RGDATA has warned that a raft of government-imposed cost increases represents the single-biggest threat to the viability of local shops to continue trading through the current difficult conditions.
The warning from the representative association for over 3,000 local shops, convenience stores and supermarkets nationwide comes following reports that the Low Pay Commission is proposing a 12.4% increase in the National Minimum Wage (NMW).
RGDATA estimates that this will increase the gross wage bill for an employee on the NMW by over €3,000 per annum, and it will also increase the wage costs for all other employees on higher rates who expect increases on parity with the NMW.
This increased cost would be on top of the additional costs associated with:
- the new St Brigid’s Day bank holiday (€110);
- the contingent costs of statutory sick pay (€550); and
- pension auto-enrolment (€386).
Collectively, these costs amount to an additional €4,000 per employee in labour costs, which employers will need to find just to keep apace of the new legal labour obligations being introduced by the government.
RGDATA highlighted that these additional costs are not sustainable, at a time when shops are facing considerable competitive, compliance and inflationary pressures, and striving to keep food costs down for their customers.
Tara Buckley, director general, RGDATA, said, “This is not about employers being Grinches, but about recognising that local food shops are not high-margin businesses and operate in extremely challenging environments.
“Business owners cannot just magic an extra €4,000 per annum per employee from thin air – this is money that will have to be found through getting more customers, charging higher prices, reducing employee hours, or cutting costs – and these increased costs are coming at a time when retailers are already facing a plethora of additional compliance costs associated with bring-back schemes, the circular economy, and enhanced reporting obligations.”