Minimum wage rise ‘threatens’ SMEs

Raising the national minimum wage, at this time, would threaten the country’s small business community, a leading representative body has warned.

Ahead of the Low Pay Commission’s latest recommendations being made to Government, the Ibec-affiliated Small Firms Association (SFA) has said the focus must be on increasing competitiveness, with the recent Brexit vote highlighting the need to control costs.

The Government is expected to review a recommendation from the LPC to increase the rate from €9.50 per hour to nearly €10, tomorrow. The Programme for Government contained a commitment to raise the minimum wage to €10.50 by 2021. 

But the SFA has claimed the decision to raise the rate by nearly 6% to €9.15, at the turn of the year, has already placed pressure on SMEs including in the form of wage pressures.

“Brexit must be a wake-up call to the Irish Government — competitiveness is crucial if small businesses are to withstand the impact of the vote,” said the SFA’s acting director Linda Barry.

“Exchange rate movements have already left Irish goods 19% more expensive in the British market than they were at the end of 2015. Now is the time for action to enhance the Irish business environment, not to create additional pressures for businesses. SFA members have identified wage inflation as the number one threat to their businesses over the coming year. This is despite the fact that many small businesses plan to give pay increases, where — crucially — the performance of the business allows,” she added.

The SFA claims there is “no justification” for a rise in the minimum wage — one member saying it is “maxed out” at €9.15 — warning of job losses if costs are squeezed further. While some are calling for a rise to €11.50 an hour, the ESRI has said such an increase would not help poverty-stricken households.


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