Press Release

Dublin, March 4th – Ireland’s hospitality sector is under increasing financial pressure following the latest rise in the national minimum wage, which jumped from €12.70 to €13.50 per hour on 1 January 2025. With further increases expected as the government moves towards a living wage of which currently stands at €14.75, significantly above the current minimum wage, businesses in the sector—already grappling with tight margins and staffing challenges—must take urgent action to manage rising payroll costs.

David Bolger, Partner, Advisory at HLB Ireland, warns that the impact of wage increases extends far beyond minimum wage earners, putting hospitality businesses in a particularly vulnerable position.

“For hotels, restaurants, and pubs, wages can account for up to 40% of turnover. The challenge isn’t just the minimum wage itself—it’s the knock-on effect across the entire pay structure. Businesses are pressured to maintain wage differentials, leading to rising payroll costs at all levels.”

Escalating payroll costs & PRSI implications

In addition to higher wages, employer PRSI contributions increased on 1 January 2025 to 8.9% for earnings up to €527 per week and 11.15% for earnings above this threshold. From 1 October 2025, these will rise again to 9% and 11.25% respectively, adding further financial strain.

Beyond PRSI, higher wages also mean increased holiday pay, sick pay, pension contributions, and other statutory entitlements—all placing growing pressure on already stretched payroll budgets.

“For hospitality businesses, absorbing these costs isn’t straightforward. Many will need to look at menu pricing, operational efficiencies, or restructuring staff hours to remain viable,” says David.

Hospitality & tourism at risk: higher costs could impact competitiveness

With Ireland’s hospitality sector facing staffing shortages and rising overheads, increasing wage costs could directly affect pricing and service levels. Many businesses may be forced to pass on costs to consumers, potentially affecting Ireland’s competitiveness as a travel destination.

“We are hearing real concerns from business owners about how this will affect Ireland’s tourism appeal. If accommodation, food, and service costs continue to rise, it could impact visitor numbers and overall sector growth,” David adds.

Preparing for the transition to a living wage

The government plans to transition to a living wage of €14.80 by 2026, so hospitality businesses must prepare for continued wage rises.

“The shift to a living wage is a significant policy change and businesses that don’t prepare risk serious financial strain. Hospitality owners must take a proactive approach—whether through pricing strategies, operational efficiencies, or technology investments—to sustain profitability,” says David.

Upcoming auto-enrolment pension scheme adds further costs

Alongside rising wages, businesses must also prepare for the introduction of Ireland’s new auto-enrolment pension scheme in 2025, which will introduce mandatory employer pension contributions.

“Between wage hikes, increased PRSI, and pension auto-enrolment, hospitality businesses face an unprecedented rise in payroll costs. Planning is essential to ensure long-term financial stability,” David advises.

Next steps for hospitality businesses

With cost pressures intensifying, monitoring margins is now more critical than ever. Keeping up-to-date management accounts and maintaining a clear understanding of your business’s financial position will be key to navigating these changes.

HLB Ireland is working with hospitality businesses nationwide to help themtrack profitability, assess cost pressures, and implement workforce strategies to protect their bottom line.

For more information, please contact the team at HLB Ireland, today.