Small Firms Association Deeply Concerned at 79-Cent Minimum Wage Hike, Threatening Small Business Survival

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• SFA reacts to Budget 2027
• SFA welcomes decrease in Capital Gains Tax – first decrease since 2013.
• Changes to PRSI will only offset some of the employment costs associated with the National Minimum Wage increase
• SFA secures increase in PRSI threshold, changes to the tax system, including reduction in regulatory burden and more energy supports.

Tuesday, 6^th of October 2026 - The Small Firms Association (SFA) has expressed disappointment with the Government’s Budget 2027 announcement to approve the Low Pay Commission’s full recommendation of a 79-cent increase in the National Minimum Wage. The decision pushes the statutory baseline from €14.15 to €14.94 per hour, dealing a significant blow to small enterprises operating on non-existent profit margins across Ireland.

Despite the SFA’s engagement as a key partner in the Government’s Cost of Business Advisory Forum—which established a 63-recommendation roadmap to ease non-pay regulatory and administrative burdens - this significant statutory wage increase completely dismantles and neutralises any prospective relief before businesses can even see it.

However, the SFA has welcomed the decrease in Capital Gains Tax from 33% to 31%, the first decrease since 2013. The SFA also welcomes the increase in the employer PRSI threshold, the extension of the enhanced Diesel Rebate Scheme and aligning the Enhanced Reporting Requirements with existing payroll reporting cycles which will ease the administrative burden.

Reacting to the Budget 2027 announcement, SFA Director David Broderick stated:

"Today’s decision to impose a 79-cent increase in the National Minimum Wage is a shortsighted measure. The Government has chosen to incomprehensibly rubber-stamp the Low Pay Commission’s recommendation, displaying contempt for the economic reality on the ground. Small businesses represent over 98% of all enterprises in Ireland, yet small business owners are being asked to shoulder heavier financial burdens courtesy of this Government.

"For a year, the SFA sat at the table of the Cost of Business Advisory Forum in good faith, working tirelessly to deliver recommendations to lower non-pay overheads. By ignoring labour costs in that process coupled with handing down this unmanageable increase, the Government has rendered the advisory forum as useless. While the increase in the PRSI threshold will alleviate some employment cost, it will not be enough.”

“The increase in the National Minimum Wage will significantly increase payroll budgets across various paygrades on a pro-rata basis. This is the twelfth year in a row that small businesses are having to endure these Government sanctioned costs. When you add the recent increases to statutory sick pay days and auto enrolment, many small businesses will be forced to reduce staff, cut operating hours and halt investments.

"To offset any proposed increase in the National Minimum Wage, the SFA recommended a temporary PRSI rebate for small businesses to help them cope with cumulative employment costs. The Government’s decision to ignore this proposal is short sighted.”

The SFA made a variety of proposals that the Government has included in Budget 2027. They include the following:

• Increase the employer PRSI threshold from €552 to €600 per week for 2027.
• The extension of the enhanced Diesel Rebate Scheme until the end of December 2026.
• A reduction in Capital Gains Tax (CGT) from 33% to 31% - first decrease in 13 years.
• Align the Enhanced Reporting Requirements (ERR) with existing payroll reporting cycles, shifting from real-time tracking to monthly reporting cycles to drastically curb administrative compliance costs.
• Extension of the Employment Investment Incentive; the Start-Up Capital Incentive; the Start-Up Relief for Entrepreneurs; and the Relief for Investment in Innovative Enterprises, also known as Angel Investor Relief.
• Changes to the R&D tax credit to benefit smaller businesses.
• Unlocking €150 million from the National Training Fund to get workers ready for the AI revolution

SFA also welcomes the following measures announced in the budget:

• €1 billion investment programme which will be launched by the Ireland Strategic Investment Fund
• The changes to the Capital Acquisition Tax thresholds.
• The reduction in the rate of carbon tax on both kerosene and natural gas.

Commenting on the Government’s proposed measures to help small businesses, David Broderick added:

“The SFA welcomes the first decrease in Capital Gains Tax in over a decade along with changes to Enhanced Reporting Requirements which the SFA strongly recommended to Government. Many of the measures designed to assist small businesses are adequate for long term investments but bad for day-to-day operations.”

SFA Small Business Survey

Data from the SFA Small Business Survey 2026, conducted in partnership with Amárach, underlines the reckless nature of this decision:

• Surging Operational Overhead: 80% of small businesses report rising operational costs as a major challenge (up from 64% in 2025), with 77% confirming net cost increases year-over-year.
• Primary Existential Threat: 51% of small firms identify rising costs as their single biggest challenge—more than double the 26% recorded in 2025.
• Decade of Wage Inflation: Over the past decade, the National Minimum Wage has now rocketed by 63.3% (from €9.15 in 2016 to €14.94 in 2027), violently outpacing cumulative Consumer Price Index (CPI) inflation of approximately 25% over the same period.

ENDS

• Please see the full ‘Small Firms Association Pre-Budget Submission 2027’ here.
• The Small Firms Association proudly represents a diverse membership of businesses employing up to 50 employees: homegrown and spanning every sector of the economy with members found in every town and every city in Ireland.
• SFA Director David Broderick is available for interviews. For more information and to arrange more interviews, please contact SFA Public Affairs Lead, Jonathan McDade at jonathan.mcdade@sfa.ie or 0876253551.