A local employment firm has said Budget 2016’s hike in the national minimum wage is bad news for employers.
The Government’s announcement of an increase in the national minimum wage of 50 cent from January – although good news for low paid employees - will have serious implications for employers, according to HR Team Managing Partner, Martina McAuley.
She said: “A 6 per cent increase in the statutory minimum wage from €8.65 to €9.15 per hour is concerning for employers and will have a negative impact on many Irish businesses.
“The change which will take effect on January 1 next year will increase overall employment costs in firms with lower paid workers. The move may force employers to shorten the working hours of employees, particularly in sectors such as retail and hospitality.
“The increase will also be particularly difficult for small businesses which have no potential to pass on such cost increases,” says the employment law specialist, who is based in N. Ireland Science Park in Derry.
Ms McAuley said changes to employer PRSI - although welcome - would be overshadowed by the amendment of the minimum wage.
“The Budget’s reduction in employer PRSI costs does not go far enough to offset the hike in the minimum wage and as a result some small businesses will have no option but to reduce the working hours of employees, shed staff or shelve recruitment.”
She said another implication of this week’s Budget for employers is the introduction of new paternity leave measures.
“Statutory paternity leave of two weeks is to be introduced together with a new paternity benefit in respect of births from September 2016. Employers will need to ensure they make the necessary arrangements to meet these requirements,” Ms. McAuley added.
A number of measures were announced in Tuesday’s budget, with many receiving mixed reviews, including excise on a pack of cigarettes increasing by 50 per cent, pensions to increase by three euro per week for those aged 66 or over, Christmas bonus for those on Social Welfare increased to 75 per cent. and a fuel allowance increase of 2.50 euro per week.
Also announced was 2,260 new additional teaching posts and a 12 cent charge on ATM transactions to replace the current five euro stamp duty on ATM and debit cards.