Two major retailers go into examinership as Government raises minimum wage by 6%
Another double whammy
News reaches ISME this lunchtime that a 2nd major retailer, Mothercare Ireland, has gone into examinership following on from yesterday’s news that an examiner was appointed to the company operating 13 Best Menswear stores and two other fashion stores in Ireland, employing around 135 people. This, despite the much vaunted economic ‘recovery’ that the government has used as a nonsensical excuse to raise the minimum wage by 6%. Coincidentally we blogged an article from Davy Chief Economist, Conall Mac Coille, who had this to say and which was written well before the Mothercare Ireland news broke…
What Conall Mac Coille wrote
Government ministers have already indicated that the Commission’s recommendations will be implemented, applying to all workers, of whom around 9% have earnings close to the minimum. The UK example, where the planned increase in the mini mum wage from £6.50 to £7.20 applies only to over 25s, has not been followed. The report concedes that Ireland’s minimum wage is already high by international standards, with only France, Belgium, Luxembourg and the Netherlands higher among euro-zone economies.
The retail sector, employing 20% of employees earning the minimum wage, will be particularly exposed. Despite the recent strong recovery, the value of retail sales in May was still 22% off peak levels. The minimum wage will affect small and medium-sized enterprises (SMEs) which are only slowly joining in the recovery and still paying down boom era debts to repair strained finances. In the year to Q1, SMEs reduced their bank debt by an enormous 10.1%, and by 7.0% excluding property-related sectors.
Yesterday’s announcement should be seen in the context of political developments. As set out in the report we [Davy Stockbrokers] commissioned from political scientist, David Farrell, ‘Outlook for the Political Landscape 2015-2017’, the key threat to establishment political parties has been the rise of Sinn Fein, whose support base is disproportionately drawn from low-income, urban and younger voters. That is the same demographic that will tend to benefit from higher minimum wages. ENDS
What the lunatics are now up to
There are clearly two Irelands. There’s the one (SMEs) struggling to keep it altogether and there’s the political one (Oireachtas Éireann) that has gone on its holidays until Tuesday 22 September. There’s the entrepreneurial Ireland which we know, because we represent them, that cannot afford a 6% increase in the minimum wage and there’s the political Ireland that will use Business Ireland’s money that could bankrupt those SMEs, to buy votes. There’s the Facts of Life Ireland where 200,000 remain unemployed and the Fantasy Ireland where unions fight not for the most vulnerable, but for those who pay their union dues.
Can anyone tell ISME if the Irish for self-interest is Mé Féin?