Firms face €4bn rise in wage bills, says Ibec

Government urged to pause labour market measures

Ibec said double-digit increases in the minimum wage, increases to employer PRSI, modifications to statutory sick pay, the introduction of pension auto-enrolment, substantial increases in the salary thresholds for work permits, and enhanced protective leave entitlements have combined to impose an unrealistic burden on businesses.

Ibec has called for a halt to all labour market measures being introduced by the Government: The business representative group estimates these will add €4bn to the annual wage bill of Irish employers.

In a letter to Taoiseach Leo Varadkar, Ibec’s CEO Danny McCoy said that labour costs would rise by between 25% and 30% for some firms.

In these first three weeks of 2024, a significant number of businesses have ceased operations, particularly in the hospitality sector, including popular Cork restaurants Tung Sing and Nash 19. The increased cost of doing business has been cited by the majority of these businesses as the primary reason for their closure.

Ibec said that double-digit increases in the minimum wage, increases to employer PRSI, modifications to statutory sick pay, the introduction of pension auto-enrolment, substantial increases in the salary thresholds for work permits, and enhanced protective leave entitlements have combined to impose an unrealistic burden on businesses.

“While many of the changes have merit, our primary concern is the lack of co-ordination, resulting in these costs unnecessarily converging,” Mr McCoy said.

Ibec has called on the Government to pause all further labour market measures that involve a direct or indirect cost to employers. This would include the planned further step increases in the national minimum wage, planned increases in the income thresholds for work permits, and any additional leave measures.

Mr McCoy said that the labour market policy measures have been introduced without sufficient regulatory impact assessment.

In particular, there has been no consideration given to the cumulative impact of the scattergun approach of labour market measures introduced by a range of different Government departments and agencies.”

Ibec also wants the Government to commit to a new ‘competitiveness charter’ that would set an annual ceiling on the labour market costs that can be imposed on businesses in any single year. The demands come on the back of an Ibec survey of 1,900 CEOs between December 6 and January 8. This found that 75% of owners feel that the cost of doing business should be a priority after the next election.

Ibec's Danny McCoy said labour market policy measures have been introduced without sufficient regulatory impact assessment. Picture: Sasko Lazarov/RollingNews.ie

Business closures have also brought into focus the May 1 deadline for firms to arrange repayment schemes with Revenue for taxes that were warehoused during the pandemic.

Business groups have also called for a further extension of this deadline and to allow firms to make repayments over a longer timeline.

Finance Minister Michael McGrath has engaged with Revenue in relation to the tax debt warehouse scheme and a proposal is being developed by officials in Revenue and in the Department of Finance.