RGDATA makes submission to Low Pay Commission on The Living Wage

RGDATA makes submission to Low Pay Commission on The Living Wage

The Government plan for a national living wage which will be 60% of the hourly media wage announced in November 2022 tasked the Low Pay Commission (LPC) with making recommendations on how this can be achieved by 2026 through annual changes to the National Minimum Wage.

The LPC is currently considering the appropriate rate of the National Minimum Wage for 2024.

The LPC has produced forecasts for the rate at which the NMW needs to increase each year up to 2026 to deliver on the Government’s Living Wage decision.

The Low Wage Commission asked the Local Jobs Alliance for a short written submission by 24 May on the forecasts and the appropriate rate of the NMW in 2024.

RGDATA, the founding member of the Local Jobs Alliance, worked with the other members to develop a short submission. It highlighted how keeping a retail business in operation at a time of considerable operating cost inflation is a real challenge for independent retailers solely reliant on a local market. Faced with a competitive market, high consumer expectations on retail prices and spiraling operating costs, this is not the time to compound these difficulties by adding further costs through a State imposed wage increase.

High Business Costs

RGDATA explained 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. An increase in the NMW will increase costs for retailers until low operating margins become completely unsustainable.

Cost of quick introduction of Living Wage by 2026

The NMW (National Minimum Wage) saw an increase from €10.50 to €11.30 in January 2023. This 80c increase is the largest single increase of the NMW since July 2011 and is adding a huge burden on retailers. The vast majority of the staff working in the shops that RGDATA represent are earning an hourly rate that is significantly more than the Minimum Wage. However, if the Minimum Wage increases it creates an expectation that all hourly wages will rise by a similar percentage. From the year 2016-2022 the minimum wage increased from €9.15 to €10.50, an increase of €1.35. The increase of 80c from 2022-2023 is a large cost to a business and the potential for an increase of 80c every year until 2026 to create a living wage is not tenable for retailers. The weekly cost of ten full time employees (40 hours) on the NMW in 2022 was €4200 a week for an employer and at the current rate by 2026, the cost of those same ten employees will be €5480. This adds on a huge financial burden to shops as the same workforce will cost over €60,000 more in 2026. On top of all other costs that RGDATA members have to bear this is another major burden for them.