Ms Jean McCabe:

I thank the Cathaoirleach and members for the opportunity to address them on the critical issue of escalating business costs in Ireland. As CEO of Retail Excellence Ireland I wear two hats: one as a small business owner and one in the seat that I sit in today. We represent the largest forum of retailers in the country, ranging from independent stores to large multiples. Ms McBride is from MacBees Boutique, which is a family-run business in Killarney operating for 40 years. Mr. De Luca is managing director of Maxi Zoo Ireland’s 32 stores.

I acknowledge the contribution of other representative groups who have appeared before this committee in recent weeks and highlighted critical infrastructure deficits as well as energy and housing, which are issues essential to Ireland’s competitiveness. We agree they are critical but rather than revisit well-covered ground I am focusing on what is immediately determining survival for our members, that is, labour costs and the cumulative burden of mandated increases that are pushing once-viable businesses to insolvency. In the next nine minutes I will explain why 200 retail businesses failed last year, why January's minimum wage increase will accelerate closures and what needs to be done.

The numbers tell a stark story. There were 200 retail insolvencies in 2024. This was a quarter of all insolvencies, the highest of any sector. There were some 17,000 fewer jobs in wholesale and retail in the last year. We estimate each closure costs the State €6.2 million annually in lost economic activity and every week four more businesses close their doors with the loss of an average of 80 jobs, which is €25 million in revenue gone.

Retail is central to Ireland's economy. There are 326,600 people directly employed, which is 12% of national employment We contribute €8.4 billion in VAT and €2.7 billion in corporation tax. Retail is present in every small town, city and village in the country, with three out of four jobs in retail being outside Dublin. When I speak about retail, it is important to note 98% of businesses in retail are SMEs. That is what we are talking about here. We are talking about the small micro stores that employ fewer than ten people. It is the small guy who is suffering the most.

When hospitality faced cost pressures, the Government responded with VAT relief in budget 2026. It was a welcome respite, but retail faces identical labour and utility cost pressures plus fierce online competition on a playing field that is not level. However, retail SMEs like my business, Ms McBride's and Mr. De Luca's received no respite in the budget. Let us fast-forward to January and the proposed minimum wage increase to €14.50 an hour, topped with pension auto-enrolment.

Retail is left to shoulder this alone, with no respite.

Before I move on, I want to be very clear that retailers want to look after their people. We know how important they are to what we do. They are core to our business. The Government's mission may be to introduce a living wage, which is commendable, but it has mandated a 44% increase in minimum wage costs in six years in a sector with some of the lowest margins and highest cost pressures, and we have shoulder it alone. That has always been our case in point. To move towards this is commendable, but it has to be offset elsewhere because the camel's back is about to break.

There is also a fundamental problem in the methodology to calculate the living wage. I do not think anybody wants to acknowledge that Ireland has two completely separate economies, and we are using one to set wages for the other. In simple terms, Google salaries in Dublin are determining minimum wages for shop workers in Donegal. That is essentially the economy we are in. Let me explain. Ireland's workforce is split, with roughly 50% working in large multinationals or the public sector and the other 50% working in domestic SMEs like my own business. The wage gap between these two economies is staggering. ICT workers earn on average about €35 per hour. Retail workers are looking at €15.75 per hour. That is a 115% gap. ICT workers are on double the rate of pay of those in retail. Here is the flaw: the EU formula sets the living wage at 60% of the median, but Ireland's median is grossly distorted by our unique economy. No other EU country has this concentration of high-wage multinationals. Ireland has double the EU average of people employed in ICT or pharmaceuticals. When calculating the national median, it is completely skewed. The calculation includes ICT workers earning €35 an hour, financial services employees earning €25 per hour, public sector workers earning nearly €26 an hour. That is used as an inflated median to set minimum wages for retail workers. This makes no economic sense.

The Government's own report from the Department of enterprise on the cumulative cost of doing business in 2024 identifies retail as one of the most impacted sectors. The report acknowledges retail is "labour-intensive, relatively low-wage sectors typically characterised by low margins" and important for employment, "particularly in rural areas." Yet again, hospitality received relief in budget 2026 but there was still no respite for retail.

There is another area that has been a big challenge for our members in trying to manage wage costs. Wage costs are the biggest cost for any business. Unlike any other sector, retail and hospitality employ more people on the minimum wage than any other, so it disproportionately affects us more than others. This is an area that is extremely difficult for our members to manage. I want to reiterate that we are all about paying people fairly, but let us look at the numbers. From 2020 to 2026, the minimum wage went up 44%. During the same period, consumer prices went up 20%, meaning minimum wage inflation has been double the cost-of-living increase. Ireland has the second highest minimum wage in the EU. Over the last four years, it has seen a 34% increase with no offset. That is the point here. There has been nothing to counterweigh the cost that has been imposed on businesses. However, here is what is really destroying businesses from within. The minimum wage of €14.15 versus retail's current median of €15.75 means only €1.60 separates an entry-level employee from experienced staff. That is the knock-on effect on a businesses payroll that has been the extreme challenge for so many of our members. How do we reward loyalty and experience? How do we promote talent with increased responsibilities? How do we maintain management structures when supervisors earn barely more than new hires? This is what we call the spillover effect. When the minimum wage was increased 12.4% in 2024, the average increase across the teams was 8%. This spillover effect has been equally challenging to afford and manage and the true cost of the minimum wage increase far exceeds the headline figures we see today.

We have created the perfect storm. We have wage increases on top of some of the most expensive energy costs in the EU for businesses at 63% above the EU average. We sit at seventh highest in the EU for VAT rates at 23%. We have already heard the story of where we sit with insurance costs for business. If we look at commercial rates, retail businesses shoulder the burden of commercial rates while Amazon, Temu and Shein are allowed to sell in and out of our jurisdiction freely versus the rest of us.

The message I want to send is that we want to work with the Government, but we cannot solve the cost-of-living crisis, driven by housing and energy, by raising minimum wages beyond business capacity. It creates a destructive cycle. Higher wages force price increases or closures, reducing employment, ultimately harming the workers we are trying to help. In a report, the ERSI stated that increasing the minimum wage would be a "blunt instrument" and not the tool to be used to help people out of poverty. It also has a report highlighting that most minimum wage workers are coming from high-income households, so it is not getting where we need it to get to in order to help those who need it the most.

I will leave members with a final message. This is about Ireland's future. When retail closes, communities lose their heartbeat. For the elderly person who walks to the local shop daily, it is not just commerce, it is community. Every closed shopfront is a lost meeting place, a lost first job, a lost local identity. Most critically, retail is where Ireland's young people learn to work. It is where students get their first job and where they learn customer service, responsibility, work ethic and skills no classroom can teach. Members will know this from their own experiences of a first job in a shop, a restaurant, a local business. That is where they learned to work. That is where they learned to show up and learned their love of people. If we lose retail, we lose those pathways and we lose Ireland's future. As businesses cut hours to manage impossible costs, these opportunities disappear. The members' constituents will soon tell them that their little Sinead or Seán cannot find a part-time summer job. Imagine Ireland's competitiveness with an educated workforce that never had the opportunity to learn the fundamentals of work itself. We are not asking to abandon fair wages. We are asking for policy grounded in reality, not formulas where Google salaries determine retail worker wages. Ireland is fundamentally different from other EU economies. Our wage policy must reflect this reality or we will continue losing retail jobs to an unworkable formula designed for countries that do not look like us. At stake is whether Ireland remains a country for real communities and opportunities or becomes a cautionary tale of how flawed policy destroyed the pathways that could build our future and the communities that sustain us.

I am open to members' questions.