RGDATA Director General Tara Buckley told the Enterprise Forum on 16th October, jointly chaired by Ministers Dara Calleary and Emer Higgins, that independent family owned food/convenience shops and supermarkets were deeply disappointed that Budget 2025 did not provide the targeted supports they desperately need to fund huge increases in employment and other costs.

Buckley also highlighted the failure to include RVM machines in the Accelerated Capital Allowances Scheme despite assurances from Ministers; the failure to provide any supports for shops and supermarkets paying more than 30k in commercial rates and the deep concerns of independent retailers about the future of their businesses.

RGDATA also joined the SME day of protest to Leinster House the day before (15th October).

Led by Director Padraig Broderick and Director General Tara Buckley joined with hundreds of restaurant, café and pub owners to march in Dublin and rally outside Leinster House to highlight the huge concerns of SME family business owners in retail, hospitality and childcare.

RGDATA Director & Spar Croom owner, Padraig Broderick took to the stage at the SME Day of Protest at Leinster House and highlighted the huge challenges facing community shops and supermarkets. Padraig called for targeted action on Employment Costs and a better voice for SME businesses at the Government’s decision-making table.

The post Independent family owned food/convenience stores ‘deeply disappointed’ by Budget 2025 appeared first on Ireland's Forecourt & Convenience Retailer.

CSNA has reported to its members that the Government looks likely to increase the national minimum wage by over €1 an hour in Budget 2025.

The Low Pay Commission is understood to have recommended increasing the basic pay rate to at least €13.70.

Its proposal would help the Government deliver on a commitment to replace the minimum wage with a new living wage in two years.

But the move is a headache for the Coalition, which has been seeking to reduce costs for businesses in the aftermath of record levels of inflation.

It has never rejected a recommendation from the commission, but there is increasing concern about handing struggling businesses another financial burden. Government sources confirmed the commission proposed a more than €1 an hour increase, but less than €1.20.

The Government aims to replace the minimum wage with a new living wage by 2026. It will be set at 60pc of median wages across the economy.

Employers are legally obliged to pay at least the minimum wage to their staff, and it is paid to an estimated 164,000 workers.

Enterprise Minister Peter Burke is believed to be concerned about the impact a further increase in the minimum wage will have on businesses, which are already facing the additional costs of the introduction of auto-enrolment pensions, an extra bank holiday and statutory paid sick leave.

“The minister is very keen to slow down the train of additional costs and regulations businesses have been forced to deal with over recent years,” a government source said.

Mr Burke wants to delay the proposed increase in paid sick leave from five to seven days, which is due to come into effect next year. He also wants to see an extension of the Government’s Increased Cost of Business (ICOB) grant scheme, which has seen more than 80,000 small and medium businesses receive payments totalling €200m.

The minimum wage will stay in place until the living wage is phased in.

In 2022, former tánaiste and enterprise minister Leo Varadkar announced the introduction of a national living wage for employers.

The first step towards the new living wage was an 80c increase to the national minimum wage from January 1 last year to €11.30 an hour. This was followed by a 12.4pc increase of €1.40, bringing the minimum wage to €12.70 last January 1.

At the time, Mr Varadkar said improving terms and conditions for workers must be one of the legacies of the pandemic. He said as well as minimum-wage workers, many more employees would feel the benefits of knock-on increases as a result of the changes.

The introduction of a living wage is an important step the Government is taking towards eradicating low-wage employment

Research by Maynooth University for the commission found that a wage floor of 60pc of the hourly median wage could raise wages without a negative impact on hours worked and employment.

Once a living wage is in place in 2026, the Low Pay Commission will examine the possibility of increasing it further to 66pc of the hourly median wage.

In response to a question from Labour Party TD Ged Nash in April, Mr Burke told the Dáil the Low Pay Commission estimated the minimum wage in 2022 was 50.9pc of the median hourly wage.

It rose to 51.8pc last year. The commission estimated that the €1.40 increase in the wage this year brought it to 55.1pc of median hourly wages.

Mr Burke said the commission would continue to make annual recommendations on the appropriate rate of the national minimum wage and the increases required.

He said the introduction of a living wage is an important step the Government is taking towards eradicating low-wage employment for all workers and it is on track with its implementation.

The minister said it is also important to acknowledge the challenges facing the enterprise sector.

Meanwhile, the Government also faces a demand from the Irish Congress of Trade Unions (Ictu) to scrap lower minimum-wage rates for younger people.

The Low Pay Commission recommended this earlier this year.

In its pre-Budget submission, Building a Better Future, Ictu calls for the state pension and welfare payments to be linked to average earnings. It wants the state pension to rise by up to €25 a week in the Budget.

