Minimum wage rise would heap pressure on retail

Thursday, 23 July 2015
Retail Ireland, the Ibec group that represents the retail industry, today said that recommendations to increase the national minimum wage by €0.50 per hour will have a disproportionate impact on retail, an industry which by its very nature is enormously labour intensive. Recent retail examinerships further highlight the intense challenges still facing the sector.

Commenting on Low Pay Commission recommendations, Conor Whelan, Managing Director of Eason and Chairman of Retail Ireland said: “These proposals come at a highly precarious time for Irish retail, the country’s largest private employer and most geographically diverse industry. Over recent months we have finally seen a return to modest growth after years of devastating contraction. Adding additional costs to the operating environment at this time is premature and unjustified.

"An increase in minimum wage may have the counter-productive effect of ultimately lowering take home pay, as employee hours may have to be cut by some operators to balance the significant increase in labour costs. Additionally, the possibility of such an increase taking effect in January, a month which traditionally sees sluggish sales after the busy Christmas trading period, will negatively impact on cash flow in the sector, giving rise to the possibility of yet more high profile store closures.

"Providing employment for over 275,000 people and paying out a combined €8 billion in wages each year, retail’s contribution to Irish society, prosperity and regional development must be safeguarded. With the total value of Irish retail sales still 17% below peak levels and with legacy challenges such as high rents continuing to pose massive obstacles to the sector’s recovery, the Government should be doing all it can to nurture the recent upturn, including urgent action to reduce employer PRSI contributions, rather than hitting Ireland’s embattled retailers at such a crucial time for the industry."