CEO Update: Ibec's campaign to address cost challenges

Dear Member,

Ibec understands the major cost challenges facing business at this time.

It is an issue reflected in our day-to-day engagement with our membership and crystallised by our latest leadership sentiment survey which found that the increasing cost of doing business is the single most significant challenge for business leaders heading into 2024.

Ibec has carried out extensive research to understand the scale of this problem. We estimate that the Government's labour market policies will add €4 billion annually to the wage bill of Irish employers and result in labour cost increases of between 25% and 30% in the most impacted firms.

I have written to Government to express our members’ concerns about the escalating cumulative costs affecting businesses right now and highlighting that the viability of many small enterprises is becoming an increasing worry.

Ibec’s firm position is that the current policy path by Government represents the biggest single change in Irish labour market policy in decades and now risks creating the most significant cost competitiveness challenge faced by Irish businesses since the pre-financial crisis period.

In the letter to the Government, Ibec has called on the Government to:

• Pause all further labour market policy measures which involve a direct or indirect cost to employers. Employers need an immediate signal from Government that the current trajectory of increasing labour cost measures will not continue until impact assessment and coordination is agreed upon. In the absence of this, we fear that many more viable businesses will be lost as more business owners and managers struggle to see viable business prospects in an ever-increasing cost environment.

• Publish a full impact assessment of increased labour costs on business arising from the totality of recent labour market policy measures. Most of the recent labour market policy measures have been introduced without sufficient regulatory impact assessment. In particular, there has been no consideration given to the cumulative impact of the scattergun approach of labour market measures introduced by a range of different Government departments and agencies. The impact assessment needs to clearly set out the aggregate impact of all these measures and the likely consequence for future business viability and employment.

• Commit to a new ‘Competitiveness Charter’ setting an annual ceiling on the total amount of additional labour market costs which will be imposed on business in any single year. The uncoordinated approach across Government Departments is resulting in exceptionally large cumulative cost increases for many employers which are simply not sustainable. A more effective and consultative coordination mechanism is needed within Government to ensure that future changes can be implemented without damaging business viability.

The letter which we issued to Government is available to read in full here and forms part of a wide-reaching lobbying campaign to address this issue.

I will continue to keep you updated of developments on this critical issue and our engagement and advocacy work on your behalf.

As always if you have any feedback or queries, please feel free to get in touch.

Regards,

Danny McCoy

CEO

Ibec