Minimum wage rise could create economic cost, warns Isme

Plans for a 16% increase over four years could result in reduced working hours for staff, increased worker productivity, increased sales prices, or a combination of all three, business group says

Since 2008, the national minimum wage has grown 21%, while the average industrial wage has climbed 24%. Picture: Simon Dawson/Bloomberg

The planned increase to the national minimum wage could create a “serious” economic cost for Ireland, a business representative group has warned.

The Irish SME Association (Isme) said if Government plans for a 16% increase over four years goes ahead, it could result in reduced working hours for staff, increased worker productivity, increased sales prices, or a combination of all three.

“An increase of 16% in the base minimum wage would impact the wages of all our staff and would increase grocery prices to the customer by 4% if passed on in full,” said Finbarr Filan, a convenience store owner from Sligo on the Isme National Council.

“In reality, we would have to look at ways to avoid passing on the full impact to customers, so we would have to make savings elsewhere,” he added.

The proposed increase is aimed at helping low-income earners cope with the rising cost-of-living. However, Isme chief executive Neil McDonnell said the issue of affordable housing is at the centre of the cost-of-living crisis, not wages.

“Adjusting the minimum wage upwards will have no impact on the affordability of housing and rental accommodation for workers as rents spiral upwards, chasing an ever-diminishing supply of accommodation,” he said.

Since 2008, the national minimum wage has grown 21%, while the average industrial wage has climbed 24%. The planned increase of 16% to the minimum wage would bring the hourly rate to €13.10, reached over four years.