As president of the Restaurants Association of Ireland I am also a restaurant owner in Sligo and an employer of 34 people. I'm very passionate about expansion and job creation throughout Ireland and in particular rural Ireland.
I oppose the increase in the national minimum wage for a number of reasons.
As an employer I know the minimum wage is a stepping stone into the world of work. It offers people a path to progress in a career and to earn higher wages in the future. However, if the minimum wage is increased, I, as an employer, would find it too expensive to give these people their first job. Companies across the country won’t want to employ any inexperienced workers, so it will become impossible to climb on to the career ladder. It would also result in a staggering increase in my wage bill each year. Where does the Government think I’ll be able to recoup this?
I would welcome a reduction in PRSI or the universal social charge (USC) and I believe the Government must understand that this is the way forward, before implementing any minimum-wage increase. The Government is drawing a red line through job creation, expansion and competitiveness with this proposal.
Some people are not aware the restaurant industry is highly labour-intensive and wage costs account for a significant part of total operating costs. It is estimated that in the hotel and restaurant sector labour costs account for between 35 per cent and 40 per cent of input costs and about 17 per cent of the sector’s workers are on the minimum wage.
Fragile recovery
In addition, let’s not forget how seasonal this business is. Given the still fragile nature of Ireland’s recovery and the difficult environment in which the restaurant sector still finds itself, increasing the national minimum wage now would have a push-through effect on wages up the line. Restaurants are struggling to keep their doors open and come winter they will close – have we already forgotten what we have gone through over the past seven years?
Ireland is still showing only green shoots of recovery from the recession. The hospitality sector is just breaking even each year and we are nowhere near back to being a profitable industry, as we were before the crash. So we need to be cautious about this increase.
A recent survey of 214 countries found Ireland had the seventh highest minimum wage, at more than €18,000 a year, ahead of France, the Netherlands and Canada. The United Nations' recent Global Wage Report also showed Ireland's high wage rate in comparison with the rest of the world. Ireland came fourth behind Australia, Switzerland and Denmark when it came to hourly rates.
Youth unemployment
Our youth unemployment figure still stands at a massive 21.6 per cent. We should fear losing even more young people to emigration if a rise in the minimum wage made it more difficult for employers to give young people work. The danger is of a lost generation of young people facing the struggle to find employment, leading to further emigration.
We simply can’t afford to price these people out of work – it’s just not fair.
A rise in minimum wage now would be disastrous for restaurateurs and for small businesses starting out. We would not be able to remain as competitive and offer value for money. This would lead to us pricing ourselves out of business and hence lead to closures and job losses.
We as an industry are currently creating jobs and supporting our slow recovery. But growth must happen first across the country before an increase in the minimum wage should be even considered.
Ireland’s cities are starting to buzz again; but there are also many closures of small businesses and restaurants in villages and small towns. There is a two-tier recovery and this is widening between urban and rural Ireland.
So please let us look at this matter clearly, instead of with the blinkered vision of the Government. This increase fits in perfectly with the run-up to a general election. It certainly has all the hallmarks of damage limitation and a desire to “ give something back to the people”. God knows the Government has crippled us with the USC and water charges.
But if the Government wants to redeem itself it must understand Ireland, especially rural Ireland, is still fragile. It is about time the people in power remembered the rest of Ireland. It’s time somebody cared and did something about rural Ireland. It’s not a desert wasteland. But it will be if the Government fails to repay rural Ireland for what it suffered during austerity.
Increasing the minimum wage while not investing in job creation and boosting tourism would be detrimental to the restaurant industry and to other small and medium-sized enterprises.
Anthony Gray owns Trá Bán in Strandhill, Co Sligo and Eala Bhán in Sligo town. He is also president of the Restaurants Association of Ireland