The Low Pay Commission is expected to recommend an increase of almost 5% to Ireland’s minimum wage, according to media reports.

If accepted by Government and introduced in Budget 2026, the move would raise the statutory minimum wage from its current rate of €13.50 per hour to €14.15.

The proposal comes after a series of significant increases in recent years.

Since January 2020, the minimum wage has risen from €9.80 to €13.50 — an overall increase of 38% in just five years.

It rose by 7.6% in 2023 and a further 12.4% in 2024, making Ireland’s minimum wage the second highest in the EU-27.

However, the prospect of another hike has triggered alarm from industry groups who say many employers are already under severe financial strain.

Retail Excellence Ireland (REI), which represents the country’s retail sector, warned that further wage increases could have devastating consequences for jobs and businesses.

REI pointed to a 112% increase in store closures in Q2 2025 compared with the previous quarter, attributing much of the pressure to wage costs and other overheads.

Jean McCabe, Chief Executive of REI, said: “Ireland already has the second-highest minimum wage among the EU-27 countries, and the retail industry would be decimated by any further increase.

"Every business owner wants to see their employees well remunerated and looked after, because happy employees make for well-run businesses.

"But the harsh reality is that many retail employees will not have jobs if this increase in the minimum wage goes ahead.

"Retailers cannot be expected to shoulder these crushing cost increases alone. If the Government believes minimum wage increases are necessary social policy, then it must share the financial burden through meaningful tax relief - including reductions in VAT and PRSI rates for businesses.

"We already contend with numerous other prohibitive costs such as the high standard VAT rate and energy bills, while operating on razor-thin margins.

"Recent ESRI research confirms what we've been warning about - minimum wage increases are already forcing employers to cut worker hours.

"If this call is made to increase the minimum wage yet again, then the Government must either rebuff it in the strongest possible way, or provide immediate tax relief to prevent widespread job losses across the retail sector.”

The Small Firms Association (SFA) also voiced strong opposition.

Reacting to the proposed increase, SFA Director David Broderick said: “The proposed increase in the National Minimum Wage flies in the face of reality.

"Spiralling business costs are impeding small businesses from hiring more staff, expanding operations and making further investments into their businesses.

"Many small businesses will not be able to cope with this latest hike in the minimum wage as it will raise all other wage brackets on a pro rata basis.

"The minimum wage has increased every year since 2017.

"After several turbulent years, what small business owners need now is breathing space. If government choses to accept this proposal, it will suffocate small businesses.”

He added: “The Small Firms Association has renewed its call for the Government to introduce a temporary PRSI rebate in Budget 2026 to help small business owners cope with rising labour costs.

"The SFA has been calling for this rebate for over a year and has included it in its recent pre-budget submission.

"Failure to act on this will devastate the livelihoods of small owners in communities across the country.”

The Government is expected to consider the Commission’s recommendations in the run-up to Budget 2026 in October