Small firms may be hit by minimum wage increases, warn business groups

Recommendation to increase the national minimum wage to €12.70 per hour from next January will place 'additional pressure on employment costs' 

Minimum wage rise will impact small businesses in the retail, food manufacturing sectors, the Small Firms Association said.

A business group has urged Government to support small firms if the proposed minimum wage increase is implemented.

The recommendation by the Low Pay Commission to increase the national minimum wage to €12.70 per hour from next January will place “additional pressure on employment costs” especially for small businesses in the retail, food manufacturing sectors, said the Small Firms Association.

“The cost of labour is the most significant driver of business costs in small firms followed by energy and insurance costs,” said David Broderick, SFA director.

The organisations said in recent years its members have increased pay and conditions for employees, provided additional training and upskilling and enticed staff to remain in their jobs.

“These cumulative impacts alongside the introduction of a statutory sick pay scheme, a new public holiday and changes in employment regulations, this year, have added to employment costs and greater administration burden on Ireland’s micro and small employers,” the SFA said.

The SFA recommended that Government considers how employers with a substantial proportion of minimum wage staff can be supported during the progression to a national living wage.

Another business representative group, Isme, echoed these concerns. 

“The divergence in wage levels paid between the minority of those working in multinationals and the public service, and the majority working for small firms, is enormous. 

"The Low Pay Commission's recommendation must reflect the ability of small employers to pay realistic, affordable rates of pay," said Neil McDonnell, Isme chief executive.