Impact of Minimum Wage Changes

At BPO we recommend to properly review the impact of the minimum wage increase you need to go through the following steps:

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1.?????? Review what the average hours per week are below the new minimum wage of €12.70.

a.?????? Number of employees is not sufficient you need to see how many hours are paid weekly at below the new min wage number.

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2.?????? As the full minimum wage difference is 12%, there is also a need to work out the average blended increase in min wage as staff who are above the current min wage but below the new minimum wage will get an increase of less than 12%.

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3.?????? You may need to factor in a Sunday premium into your minimum wage so your actual new minimum wage could be €12.80.

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4.?????? We have created a formula below to calculate what the effect will be on your overall pay % for the year.

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a.?????? Table 1 below shows that if 30% of your hours are below minimum wage your will see a 3.6% increase in your annual payroll cost.

b.?????? Table 2 – we have calculated for this example that the blended increase to minimum wage was 8% and so in this example if 30% of your hours is below the min wage then the increase will be 2.4% on your yearly payroll cost.

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5.?????? In Table 3 we have calculated that if prices cannot increase to match the increased cost then a business will need to look to reduce casual hours to avoid the increase. This works out at 4 hours less for every 39 hours paid of casual labour. This may be the only solution.

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Table 1

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Table 2

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Table 3