The increasing and hidden costs of doing business in Ireland in 2024 and beyond
Did you know that a company with 40 employees that made a profit of €100k in 2023 will probably just about break even this year, even if they generate the same amount of income?
Why? The answer is simple – the potential increased costs of doing business in Ireland in 2024. Since the start of this year, we have seen a number of new initiatives introduced by the Government including new sick leave policies and an increase in the minimum wage, all implemented in an attempt to combat Ireland’s increased cost of living. While these initiatives aim to uplift workers and foster economic dignity, the burden on SMEs cannot be understated.
For example, a company with 10 minimum wage employees will be paying an additional €2.35k per full time employee (on minimum wage per year) – that’s an additional outgoing of €23.5k for the year. If this company made €25k in profit last year, that means they would just about break even in 2024.
In addition to this, the looming introduction of a ‘living wage’ for Irish employees in 2026 will add another layer of complexity to this equation, in addition to pension auto-enrolments beginning in 2025. Expanding sick leave policies will also further compound the challenges facing businesses.
The practical implications of these measures for businesses cannot be ignored.
In this delicate balance between worker welfare and business sustainability, the role of financial partners like Bibby Financial Services becomes increasingly vital. Companies are finding themselves grappling with mounting costs, which in turn squeeze margins and dampen prospects for growth and business viability. As a result, ensuring a business has a healthy cash flow to pay their liabilities is more important than ever.
And, as we look into the future, more government led initiatives are on the horizon, which will potentially further threaten the growth and sustainability of Irish businesses.
With a new Taoiseach and new government now in place, we must ask - who will be a champion for SMEs and business in Ireland?
While Taoiseach Simon Harris has indicated he will be doing more for SME’s, we know the devil is in the detail – which is, as yet, not forthcoming. Will Taoiseach Harris and Minister for Enterprise, Trade and Employment, Peter Burke, recognise the real and near immediate consequences of the cost of these new initiatives on smaller businesses?
Timing is everything - the introduction of new initiatives at Government level at this time of financial instability is of no benefit to an employee if the company they work for becomes insolvent by next year due to rising costs.
The onus cannot be on small and medium businesses to balance the cost-of-living crisis alone. As businesses brace for the financial shockwaves, it's imperative to seek solutions that prioritises the fiscal health of enterprises.
Bibby Financial Services Ireland stands as a beacon of support for Ireland’s SMEs, offering tailored financial solutions to navigate the turbulent waters ahead.
