Ireland this month hiked the national minimum wage by 12% to 12.70 euros, increased income thresholds for work permits and broadened statutory sick pay entitlements.
The government also plans to increase employer Pay-Related Social Insurance, introduce pension auto-enrolment and extend parents' leave later this year.
The Irish Business and Employers Confederation (Ibec) said this represented the biggest single change in Irish labour market policy in decades and that firms in the most exposed sectors expect their wage bills to jump by around 25% over the next 24 months as a result.
"We can already clearly see through our membership network that business failures, particularly in the SME sector, are rising rapidly," Ibec chief executive Danny McCoy said in a letter to Prime Minister Leo Varadkar that the group published on Monday.
Business insolvencies in Ireland rose by 32% year-on-year in 2023, but were still below pre-pandemic levels. Accounting firm PricewaterhouseCoopers, which compiled the figures, expects a similar increase this year and a return to the 20-year average of annual closures.
Ibec said that 74% of business owners it surveyed last month regarded the increasing cost of doing business as the single biggest challenge heading into 2024.
The group said the paused measures should include planned further minimum wage increases towards a national living wage, further increases in work permit income thresholds and any other additional leave or regulatory costs.
The government introduced a 250 million euro package late last year to help alleviate some of the costs, offering firms grants of up to 5,000 euros each this year.
(Reporting by Padraic Halpin; Editing by Alex Richardson)
