COALITION PILES ON COSTS
Former Taoiseach Leo Varadkar was personally invested in expanding the National Minimum Wage (NMW) into the so-called Living Wage that is benchmarked to a median wage calculated from all employer payrolls in the economy. For two decades, the Low Pay Commission recommended an NMW level taking economic factors into account. That changed when the Commission was directed by Varadkar to ensure that the NMW reaches 60% of hourly median wages by January 2026.
That was why the January 2024 NMW increase from €11.30 to €12.70 foisted on employers was an inflationbusting 11.4%. On current trends, the Commission envisages an 8.7% increase next January, followed by another hike of 8.7% to €15 an hour in January 2026.
Officials in the Department of Enterprise, Trade and Employment, and Department of Social Protection, estimate that by 2026 Varadkar’s Living Wage policy will add 33% to the payroll costs of small hospitality firms, relative to a 2023 baseline. This is in addition to other policy costs such as autoenrolment, higher employer’s PRSI, and increased sick leave entitlement. In their policy review paper, the civil servants didn’t consider the impact of the 50% increase in the hospitality VAT rate to 13% effected in September 2023.
Very much in the firing line of Fine Gael’s anti-enterprise measures are businesses like Market Lane Group in Cork, which comprises Market Lane, Elbow Lane Smokehouse & Brewery, Orso, Goldie and Castle Café Blackrock. Led by Conrad Howard, the Market Lane Group employs up to 200 staff in the hospitality sector in Cork.
Howard and his colleagues are proactive about recruiting and retaining staff. Market Lane is one of a handful of restaurant businesses that participates in the ‘Great Place to Work’ scheme and Fáilte Ireland’s ‘Employer Excellence’ awards.
Both programmes centre on an employee survey and feedback process that explores trust in management,
Market Lane Group is a major hospitality employer in Cork
training and development opportunities, pride in the workplace, remuneration, and diversity and inclusion practices.
The Market Lane restaurants operate through multiple companies. Market Lane Café Ltd had a payroll overhead of €1,780,000 in 2022, with average pay for 45 employees coming in at €33,100. The employer PRSI cost was €208,700, which was 70% of what the company’s four directors were paid for managing a late-night business.
Pembroke Cafes Ltd, the operating company for Orso restaurant, had 16 people on the payroll in 2022 on average pay of €16,100. If new Taoiseach Simon Harris continues on his predecessor’s Living Wage path, the inevitable outcome for small restaurants will be fewer staff and fewer hours of employment for those who remain.