Viable businesses may be lost due to rising labour costs - Lowry

Businesses across Tipperary and the country as a whole are battling against upcoming increased costs with many in the SME sector, and hospitality and retail in particular, facing a battle to keep their doors open in the year ahead.

Government is said to be currently compiling a report following outrage from leading business representative groups detailing the impact that the announced labour cost increases will have on them going forward.

"The Irish Business and Employers Confederation (IBEC) have sounded the warning bells with Government, emphasising that the rising and cumulative costs associated with hiring and keeping staff are pushing them over the edge’ says Deputy Michael Lowry.

"RGDATA, the Convenience Store and Newsagents Association (CSNA) and the Small Firms Association (SFA) have also expressed their concerns for the future.

"RGDATA says that the increased employee costs will amount to some €4,000 per employee per year.

"While having good staff is key to running a successful business, increasing the Minimum Wage and extending Annual Holiday time, in addition to the other planned changes, comes at a high cost to businesses, especially those in the Small and Medium Enterprise (SME) sector.

"Good staff is invaluable to this sector, but the increasing collective costs associated with both maintaining existing staff and perhaps increasing staff numbers are becoming unmanageable for many’ he says.

"IBEC has stated that moves by a number of Government Departments and agencies have combined to create ‘the most significant cost competitiveness challenge faced by businesses since the pre-financial crisis period’.

"This is very worrying", says Deputy Lowry, adding that there is mounting fear that many viable businesses across the country will not be in existence by year-end.

"IBEC’s analysis shows that more than € 4 billion will be added annually to the wage bill of employers from new costs including the Government’s commitment to a living wage by 2026, the introduction of Pension Autoenrollment, increases in employers’ PRSI and non-indexation of PRSI thresholds, broadening of statutory sick pay and more Annual Leave entitlements for workers.

"I am completely in favour of improving conditions for workers, as are the majority of employers that I have spoken to, as their staff is an integral part of their operation. However, risking the closure of businesses makes no sense and this is what lies ahead for many small businesses who have struggled to save and rebuild their operations following the major disruption of Covid. They simply cannot sustain this level of increased costs.

"Adding so many additional costs within a short timespan is a retrograde step that will result in business closure and more people becoming unemployed and dependent on State assistance. Closing businesses will also negatively impact the economy as a whole, particularly in towns across the country", he said.