Minimum wage increase would add 2.5% to grocery bills, warns ISME

Proposed wage increase would be 'unsustainable' for members

The Low Pay Commission recently recommended that the minimum wage be increased from the current rate of €11.30 an hour to €12.70 an hour — a 12% increase. 

Retail members of the Irish Small and Medium Enterprise Association (ISME) have claimed that a proposed increase to the minimum wage will add between 1% and 2.5% to grocery bills, depending on the size of the store. 

The Low Pay Commission recently recommended that the minimum wage be increased from the current rate of €11.30 an hour to €12.70 an hour — a 12% increase. A decision on any increase to the minimum wage will be made in the budget in October.

In a letter to Taoiseach Leo Varadkar, ISME said such an increase would create “a financially unsustainable situation” for many of its members.

ISME said the minimum wage rate serves as an important benchmark and relativity for most incomes up to around €30,000 per year.

ISME chairman Marc O’Dwyer said they “fear” the Government might press ahead with an “unaffordable and unsustainable increase” in payroll costs in January.

“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,” he said.

“The retail members of ISME estimate that the 12.4% wage impact of the national minimum wage will add between 1% and 2.5% to grocery bills, depending on store size."

Mr O’Dwyer said it was their view that social welfare support “should be used to bridge identified gaps, not an increase in the national minimum wage”.

Other measures 

He said that an increase to the minimum wage comes following other measures introduced by the Government that have added to payroll costs.

ISME pointed to the additional public holiday for St Brigid’s Day, three days worth of statutory sick pay which increases to five days next year, as well as five days for domestic violence leave.

ISME said the employment measures are “laudable and welcome” but that the cumulative effects of these entitlements and increases “have not been adequately evaluated”.