Ictu general secretary Owen Reidy said state benefits should be benchmarked and keep pace with inflation to avoid the “usual annual horse-trading”.

The submission says there should be no tax cuts. It calls for workers’ flat-rate expenses regime to stay in place and an increase in an “eating on site” allowance from €5 to €6.20 a day to reflect inflation.

The post Minimum Wage could increase by €1 per hour appeared first on Ireland's Forecourt & Convenience Retailer.

In a letter to the Taoiseach,  RGDATA said it would usually make an annual Budget Submission to the Minister for Finance and the Minister for Public Expenditure, NDP Delivery and Reform.

Reasons

‘However, this year we are directing our Budget Submission to you as Head of the Government for a number of reasons:

‘In the first instance you have identified supporting SME enterprises as a core focus since taking office as Taoiseach. As we face into a series of elections, the measures introduced in Budget 2025 will very clearly set the context against which the SME sector, including the 3,000 retailers that RGDATA represents, will judge if this Government is truly committed to supporting their businesses as key socio-economic hubs within their communities.

‘Secondly, the issues impacting on the food/convenience retail sector which need to be addressed in the Budget straddle a number of different Departments and are not the sole preserve of either the Department of Finance or DPER. A whole of Government approach is required which carefully targets interventions required to support SMEs. As Head of Government, there is a special responsibility on you, as Taoiseach to ensure that the Government in the round, gets this right.

Concessions

‘Finally, if this Government wants to genuinely show that it supports SME businesses then it needs to ensure that all employee related proposals and any other policies, that directly add to the cost of running an SME, must be cost neutral to the business, now and going forward. In other words, if Government policies create an increase in costs for SME businesses, the Government must also give a concession that negates the increased cost.

‘Otherwise, State imposed costs are going to increase inflation and the cost of living, reduce employment, reduce competition and cause shop closures that will wreak havoc with rural town centres and villages.

Extremely Difficult Year

‘The last 12 months has presented significant challenges for SMEs in Ireland, particularly businesses in the food/convenience retail and hospitality sectors. The slew of Government imposed increases in labour costs over the last number of years has presented serious challenges to SME employers, who have had to face unprecedented State imposed increases in the cost of employing people and running a business.

‘These increases have been introduced without any regard for their affordability by SMEs and have placed many viable businesses in serious peril.

‘The Report on the Assessment of the Cumulative Impact of Proposed Measures to Improve Working Conditions (DETE, 2024) recognised the impact of these measures on SMEs in the Food/Convenience Retail sector. In particular the Report noted that the increase in the Living Wage would have a massive impact in terms of pay relativities and follow-on costs.

Reduce overheads

‘The Report contained a specific annex (D) examining the cost implications of the increased measures and indicating the limited options available to these retailers to reduce overheads or increase prices to compensate for the additional labour costs.

‘Ultimately as the Report noted, the consequences of these unrestrained increases in costs would lead to Food/Convenience Retail SMEs floundering as they are unable to maintain a business that depends on high turnover, low cost, high payroll value and numbers to remain viable. These are low margin businesses.

‘The main response from SME shop owners in the food/convenience retail sector has been to cut the number of employees, reduce employee hours and work longer hours themselves–measures which have been necessary to ensure business survival, but do not achieve the public policy objective of improving working conditions.

May 2024 SME Supports Inadequate

‘RGDATA notes the programme of business supports that were announced by Minister Peter Burke on 15 May 2024. Minister Burke had already indicated that he could only introduce measures within the context of the existing budgetary framework, which emphasises the need to ensure that Budget 2025 provides meaningful measures and supports for a full year.

‘Regrettably there was very little of any tangible benefit for independent food/convenience retailers in the Minister’s Programme of Business Supports. There were very limited proposals to address the increased cost of labour. In addition, one off supports like the Increased Cost of Business Grant do not address the on-going increased cost issues for SME businesses that employ significant numbers of people. These viable local shops require ongoing measurestargeted specifically at reducing wage costs.

SME – means Small and Medium Sized Enterprises

‘As a general comment it is important that business supports that are directed at the SME sector actually deliver to that sector. Regrettably some of the eligibility thresholds for the various reliefs introduced to date have excluded businesses that fall within the medium sized classification of SMEs.

‘For instance, the rates refund announced in Budget 2024 did not apply to medium sized businesses that paid more than €30,000 in commercial rates. The most recent list of measures to support SMEs also excluded business that employ over 50 people from some of the reliefs proposed.

‘This is misplaced, as businesses in the medium sized category will have been increasingly adversely impacted by raised labour costs and face more significant operational challenges.

