ISME has today written to Taoiseach Leo Varadkar to highlight issues around the impact of the proposed 12.4% increase on the National Minimum Wage in 2024.
The association warned that the measure will create a financially unsustainable situation for many small and medium businesses across the country.
ISME represents over 10,000 small and medium enterprises in Ireland, either directly or through 32 affiliated associations and trade bodies.
In today's letter, ISME chair Marc O'Dwyer said that while very few of ISME's members pay staff at the National Minimum Wage level, the rate serves as an important benchmark and relativity for most incomes up to abouty €30,000 a year.
He also noted that it marks the largest proposed increase in the NMW since 2012.
The proposed increase comes on top of several other payroll cost increasing measures introduced or about to be introduced.
These include the St. Brigid's Day Public holiday introduced in 2023, three days of Statutory Sick Pay which will rise to five days in January, seven days in 2025 and ten days in 2026, gender pay-gap reporting and five days of Domestic Violence Leave.
While he said these employment measures are "laudable and welcome", Mr O'Dwyer said the cumulative effects of these entitlements and increases have not been adequately evaluated.
There appears to be no regulatory impact assessment carried out on them, he added.
"In the absence of the opportunity to adequately represent these views in the Labour Employer Economic Forum (LEEF), we fear your government might press ahead with an unaffordable and unsustainable increase in payroll costs in January," Marc O'Dwyer told the Taoiseach.
"The retail members of ISME estimate that the 12.4% wage impact of the NMW will add between 1% and 2.5% to grocery bills, depending on store size," he added.
He said he understands that some of the impetus for NMW increases comes from the EU under the directive for adequacy of the minimum wage.
"However, as we pointed out to the Department of Enterprise in our submission on the NMW 2024, the use of the 50% of mean/60% of median metrics are clearly problematic in an economy where there is such a wide distribution in incomes by enterprise size," he said.
"The current earnings in small business average €720.33 per week, or €37,457 per annum, and we genuinely feel the hard work done by the Low Pay Commission lacks context around the fact that the majority of Irish workers are employed by SMEs, with earnings that are reflective of this, and not the exceptional premiums earned in FDI businesses and the public service," he wrote.
He also said that many of ISME's affiliated groups, in areas such as childcare and nursing homes, operate in sectors where the overseeing department regulates the pricing in the sector, or caps commercial charges within it.
"Whilst trying to negotiate rate increases already in a difficult climate, with their parent department, these services will enjoy no scope to negotiate payment of the NMW," he added.
