Small and medium-sized businesses’ representatives have urged for a two-year freeze on the national minimum wage. This comes as the group Isme, combated inflation with a substantial 12.4 per cent hike in the minimum wage this year, distinctionally above the rate of inflation. Moreover, according to Neil McDonnell, the CEO of Isme, the future growth of the minimum wage should correspond with the inflation rate.
Responding to criticisms made by trade unions regarding the supposed misinformation of rising business costs due to new worker-centric governmental measures, Isme rejects their claims. The Irish Congress of Trade Unions argue that programmes like an increased minimum wage, structured sick leave, pension auto-enlistment and the opportunity for remote work would mainly serve to align Ireland with Western European norms. Isme disputes this, stating the labour market changes go beyond what is offered in comparable EU nations.
Trade unions may argue the labour cost alterations as being mild, however, market response suggests the opposite. Neil McDonnell describes SME owners perception of these changes as anything but modest, attributing the rise of wage inflation to the closure of businesses, notably within the local services sector.
The CEO further explained that Ireland exhibits the second-highest minimum wage in Europe – €12.70 per hour, with the fourth highest median wage. McDonnell disputes that low wages are what ails the economy, rather highlighting high costs and a housing shortage as the more pressing issues.
In a system where the national minimum wage and living wage are calculated differently, figures suggest large-company workers earn 38% more each week than SME employees, while those in the public sector earn 46% more. This pattern, based on data from the final quarter of 2023, demonstrates that small businesses are struggling to measure up against these substantial wages.
McDonnell accentuates that while Ireland employment rate remains high, the issue of labour cost isn’t affecting unemployment levels. However, the concerning trend of small businesses, such as childcare centres, nursing homes, restaurants and convenience stores, going under, particularly outside major cities, is an ongoing concern.