'It's a vicious circle' - Mayo employer warns shoppers could feel the impact of minimum wage rise

A Ballina business owner has said she was disappointed with Budget 2027 and had hoped it would’ve included more measures to help lower the cost of running a business.

Sheila Clarke, who runs Clarke’s XL on Pound Street in Ballina, said that while the increase in the minimum wage may look good on the surface, she warned the outcome will be an increase in prices on the shelves as businesses recoup the additional costs, describing the process as a “vicious circle”.

Starting on January 1, 2027, the minimum wage will go up from €14.15 to €14.94.

“There are lots of other ways that we could’ve helped our employees that would also help the business,” Sheila said.

Her initial reaction as a business owner and employer was disappointment that the Government had implemented the “obvious measure” of increasing the minimum wage.

“While we applaud the move in one way, at the end of the day, it is going to add considerable cost to businesses. As a retailer, we will have to find some way of recouping those costs. Inevitably it will end up leading to an increase in prices,” she said.

“It's a vicious circle in that, for us, every time there is a wage increase passed down, the money has to come from somewhere. That does lead to an increase in costs in our business."

Sheila believes more could have been done to bring down the costs of running a business, helping owners with their overheads while also allowing them to look after their employees and turn a profit.

“At the end of the day, if your business can't cover those costs, and that includes the wage bill as well, your business is in trouble,” she said.

“There has to be ways of making a profit in your business, being able to look after your business, look after your people, and keep your business vibrant.”

“There are a lot of measures in terms of reducing the cost of running a business that could certainly have been looked at. In our area there are phenomenal overheads and any number of them could have been revised."

For Clarke’s XL, Sheila gave the example of the licence fees the business must pay to sell tobacco products.

The licence costs €1,000, yet Sheila explained that the business does not get to choose the price at which it sells the products, whereas for other licensed products, such as wine, it can set its own prices.

“It's a massive dent in the profit of that particular category,” she explained. “Any other product that we have to be licensed to sell, we set our selling price. Whereas with tobacco we have no control, yet we are expected to pay this licence fee.” 

“It's things like that where the cost of doing business could have been looked at, not just increasing wages,” she added.

“It's an easy [way] for good PR, but at the end of the day it doesn't really help people. You are increasing wages, but it has a knock-on effect of increasing prices.”