CEO Update: Changes in the National Minimum Wage

July 21, 2023

Dear member,

As you may be aware the findings of the most recent Low Pay Commission report on the National Minimum Wage were shared in the media earlier this week. It has been widely reported that the Commission is recommending an increase in the National Minimum Wage in 2024 of 12%, or €1.40 an hour.

Government has announced its plans to move to a so-called “living wage”. It is in fact a renamed national minimum wage. The incremental changes in the National Minimum Wage over the next four years will be substantial to bring the National Minimum Wage closer to the target Living Wage of 60% of the median wage. Ibec has sought for the transitionary period to include measures that will help businesses - especially small and medium enterprises who will find it hardest to absorb this significant extra cost – to do so.

It is estimated by the Department of Enterprise, Trade and Employment that 60% of median earnings would have equated to approximately €13.10 per hour in 2022, by 2026 this threshold would amount to around €15 per hour.

For sectors with low pension coverage and high labour costs, these costs may be significantly higher. Taking into account the planned introduction of pension auto-enrolment and other labour policy driven labour costs, by 2026 and 2030 it may be respectively adding 13% and 17% to the wage bill in the Experience Economy and between 7% and 12% by 2026 and 2030 in sectors such as retail, wholesale and administrative activities.

With the reported increase in the National Minimum Wage being four times the Government’s forecast for inflation in 2024, the changes also increase the risk of a more embedded inflationary dynamic in the economy.

Ibec has been engaging with Ministers, the Low Pay Commission, the Civil Service and across the political spectrum in recent months to raise the cost implications of these changes and to seek a commitment to offset measures through reduced employers’ PRSI.

This week we also conducted several high-profile media interviews to emphasise Ibec’s position on this important issue:

Ibec will continue to lobby on this critical issue to ensure the recommended cost supports are put in place in Budget 2024. Ibec will also provide a submission to the Low Pay Commission’s public consultation on the Sub Minimum Youth Rates of the National Minimum Wage early next week.

As pay and pay expectations are a key issue for all businesses as we move into budget time, could I remind members that our annual HR Update Survey has been circulated to your teams and we would appreciate your engagement to ensure we have early and comprehensive data to track trends on your behalf.

As always if you have any queries regarding this or any other aspects of our work, please do not hesitate to get in touch.


Danny McCoy