Business

Ibec calls for ‘pause’ on minimum wage increases and other labour measures that it says risk employment

Employers’ group says Government’s approach to labour market policies ‘haphazard’ and ‘scattergun’

Ibec chief executive Danny McCoy with Taoiseach Leo Varadkar at an event last month. In an open letter to the Government, Mr McCoy claimed recent policy changes will make some businesses unviable. Photograph: Maxwells

Ian Curran
Mon Jan 22 2024 - 00:15

Employers group Ibec has called for a pause on further increases in the national minimum wage and other labour policy measures planned by the Government that it claims will add more than €4 billion to the annual wage bill of Irish companies and risk “employment and business viability”.

In response, Owen Reidy, general secretary of the Irish Congress of Trade Unions (Ictu), said Mr McCoy’s proposals were “short termist” and “quite nasty”, given that wages have failed to keep pace with inflation in recent years.

In an open letter to the Taoiseach Leo Varadkar, Danny McCoy, Ibec chief executive, called on the Coalition to publish a full cost impact assessment of all recent policy changes – including the increase this month in the national minimum wage and the pending introduction of the pension auto-enrolment scheme among others – before April.

Among the recent policy changes referenced in the letter are the increase in the national minimum wage from €11.30 to €12.70; the introduction of pension auto-enrolment (which has missed a number of deadlines); increases in employer Pay Related Social Insurance (PRSI) and non-indexation of PRSI thresholds; a broadening of statutory sick pay and a range of additional leave entitlements.

READ MORE

Ibec also highlighted the Government’s commitment to introducing a national living wage – 60 per cent of hourly median wages – by January 2026 through incremental increases in the minimum wage.

Mr McCoy claimed the recent policy shifts will add more than €4 billion to the annual wage bill of employers at a time when costs are already elevated.

[ The wave of restaurant closures may only be the start of it ]

“This is before even greater knock-on costs or relativity effects arrive as other workers look for their pay to keep ahead of the new wage floors,” he said. “Many companies in the most exposed sectors are expecting increases in their wage bills in the order of 25 per cent over the next 24 months as a direct result of Government policy measures.

“These major changes in the labour market are being conducted in the absence of any overarching action plan, strategy or impact assessment. We can already clearly see through our membership network that business failures, particularly in the SME sector, are rising rapidly.”

Ibec is calling on the Government to pause all further labour market policies involving a direct or indirect cost for businesses “until impact assessment and co-ordination is agreed upon”. This includes “planned further step increases in the national minimum wage; planned increases in the income thresholds for work permits; and any other additional leave or measures involving additional regulatory or administrative costs for employers”.

[ Irish economy has stalled and corporation tax is wobbling but what will 2024 bring? ]

It has also called on the Coalition to commit to a “competitiveness charter”, setting an annual ceiling on the total amount of new labour market costs that can be imposed upon businesses.

Mr Reidy of Ictu described the move by Ibec as “reactionary” and “wrong”.

“We are still – for many, many workers in the private sector – in a cost of living crisis. And that Ibec is concerned about the idea of a living wage is a bit worrying because it seems to suggest that a lot of their members’ people are on the minimum wage or just a bit above it,” Mr Reidy said.

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times

LATEST STORIES