Minimum wage impact on other salaries

C

cally1990

Registered User
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I'm more curious than anything.

Minimum wage is going to 13.5 p/h in Jan 2025

That's 27,378 per year (based on 39 hour week)

It's the 2nd year in a row of min wage increase (and no doubt people need it)

For comparison, in 2023 , it was €22,916 (€11.30 p/h)

An increase of €4462 or 19.4% between 2023 and 2025

However , jobs that were previously in the 30k to 35k, 35k to 40k, 40k to 45k etc are now essentially having the earnings gap narrowed and it got me thinking that if minimum wage jobs are increasing , does it mean in theory "higher" skilled positions should also be moving up when offered to candidates ?

Are job seekers seeing it?

*I'm really only talking about new roles being offered.

*I appreciate those in positions already will need to ask for a raise

Just thought it was quite interesting when I saw the increases announced and it got me thinking.
 
There has been massive capital price inflation over the last 20 years with little or no growth in wages in the developed world. In real terms that means that more of the wealth that is being created is held in capital instead of labour. Wage growth is inevitable, across the developed world.

The increase in the minimum wage will have aa knock-on effect but it's only part of the picture.
 
Yes they will have to try and move all other wages that are close to the minimum wage. The problem is that most of those jobs are in the domestic sector which is already struggling, we are seeing a wipeout in the hospitality sector and fall in tourism numbers due to high costs here and lack of accommodation (again caused by government interference in market block booking so much capacity). If we are so reliant on foreign multinationals we shouldn't be undermining our own domestic economy
In some ways the corporation tax bonanza is damaging the domestic economy because it is making the state too large and their interference too big . We saw in the recent budget how much of that bonanza was thrown into welfare payments
 
joe sod said:
In some ways the corporation tax bonanza is damaging the domestic economy because it is making the state too large and their interference too big . We saw in the recent budget how much of that bonanza was thrown into welfare payments
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Great point.
 
joe sod said:
Yes they will have to try and move all other wages that are close to the minimum wage. The problem is that most of those jobs are in the domestic sector which is already struggling
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Does anyone have any information on what proportion of costs labour makes up, on average, in the hospitality sector?
 
joe sod said:
I think its 40 to 50% and food and drink purchases another 40 % or so, very tight margins,
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So rent, rates, insurance, utilities etc combined are all around 10-20%? If that's the case why were they all whinging about energy costs?
 
Purple said:
So rent, rates, insurance, utilities etc combined are all around 10-20%? If that's the case why were they all whinging about energy costs?
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I don't know exactly, I just heard a restauranter saying that figures for Labour were circa 40% and food ,drink was another 40% , obviously energy aswell that they were only working with very thin margins that's why vat cuts back to 9% were essential in his opinion
 
Purple said:
So rent, rates, insurance, utilities etc combined are all around 10-20%? If that's the case why were they all whinging about energy costs?
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Well if the cost of an essential and financially material utility jumps sufficiently strongly to wipe out your profit margin and then some, of course you're going to complain. Especially when the increase is driven largely by public policy.
 
T McGibney said:
Well if the cost of an essential and financially material utility jumps sufficiently strongly to wipe out your profit margin and then some, of course you're going to complain. Especially when the increase is driven largely by public policy.
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No argument there but the narrative was that it was an overwhelming cost. If it, along with rent, rates and insurance, constitute a combined 10% of so of your costs then you should probably be looking elsewhere to find a margin.
 
Purple said:
No argument there but the narrative was that it was an overwhelming cost. If it, along with rent, rates and insurance, constitute a combined 10% of so of your costs then you should probably be looking elsewhere to find a margin.
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Your basing you analysis on one anecdotal post above about the breakdown of hospitality business costs?

Minimum wage impact on other salaries

I'm more curious than anything. Minimum wage is going to 13.5 p/h in Jan 2025 That's 27,378 per year (based on 39 hour week) It's the 2nd year in a row of min wage increase (and no doubt people need it) For comparison, in 2023 , it was €22,916 (€11.30 p/h) An increase of €4462 or 19.4%...
www.askaboutmoney.com
 
No, I'm asking questions to find out some information. I've nowhere near enough information or sectoral knowledge to conduct any analysis.

My bias here is that I don't like seeing the lowest paid people in the chain being blamed for restaurants and other hospitality businesses closing down.
There was lots of noise previously about rent and rates and insurance. Now it's the minimum wage. I'd like to know what proportion, on average, each makes up for businesses in the sector. If the data shows that it is appropriate to do so then I'd rather see the guns pointed at rents and insurance rather than the low paid.
 
Purple said:
Does anyone have any information on what proportion of costs labour makes up, on average, in the hospitality sector?
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I am not answering your question directly here, sorry.


Maybe five years ago, I spoke to the head chef of a pub-restaurant in Sligo town.

He was asked to achive a 74% gross margin, i.e. food cost 26%.

He was hoping to achieve a 75% gross margin, i.e. food cost 25%.


A restaurant in London called Fallow make 80% gross profit margin on a cod's head dish, although they state that that GP is higher than typical, and compensates for other dishes like steaks where the GP is less than average.
 
The Drink Industry Federation commissioned a report on the very topic.
Full report here.

"Based on CSO data for 2019, the cost of sales on a sectoral basis ranges from 30% of turnover to 36.4% for hotels, restaurants and public houses. Labour cost on a sectoral basis ranges between 28.9% and 33.3%. Other operating expenses range between 22.2% and 25.8%."
 
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