Taoiseach Leo Varadkar has pledged that Budget 2024 will include a comprehensive set of measures to assist businesses in coping with the anticipated rise in costs, including a potential increase in the minimum wage. The government is eagerly awaiting a report from the Low Pay Commission, which is expected to recommend a double-digit increase in the minimum wage to ensure it remains well above the rate of inflation. Varadkar recently stated that the government is likely to accept the commission’s recommendation.
Isme, a business group, recently wrote to Varadkar to express concern about the potential impact of the reported increase, arguing that it would create a financially unsustainable situation for many small and medium-sized enterprises (SMEs). Isme chair Marc O’Dwyer highlighted that the retail members of the organization estimate that the 12.4% wage impact of the national minimum wage could increase grocery bills by between 1% and 2.5%, depending on the size of the store.
O’Dwyer emphasized that businesses that cannot afford to pay the increased minimum wage often resort to reducing employee hours, which undermines the justification for the wage increase. He also noted that the majority of Irish workers are employed by SMEs, which have earnings that reflect their size, rather than the higher wages found in foreign direct investment (FDI) businesses and the public sector.
During a recent visit to Cork, Varadkar stated that the upcoming budget will address the impact of the cost-of-living crisis on both households and businesses. He acknowledged that additional costs, such as the minimum wage increase, will affect small businesses in particular. Varadkar also highlighted the significant surplus that the government is projected to record this year, emphasizing the importance of making responsible policy choices and being cautious in light of potential international events that could impact Ireland’s economy.
Despite the surplus, Varadkar announced that approximately €10 billion will be set aside next year to pay down debt and cover future infrastructure and pension costs. This decision reflects the government’s commitment to fiscal prudence and long-term planning.
However, O’Dwyer argued that providing support measures for businesses to meet the increased minimum wage would be counterproductive. He stated that if the proposed increases are so substantial that businesses require state support, they should not be implemented. O’Dwyer suggested that social welfare supports should be used to bridge identified gaps, rather than relying on an increase in the minimum wage. He also cited research indicating that businesses unable to afford the wage increase often reduce employee hours, which undermines the purpose of the increase.
In conclusion, the government is preparing to address the expected rise in costs for businesses, including a potential increase in the minimum wage, in Budget 2024. While concerns have been raised about the impact on small and medium-sized enterprises, the government remains committed to fiscal responsibility and prudent decision-making. The upcoming budget will aim to alleviate the cost-of-living crisis for both households and businesses, while also setting aside funds for debt reduction and future expenses. The debate over supporting businesses to meet the increased minimum wage continues, with arguments for and against state intervention.