Minimum wage may not increase again next year, says Leo Varadkar

Taoiseach Leo Varadkar acknowledged the cost of doing business remained very high, with that partially due to pay.

Taoiseach Leo Varadkar has signalled the Government may not further increase the minimum wage next year, saying there is no point increasing wages if a person has their hours or job cut.

Speaking during Leaders’ Questions, Mr Varadkar acknowledged the cost of doing business remained very high, with that partially due to pay.

He said the Government’s plan was for the minimum wage to eventually reach the level of a living wage, or 60% of median earnings, “as soon as we possibly can”.

“Yet, we acknowledge that we have to monitor how this works on the ground because we have very big increases in the minimum wage in recent years,” Mr Varadkar said.

“It is not double, but it is much higher than it was 10 or 11 years ago. While businesses are opening and closing all the time, at the moment the number of closures is below the long-term average of 50 per 10,000.

“However, this is something we will have to monitor very closely, because there is no point in putting somebody’s wages up if they will then lose their job or have their hours cut. This is therefore something we will have to monitor over the next couple of months," he said.

Mr Varadkar added the Government would take account of this when the Low Pay Commission makes its recommendation for minimum wage increases for 2025, saying there are other employment-related costs due to increase, like pension contributions and a 0.1% increase in PRSI.

The new minimum wage, which kicked in on January 1, is €12.70 an hour.

The Taoiseach was responding to Independent TD Richard O’Donoghue, who raised concerns about the closure of small and medium-sized businesses due to the rising cost of operating a company.

Stamp duty

Also during Leaders’ Questions, the Taoiseach said any changes to the stamp duty charged on the bulk purchase of houses must be “considered carefully” by the Government.

The most recent figures from the Department of Finance show there were a total of 623 homes bought by 16 investors in 2023, compared to 395 the year before and 187 in 2021.

The most high-profile example in recent weeks has been Belcamp Manor in Dublin, where 46 out of 54 houses were snapped up by an investment fund for over €21.5m.

This increase has led Sinn Féin to call for the Government to hike stamp duty on bulk home purchases by investment funds from 10% to 17%, to act as a deterrent to institutional investors.

In May 2021, the Government agreed to increase stamp duty to 10% on purchases of more than 10 houses in a bid to stop investor funds from blocking first-time buyers from securing a home.

Sinn Féin president Mary Lou McDonald said the Government had previously been warned measures to prevent bulk buying of houses did not go far enough.

Responding to Ms McDonald, Mr Varadkar said the Government was not ruling out any change to stamp duty, but any changes needed to be carefully considered before they were made.

“it's something that has to be has to be considered carefully because any change to tax can have unforeseen impacts and also sometimes doesn't work.

“So we need to make sure that if there is any change that it is talked through and teased through correctly.”