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Employers warn of closures in 2024 due to rising costs

Increases to the minimum wage, changes to sick leave entitlements and a new pension auto-enrolment scheme are among a range of Government measures due to take effect in 2024.

Unions have welcomed the enhanced employee benefits but many businesses are warning that they will struggle to cope with the increased costs.

Childcare provider Elaine Dunne is getting ready to reopen after the Christmas break.

She is looking forward to welcoming the children back in January but she is not looking forward to something else the New Year will bring.

Ms Dunne is a member of ISME and Chair of the Federation of Early Childhood Providers.

She fears that increased costs will lead to further closures in her industry in 2024.

Ms Dunne said: “PRSI and minimum wage increases are big ones for us.”

Elaine Dunne fears that increased costs will lead to further closures in her industry in 2024

“Many providers are stuck in fee freezes so how are we supposed to pay these increases without having the money in the bank to do so?

“There is a real fear that it will put a lot of us out of business, we lost seven services over Christmas and five of them were in Cork.”

“The worry is how many other counties, rural and urban, are going to take a hit of closures because of all of these new costs that are coming in on top of us,” she added.

The cumulative effect of the new measures could increase employment costs for businesses by a third over the next two years, according to analysis by Excel Recruitment.

Increases in the national minimum wage, the introduction of the planned living wage, new sick pay entitlements, improvements to parent’s leave and benefit, the right to request remote working, hikes in PRSI and the new auto-enrolment pension scheme could push business costs up by 36%, the research found.

Business group Ibec estimates that the annual increase in labour costs arising from these measures will exceed €4 billion.

“The key issues here are around the fact that it is uncoordinated and it is all coming at the same time,” said IBEC’s Executive Director of Employer Relations Maeve McElwee.

“We are seeing the cumulative costs all landing more or less in January for lots of employers,” Ms McElwee said.

However, unions say that most of the measures being introduced in 2024 will benefit workers and amount to Ireland playing catch-up with our EU neighbours.

“Many of these things were signalled well in advance,” said Owen Reidy, General Secretary, Irish Congress of Trade Unions.

“It should also be remembered that these issues are really bringing Ireland into line with some of the basics that our colleagues across western Europe enjoy,” Mr Reidy said.

The Department of Enterprise, Trade and Employment said that the recently announced ‘Increased Cost of Business Grant’ has a fund of €257 million which will assist 143,000 businesses in early 2024.

“Government will continue to monitor what remains a challenging business environment and will continue to provide targeted and practical supports,” a department spokesperson said.

Business owners, like Ms Dunne, say that extra support will be needed soon with a year of higher costs fast approaching.


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