‘A “medium sized” food/convenience shop employing over 50 people and operating from a town centre in rural Ireland is a tiny minnow in the overall retail/convenience sector and yet competes on a daily basis with the biggest global players in the world. These businesses also need support to meet the increased costs of business arising from new State imposed measures.

Enterprise policy

‘Surely it is a core part of Ireland’s enterprise policy to support businesses within the SME sector to grow and thrive in scale and not for the State to constrain growth by adding significantly to the cost base of businesses or by preventing SME businesses that employ more than 50 people from accessing State supports.

‘For any relief proposal to be effective it must be tracked to employment numbers and overheads – this is the most effective way of providing support for increased employment costs as it directly relates to the headcount in businesses.

Specific Budget Proposals

‘In the context of reviewing measures that might be contained in Budget 2025 with the direct aim and purpose of supporting and sustaining SME businesses, including those in the independent retail grocery sector, RGDATA believes that there are seven specific measures that would make a real difference to Retail Grocery SME employers struggling to keep costs under control and businesses afloat as a result of recent Government imposed costs:

1. Employers PRSI reduction – a lasting reduction in the Employers PRSI rate is a targeted and direct intervention related specifically to employment costs. It would not require any additional direct outlay by the State and would be proportionate to numbers employed and the earnings provided. Consequently, it would be targeted, measured and proportionate, without imposing a direct funding requirement on the Exchequer. Noting the very limited and inadequate concession on Employers PRSI made in the May 2024 SME supports, RGDATA believes that a meaningful concession on the Employers PRSI rate is required to reduce the rate to 6% until 2028, to facilitate any adjustment to the Living Wage and to compensate for the increased costs associated with the roll out of the new Statutory Sick Pay Scheme. This would make a meaningful contribution to Retail Grocery SME Retailers to offset the increased employment costs arising from State measures.
2. Reduced Employers Student PRSI rate – RGDATA also believes that there is a public policy rationale to reducing the rate at which the Employers PRSI rate is charged on earnings of students who are in full time education and working in SME enterprises on a part-time basis. The employment of students for part time work has a significant training element and is often the students first time in the workforce with employers devoting considerable time and effort to supporting and training in students seeking to subvent their income during school or college years. RGDATA believes a reduced employers PRSI rate should apply to such employees given the nature of the work, the training element involved, and the limited duration and earnings of the employment concerned. The employers PRSI rate that applies to Community Employment Schemes would be a comparable measure at .5% would be appropriate and could in part be subvented by a contribution to the Exchequer from the National Training Fund to take account of the vocational nature of the employment. The retail food/convenience workplace in particular provides student employees with lifelong workforce skills and should be recognised as such from an Employers PRSI perspective.
3. Increased Cost of Doing Business Scheme – the ICOB relief scheme announced in Budget 2024 is too limited in scope and application. It excludes many SME food/convenience retailers with higher employee headcounts, for whom the cost of living increase is a real burden. The Scheme needs to be recast so that it is available to all town centre and village food/convenience SMEs shops and not just those with rates bill of less than €30,000.
4. Accelerated Capital Allowances – at the same time as facing prohibitive operating cost increases, retailers are also facing additional new costs to ensure compliance with sustainability objectives and requirements – for instance the new Reverse Vending Machines required to give effect to the new Deposit Return Scheme involvessignificant capital outlay. The eligibility of such investments for new Accelerated Capital Allowances needs to be confirmed beyond doubt – at present it is caught in a bureaucratic fog between different Government Departments, with no guidance or support being provided to retailers.
5. VAT Reduction – the increase in the VAT rate for food services added directly to the operating costs of retailers offering food to go and led to an increase in the costs of deli sales and hot beverages for consumers. Restoring the VAT rate to 9% would make a significant difference to retailers with a food to go and in-store café offerings.
6. Defer additional increases – given the proven adverse impacts of the business costs, the further implementation of additional measures which will increase business costs needs to be deferred until the State can demonstrate that the support measures have addressed the business challenges that they have created. Employers need certainty on these deferrals rather than vague commitments to conduct “reviews”.
7. SME test – RGDATA notes the recent announcement in the May SME measures that the Government is introducing an enhanced SME test by the Department of Enterprise, Trade and Employment and the Department of An Taoiseach. RGDATA would welcome further information on this Test and some indications of how it can be hardwired into decision making structures. It is alarming that some of the Government measures which have done most damage to SME enterprises in terms of increasing operating costs, have actually emanated from the Department of Enterprise Trade and Employment in the first place, even though that Department has policy responsibilities for SMEs.

The post RGDATA tells Harris: support for independent food/convenience retailers that address the huge increases in wage bills appeared first on Ireland's Forecourt & Convenience Retailer.