The latest ERSI report on minimum wage

0:00News talk breakfast with Anton Savage in association with air. You research from the ESRI finds that most minimum wage increases in Ireland have had no significant impact on inflation. The study found only the largest increase in 2024, that to modest price rises in a small number of sectors including restaurants and hairdressing. That kind of leads you to suspect the minimum wage is a good thing and those who are charged with uping it are getting it right. David Broderick, director of the Small Firms Association, is hard to argue with that David. Good morning Jonathan. Yeah, well I mean look when you repast the headline this ESRI report actually confirms what the small business owners have been telling us on the ground all the time. They're doing their best to keep their prices low, to protect their customer base. But they're doing that by absorbing that cost. So our own research has shown an increase of 44% cumulatively on our costs.

1:03And then you saw when they pushed through a massive increase in 2024 of 12 over 12% that the prices did go up as that report has said. So I mean I think when people see that seven years of hikes have caused no price inflation and that the businesses are doing fine but owners absorb that cost but not out of huge profits. Our own research again shows that owners couldn't raise prices but they had to cut staff, reduce hours. Or owners couldn't raise prices. Are you trying to tell me that the small businesses out there that haven't raised their prices in the last two years? No, I'm not. I'm saying they have in order to protect the business, the best business decision would be to wear at all possible not raise their prices but in 2024 as the ERI, ERI report shows they had no choice at that point.

2:04The price categories identify as being affected for wage increases account for just 11% of total consumer spending. I mean at this point even you have to agree that the minimum wage is a good thing. It protects people at the bottom. It's the reason we don't have a tipping culture in this country. It means that there is a threshold below which any employer cannot fall. You have to agree it's a good thing. This mob business owner knows that our staff and our employees are the most important asset that we have. So minimum wage is a good thing and we've been supportive of the minimum wage but this I think what people are forgetting in that debate is the cumulative cost on employers. So you have the minimum wage increase which is just one part of the puzzle. You've got statutory sick pay increasing. You've got the introduction of auto enrollment. Again all good things but this is all coming at the one time and it's falling on the same spot which is the business owner. And if there is to be a further increase there has to be some sort of offset mechanism

3:06because the business owners can't keep absorbing this time and time again. As a child they've cut their hours. They've worked probably 60, 70 hours themselves a week. Many of my members put off and say that they're on a lot less than the minimum wage when you calculate the amount of times time that they're investing in their organizations. They're still making a profit for the most part. I mean like there's nobody going in there making a loss here or making less than the minimum wage and not making a profit on the fireside David I'm not buying that. No, it's the margin of the profit. These people have to live. Small business owners are also living in a cost of living crisis. So they have to live themselves. So we can keep taking on one hand. A profit isn't a dirty word. It's about surviving and having their own livelihood. So to keep... It just seems to us at the moment that of all the costs that this government cannot control, including energy and fuel, they can control the minimum wage.

4:09And that is the one lever they can control. So the minimum wage is... I got a second. The minimum wage isn't designed to support employers. It's designed to support the people at the lowest wrong in the employment ladder that they get paid enough money that they can pay their bills. It's about them. It's not about the employers. You're coming at this from the wrong way. Well, I support employers. The small firms association represents employers. But those employers want to support their employees. Of course they do. They're the most important asset. We're just pointing to the cumulative cost and the effect that that's having on their business. This is not about employers not supporting them. That debate is getting lost. Of course we do. We have no business without them. But the business has to operate and be functional in order to keep employing that staff. If a business goes on, if we don't continue to increase the minimum wage... If we don't increase the minimum wage and inflation keeps going on the way that it's going, then you're running into a problem that those employees that you say are so valuable,

5:13they're going to fall behind. I mean, it's a checkered and exit area, isn't it? Well, if there is to be an increase in the minimum wage, there needs to be some sort of offset mechanism, such as a parasite, e-base, Ford employers, that would allow them and assist them on the journey to increasing that base for the low-paid workers. That would work as well. Is that universal to all the... Like a lot of the companies. And I know the businesses you're talking about, the small businesses, the coffee shops, the crashes, those who are struggling to make ends meet again. I get that. Yeah. But then about the fellas who are making good money and are paying their staff the minimum wage, they get the benefit of the subsidy as well. So therefore, you're... The good guys and the bad guys all benefit under that scheme, don't they? The government has the levers to put in a temporary target it. Purify, re-aise. We don't do target it. We don't do target it in this country. We just give everybody the same thing. It's the same. When his children's allowance or any electricity credit, everybody gets it. The good and the bad. We don't target it, Dave. That's not going to work.

6:14We don't do it, Jonathan, but we can do it. This government can choose to support the local bakeries, the local coffee shops. They can do it. The rebate scheme I'm talking about is the same mechanism that was used for the temporary wage subsidy scene during COVID, where you can refund the money if you set the parameters. And they could set parameters for a rebate. For example, they could say a turnover of X million, certain amount of staff on minimum wage, we can do a temporary target rebate if we want to, but the will has to be there. Well, that is true. David Broderick, Ed Director of the Small Farms Association. Thanks very much for joining us.