Increases in employment costs will put huge pressure on local shops and food prices, says RGDATA
"An increase in the NMW will increase costs for retailers until low operating margins become completely unsustainable," says RGDATA
23 May 2023
Independent retailers’ organisation RGDATA has made a submission to the Low Pay Commission regarding the proposal to introduce a “Living Wage”.
RGDATA’s submission highlights the high cost of doing business and the significant pressure that local independent shops are under amidst government calls for food prices to come down.
The association believes further increases in the National Minimum Wage (NMW) will add to inflationary pressures and should be resisted.
RGDATA has therefore urged the Low Pay Commission to postpone any increase until economic conditions stabilise.
“The retail sector is facing considerable operating cost pressures and constant demands from government for lower food prices,” said RGDATA director general Tara Buckley.
“A State imposed increase in labour costs will only add to the costs of doing business for retailers and militate against further decreases in retail food prices,” she continued. “With tight margins already in place and excessive costs for all SMEs, now is not the time for an increase in the NMW adding another cost to retailers.”
In its submission, RGDATA highlighted that “Ireland, as it has been for a while now, continues to be an expensive place for SMEs. Retailers are faced with a wide range of costs that they have no control over, such as:
- Insurance – retailers in Ireland are charged excessive premiums.
- Utilities – energy costs are extremely high.
- Commercial rates – retail grocery outlets are hit with massive levels of commercial rates and an inability to bring them down.
- Security costs – CCTV, alarms etc.
- Labour costs
- Compliance costs
“These pressures bear solely on the retailers and impose costs that cannot be recovered through an increase in prices,” Buckley added. “An increase in the NMW will increase costs for retailers until low operating margins become completely unsustainable.”
“It remains RGDATAs strong position that current economic conditions and operating challenges strongly indicate that an increase in the NMW is neither justified, sustainable or desirable at present,” the association concluded.