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

Vincent Jennings CSNA CEO pointed out that a 12.4% increase in the National Minimum Wage will increase the annual gross wage bill for an employee on 39 hours per week on the national minimum wage (NMW) by €2,840 plus ER PRSI.

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.

Mr 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. 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”. Mr Jennings, a former LPC Commissioner of six years standing added.

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.

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Mr Jennings said it’s a difficult time to be either a customer or a retailer.

Issues dominating the sector include the working groups set up by the Department of Enterprise to look at sustainability, night-time economy and digitisation and skills; the new bill on sick leave; the Low Pay Commission’s recommendations on the Living Wage; the impacts of Covid; and the spiralling cost of living and cost of fuel.

“There are things that can be done to help, but you can’t have sticking plasters – you’ve got to have a long term view on these,” he said.

“It is understandable how a workforce can consider that their only way out of the difficulty of having less money to spend, or that their money that they have doesn’t go as far as it did is to look for increases in wages, but that has its own, most certainly negative, effects. It is trying to rein in expectations that seem to solve something in the short term but create an even bigger problem down the line.

Labour crisis

“There are real problems, not least of which is the fact that in an incredibly short time frame of two years we’ve gone from a situation of having literally full employment to now having no-one who will work for us. But it’s not based upon it being full employment, it’s because all of a sudden people have turned up their nose at working in retail and hospitality and other businesses.

“I have to say that I’m really concerned about what will happen through the summer period which would have been traditionally the time that our full time staff would have taken leave and that slack would have been taken up by college students and people on holidays.

“I’ve a real feeling that this year at this point, such would be the level of pent-up frustration and desire to spread their wings that these lads and lasses will make use of the summer 2022 to leave the country and sow their wild oats and have a good time, and you cannot blame them. But it is something that I would be very nervous about, that a bad situation will become even more difficult.”

Sick pay concerns

Mr Jennings said there are concerns about the Sick Pay Leave which is currently going through the legislative process, with retailers fearful that they could end up paying significantly higher for a staff replacement for an employee who is sick.

“We’ve asked the Tanaiste to give consideration to allowing a rebate system or something equivalent to the EWSS scheme, where people who are at a genuine additional expense would have some of that offset. If laws are supposed to be equal, then what this law is going to do is make one form of employer have to pay a far higher level for sick leave than another.

“The other thing is these things are incredibly technical and we’ve spoken with the Irish Payroll Software Association and they say they need a minimum of six months from the time that it is enacted before it can actually be implemented. You have to have it right and you can’t mess around with people’s pay and their entitlements.

“So if the Tanaiste was suggesting if he wants it in the middle of the year – that’s not going to happen.”

Tobacco overhaul

After the Joint Oireachtas committee completes its observations on the Public Health (Tobacco and Nicotine Inhaling Products) Bill, it will go back to the Department of Health with recommended changes before going through discussion at the Dail, Mr Jennings said.

He said retailers don’t have a difficulty with a licensing system, but the question is how it operates, how much it will cost, who runs it, its level of frequency and how compliance will operate.

“Definitely at this point in time, without a doubt, our biggest concern is the spiralling cost of living and what that is doing within our shops – because we want people to be happy walking into our shops, rather than in dread of how much it is going to cost,” he said.

“I mean if somebody is now having to pay €120 or €130 euro to fill up their tank in our forecourts, they have less disposable income to spend on discretionary purchases within our store.

“That is not in our interest and it’s not in the consumer’s interest, so we have to work as quickly as we can to bring down the cost of fuel and all of the things that go with that.”

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