James Condon, HR Business Partner

The proposed minimum wage increase of 7.6% from January was announced last week.

The significant increase in the national minimum wage is among a number of recommendations contained in a report from the Low Pay Commission, a statutory body made up of workers’ representatives, business representatives and independent experts.  

When put into real terms, for someone on the minimum wage working a 39-hour week, this translates to a pay increase of €31.20 per week or more than €120 per month, or €1,600 per annum. Trade unions have however criticised Government plans to increase the minimum wage by 80 cent to €11.30 an hour, saying it does not go far enough in working towards a living wage.


What this means for employers

While it may be welcome news for low earners, particularly in the middle of a cost-of-living crisis, there are obvious knock on effects to salaries across the wider business community.

These effects are difficult for employers to cope with when they are facing escalating costs in areas such as rising energy costs and also additional legislation. The SFA (Small Firms Association) pointed to the additional costs that will be imposed on businesses by the impending Statutory Sick Pay legislation and Automatic Enrolment Retirement schemes which are due to come into play very shortly.

Businesses may need to look at their costs of labour and some of the additional costs associated. The usual time for salary reviews and adjustments and budget planning for 2023 is fast approaching and firms should perhaps consider wider macro-economic issues affecting their business prior to agreeing salary increases and bonus payments.  Businesses often rush to agree an increase similar to last year with staff or a bonus payment that was perhaps mooted earlier in the year. 

Additionally, this increase may affect businesses workforce planning for the new year and so it is recommended that time is taken to ensure the costs associated with this rise are fully understood. HRLegal would recommend that smaller businesses who may be impacted by this begin planning now for any additional recruitment in 2023 so to ensure it is still a viable option.


For further advice on these and any HR matters you can get in touch with a member of the team at HRLegal.

Visit www.hrlegal.ie for more.