Living Wage Delay in Ireland

The recent government announcement that Ireland’s national living wage implementation will be delayed from 2026 to 2029 has sparked mixed reactions with many small and medium-sized employers expressing relief, but also ongoing concern about what lies ahead.

At MSS The HR People, we support SMEs across all sectors who are already feeling the squeeze from rising labour, insurance, and energy costs. While fair pay is a goal shared by many employers, the pace and scale of change matter.

So what’s Changed?

Originally scheduled for full rollout by 2026, the living wage, which is set at 60% of the median wage (around €14.75/hour), will now be introduced gradually with a new target date of 2029. The current national minimum wage is €13.50, meaning many employers would have faced steep annual increases to meet the new threshold.

Enterprise Minister Peter Burke acknowledged that requiring an 8–9% increase in wages in a single year would place "significant cost burdens" on businesses, particularly in sectors with tight margins such as hospitality, retail, and care, where many SMEs operate.

Concerns from SMEs

Many of our clients in the SME sector have voiced real concern about the long term affordability of the living wage, especially in a fragile economic environment:

• Profit Margins Already Under Pressure: Rising operational costs, combined with increased wage bills, may make it harder for SMEs to invest in staff development, innovation, or even remain viable.
• Risk of Job Losses: Some small employers may be forced to cut hours, reduce headcount, or delay recruitment to afford wage increases.
• Inflationary Impact: There are concerns that higher wages could further fuel inflation, driving up prices for consumers and making wage increases feel less impactful for employees.
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What Should Employers Do Now?

While the delay provides breathing room, SMEs still need to plan strategically for future compliance with living wage requirements. Here’s how we can help:

• Review Pay Structures: We can help you benchmark wages against industry standards and identify where adjustments may be needed over time.
• Scenario Planning: Model the financial impact of phased wage increases so you can make informed decisions about resourcing and pricing.
• Alternative Retention Strategies: Where wage increases aren't immediately feasible, we support employers in boosting retention through benefits, flexible work options, and strong internal communications.
• Compliance & Risk Guidance: With regulations evolving, we’ll help ensure your pay practices align with both current and future employment law obligations.

 A Balancing Act

While the government’s decision acknowledges the real financial strain on SMEs, the living wage is still coming, just on a longer timeline. For employers, the key is to act now, while there is still time to adapt gradually rather than face abrupt changes.

If your business is unsure how to prepare or is already feeling stretched, we’re here to help.

Talk to MSS The HR People for tailored, practical HR advice that understands the realities of running an SME.

Email:info@mssthehrpeople.ie Ph: 018870690