THERE have been repeated dark warnings of late that Westport will be faced with a raft of business closures unless the current downswing in retail activity is reversed. And most observers would accept that the dire forecasts are no longer a case of crying wolf; there is a crisis and there are no simple solutions.
Much is made of the argument that last season’s woes were due to a third of Westport tourist accommodation being negated by its being set aside for immigrant needs. But there is more at play than that.
Small businesses struggling with labour costs, VAT, commercial rates and increased overheads have little option, if they are to survive, but to up their prices, and this in turn leads to the charge that Westport is becoming unaffordable. The vicious circle creates its own momentum; it’s hard to get full-time staff in the hospitality sector because wages are low, which means those who might be minded to work in the sector are unable to afford the cost of accommodation.
It might be cold comfort for Westport to say that the town, and its businesses, are not alone in their dilemma. Domestic businesses all over Ireland are under pressure, not least because of rising costs imposed by a range of government measures. The planned increase in the minimum wage might be challenging enough on its own, but it brings its own additional costs to an employer in terms of PRSI, coupled with the new expense of pension auto enrolment and extended sick pay entitlements.
One of the unintended side effects of being a high-tech economy is that wage rates become skewed across the general economy. If the glossy multinationals think nothing of paying ultra generous salaries, then the effect trickles down to the lower reaches of the jobs market, and everyone starts looking for a slice of the good times.
Nobody can quibble with the Government objective of eliminating ‘low wage’ employment. The commitment is to increase gradually the minimum wage to a national living wage by 2026. In real terms, that means a wage pegged at some €15 per hour, a prospect to send shivers down the spine of restaurant, café and service providers who, even as it is, are barely keeping their heads above water.
And that won’t be all. New proposals to increase wage levels for those coming here to work on employment permits have recently been unveiled. The intention is to provide a floor on earnings for those coming here from outside the European Economic Area. The idea is well intentioned, but the fear is that little attention has been given to the consequences.
Many of these workers will be employed in the health care and nursing home sector, which has seen a spate of closures in the past year and where, according to a PWC survey, one third of the operators actually lost money in 2022.
The proposals – which for the moment, following an outcry, have been put on hold – are that a healthcare assistant would earn a minimum of €39,000 by 2026. It would take no genius to realise the knock on effect if that were to happen. A new bench mark would be set for wage levels, and in a competitive labour market, the gap between an employee’s expectations and what the employer can afford to pay would become chasmic.
It is inevitable that the Government will be forced to take some alleviating measures to help small businesses to survive. Given what lies ahead, the call to revert the VAT rate back to 9 percent would seem a reasonable one. The danger is that, for many, when it comes, it will be too little, too late.
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