Labour costs concerns grow as economic growth is set to slow, warns Ibec

Ibec’s quarterly Economic Outlook report forecasted 2.3% growth in 2024 and 3% expansion in 2025.

Mr Brady also said the “imposed costs” on businesses will add €4bn to annual employment costs and the €250m fund “will be spread far too thinly across the economy and doesn’t come close to offsetting the cumulative costs involved.” 

Falling goods exports and slowing investment activity are set to hit the economy next year after a period of rapid growth that led to record employment levels, warned lobby group Ibec.

The business representative organisation ramped up its campaign against growing labour costs as concerns grow among its members ahead of the new year especially as details of the €250m State support package for SMEs have yet to be announced.

Chief economist with Ibec Gerard Brady said the “substantial costs” put on businesses through “labour market taxes, entitlements and regulations” may impact Ireland’s competitiveness and “will result in cumulative increases in labour costs of more than 25%” for some firms over the next two years.

Mr Brady also said the “imposed costs” on businesses will add €4bn to annual employment costs and the €250m fund “will be spread far too thinly across the economy and doesn’t come close to offsetting the cumulative costs involved.” 

Mr Brady made these comments following the publication of Ibec’s quarterly Economic Outlook report which forecasted 2.3% growth in 2024 and 3% expansion in 2025.

The report followed criticism on the 12.4% minimum wage hike from another business representative group Isme.

Isme chief executive said the vague €250m package averages €1,923 per business, but the cost of the minimum wage increase and auto-enrolment next year will be €3,228 per employee at or near the minimum wage. He wrote in the Irish Examiner that the support “is unlikely to be sufficient to keep them going.”