CSNA expresses concern on proposed Low Pay Commission recommendation
Association is concerned that the “ripple effect” will come into play if an increase of the proposed magnitude is adopted
25 July 2023
The Convenience Stores and Newsagents Association (CSNA) has expressed concern that the increase in the minimum wage planned by the Low Pay Commission (LPC) for next year will be unaffordable for many small businesses.
The Low Pay Commission is expected to recommend to the government that it increases the minimum wage next year by 12%.
This would be a rise of €1.40 an hour, bringing the rate from €11.30 to €12.70.
Last year, the government announced plans to introduce a new national ‘Living Wage’ to replace the minimum wage by 2026.
This will be phased in over a four-year period starting this year and will be set at 60% of the hourly median wage.
Vincent Jennings CSNA CEO pointed out that a 12.4% increase in the National Minimum Wage will increase the gross wage bill for an employee on 39 hours per week on the national minimum wage (NMW) by €2,840 plus ER PRSI a year.
This additional cost to employers gross wage bill excludes the cost of the St Bridget’s Day public holiday introduced this year and the contingent cost of an additional two days statutory sick pay.
The government has also indicated its intention to introduce Auto-Enrolment in 2024, an action that will cost all employers in providing for this.
Jennings expressed a concern that the “ripple effect” will come into play if an increase of this magnitude is adopted. It is well known that the majority of workers peg their earnings to a benchmark, in this case a benchmark is the NMW.
“Anyone currently earning €12 – €14 per hour will feel justified in seeking to maintain that differential and so a knock-on effect across our sector can be anticipated,” Jennings said. “Taoiseach Leo Varadkar when as Tánaiste was commending the Living Wage Report suggested as much, that increases to the NMW improves the earnings of many tens of thousands more.”
“The Low Pay Commission’s recommendation should reflect the ability of small employers to pay realistic, affordable rates of pay. It is unfortunate that the current composition of the LPC does not have anybody representing small and medium size enterprises,” added Jennings, who is a former LPC Commissioner of six years standing.
“Our members are responsible employers and will not disregard sensible increases to the NMW once they are based on discernible facts; increases that are two and three times greater than inflation make it difficult for us to see that the Low Pay Commission is acting in everyone’s interest.”