Budget 2023 must alleviate acute energy and labour cost pressures

Retail Ireland, the Ibec group that represents the retail sector, today said many retail businesses are struggling to cope with rapidly increasing energy and wider cost pressures, which will become even more acute over the coming months. The group called for decisive and far-reaching government supports in the upcoming budget to help off-set spiralling energy price hikes and rising labour market costs, including commercial rates relief. A failure to act will result in business failures and job losses.

Setting out the group’s Budget 2023 priorities, Retail Ireland Director Arnold Dillon said: “The post-Covid boost to retail was short-lived. Businesses are under intense pressure and are struggling to manage rising energy costs. These problems have been compounded by the cumulative cost of ongoing labour market reforms. Unless significant further measures are introduced to support businesses through the winter, the viability of many will be in question. The government has the resources to support business and consumers, now is the time to act.

Retail Ireland has set out to Government its detailed proposals to address energy and labour market costs, and support town and city centre rejuvenation. These include:

• Energy costs: Energy price hikes are making it very difficult for retail businesses to maintain profitability, with knock-on implications for investment and jobs. New government support schemes are required along with new incentives to support businesses improve energy efficiency. A commercial rate payment break should be introduced to help businesses manage spiralling energy cost increases.

• Labour market costs: Inflationary pressures are being compounded by the cumulative cost of ongoing labour market reforms. The rollout of pension auto-enrolment, the living wage, statutory sick pay and other leave proposals will dramatically increase labour costs over the coming years. Budget 2023 should introduce a new labour market transition rebate, funded from the National Training Fund (NTF), to support the viability of companies managing this adjustment. This should include an initial break from NTF payments, 1% of payroll, and a further rebate of up to 2% of payroll (or two years payments) equivalent in training, skills or productivity vouchers. 

• Town and city centre rejuvenation: The growth of online retail and the challenge of Covid means much more effort is needed to make our town and city centres attractive places to shop, socialise and work. A commercial rates exemption scheme should be introduced to incentivise occupiers of commercial property to carry out approved upgrades, including energy efficiency initiatives. More investment to improve the attractiveness of our public spaces and public transport links is also needed and a more visible Garda presence is needed in our urban centres.

“Having been through the disruption of Brexit and Covid, acute inflationary pressures now risk undermining a sustainable recovery. Budget 2023 must include significant direct measures to alleviate labour market and energy cost pressures. Government must also support the long-term development of a vibrant and sustainable retail sector into the future. Businesses are investing for the future, in skills and career paths, in their digital platforms, and in more sustainable ways of working. The government must incentivise the necessary investment and actively support businesses on this journey,” concluded Mr Dillon.