Almost half of Dublin pubs 'will be forced to raise their prices' if minimum wage increases
The Government has previously committed to replacing the minimum wage with a new living wage by 2026, which will be set at 60 per cent of median wage in Ireland
Almost half of all Dublin pubs believe they will be forced to increase their prices if the Government continues with their plans to significantly increase the minimum wage over the next few years.
That's according to a survey by the Licenced Vintners Association, which also found that 21 per cent of pubs in the capital say they will hire less new staff than previously planned due to the planned wage increase.
The survey follows reports that the Government looks likely to increase the national minimum wage by at least €1 an hour in Budget 2025, which represents an eight per cent increase on the current rate of €12.70 per hour.
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A minimum wage increase to €13.70 would mean an additional €39 per week or €2,028 annually for those on minimum wage working 39-hour weeks, before deductions.
The move is part of the Government's plans to replace the minimum wage with a new living wage by 2026, which will be set at 60 per cent of median wage in Ireland. The first step towards this was an 80c increase to the national minimum wage from January 1 last year to €11.30 an hour. This was followed by a 12.4pc increase of €1.40, bringing the minimum wage to €12.70 last January 1.
However, more than 1 in 3 pubs (36 per cent) across Dublin say they will have to reduce their headcounts if the Government sign off on the minimum wage increase, while 46 per cent believe they will have to raise their prices as a result.
Over 350 pubs from across Dublin took part in the survey, approximately half the total number of pubs in the capital.
96 per cent of Dublin publicans surveyed believe the Government mandated changes to employment conditions, such as the planned increases to minimum wage, changes to sick pay and employers’ PRSI, as well as the pension auto-enrolment, represent “too much, too fast”.
The survey also found that 94 per cent of Dublin publicans want the Government to slow down the introduction of the “Living Wage”, while 1 in 6 Dublin pubs (15 per cent) say it is no longer profitable to open 7 days a week.
The survey also revealed that payments provided in Dublin pubs are increasingly by card rather than cash, with 8 out of 10 pubs (82 per cent) in the capital saying they receive more card payments than cash. Just 11 out of every 100 pubs in Dublin indicated they still receive more cash payments.
Speaking about the survey, LVA CEO Donall O’Keeffe said: “Hospitality businesses simply can’t cope with the increased cost of doing business that is being foisted on them by the Government. Over the last year there have been increases in VAT, sick pay, employers’ PRSI and minimum wage, with significant further increases to come. This simply isn’t sustainable and it should come as no surprise that so many hospitality businesses are closing in this environment.
“The Government’s own report, An Assessment of the Cumulative Impact of Proposed Measures to Improve Working Conditions in Ireland, showed that the combined increase of the Government measures mean a 36.7 per cent cost increase on payroll by 2026. The report also acknowledges that the hospitality sector is facing serious difficulties in dealing with these significant and rapid cost rises. We’ve been saying the Government changes represent too much, too fast. With the significant numbers of hospitality closures, the reality on the ground and the Government’s own report clearly support that statement.
“That is why we are calling for the Government to slow things down. We understand the need for a living wage but we feel that it should be introduced by over a 5 year period from 2025 to 2029 and that the 2025 increase in minimum wage should be in line with inflation. Any more than that is going to end up being counter-productive to the State, with more hospitality businesses being forced to close and the jobs those businesses sustain being lost for good."
“The Government also needs to help the sector by making things more competitive and that means returning the VAT rate to 9 per cent for food purchases and reducing the punitive excise rates on alcohol which remain at the highest levels in Europe,” Mr. O’Keeffe concluded.
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