Richard O'Donoghue (Limerick County, Independent) | Oireachtas source

The Taoiseach and I spoke recently about the minimum wage increase. At the time, he said to me that, on the one hand, I was welcoming the wage increase, which I do, but that I also wanted protection for businesses that will be impacted by the wage increase and had asked what the Government could do to counteract it.

The issue has now come to the fore, given the Taoiseach has, I believe, received a letter from IBEC outlining its concerns about the additional costs his Government has set out. The letter highlights specific worries about the pace and scale of the Government increases in labour costs, including an increase in the minimum wage to €12.70 and changes to employer PRSI, statutory sick pay, pension auto-enrolment, work permits, salary thresholds and protective leave entitlements. IBEC estimates the Government's labour market policy will add €4 billion annually to the wage bill of Irish employers, leading to labour cost increases of 25% to 30% in the most impacted firms. According to an article on the RTÉ website, one third of new companies close within the first four years of their existence. It states that the post-Christmas period has seen a wave of restaurant closures in Ireland and that the Restaurant Association of Ireland, RAI, claims 280 of its members have closed in the past six months. I urge the Government to intervene in this.

I am an employer myself. I agreed with the minimum wage increase and all the employers I have spoken to also agreed with it, but it has created inflation in certain cases. In the hotel industry, the minimum wage was increased to €12.70, but people who were on €13 then wanted to go to €14.30 and there was a knock-on effect through all the wage increases on all hospitality sectors. In the case of one business whose owner I spoke to, which has seven employees, two of whom are part time, it amounts to an increase of €40,000 to its costs.

The only way they can counteract that and pay the increase in the minimum wage, which they said the employees deserve, without increasing the price of their product is by going into their maintenance fund. They said that by going into their maintenance fund, if anything breaks down, they will have to close anyway. If they put the prices up, the same wage increase we are giving will actually be taken back in and means they will not be sustainable anymore. Representatives from one hotel I spoke to said this will actually cost them €400,000 extra this year. For a wedding or a major event, the increase will be by €4 per sitting. This means it will go to the same people who will have got a wage increase but will actually go back again into the Government’s purse as it goes around in a circle.

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