economy is facing deflation in the near future...

“The last thing these firms need is more pressure on wage costs due to a mischievous, irresponsible demand for a further 11.5% increase in the minimum wage.”