Business groups have expressed their concern about the impact of increasing the minimum wage on small businesses ability to remain profitable.

Yesterday, Taoiseach Leo Varadkar announced that the minimum wage is set to rise to €9.55, an increase of 3.2%. The increase comes after recommendations from the Low Pay Commission. The increase will come into effect from January 1st, 2018. It will be the fourth increase in the past five yea Taoiseach Leo Varadkar , speaking at the announcement yesterday said “It’s an increase well ahead of inflation, well ahead of average wage growth in the economy. It is modest. It works out at about an extra €12 per week but it is still an important step in the right direction,” he said.

Mr. Varadkar said the cost would fall primarily to private sector employers in industries such as retail and hospitality. He said they had more than five months’ notice before the increase took effect on January 1st, and at least 150,000 workers will benefit.

Business groups representing employers in retail and hospitality industries have pointed out that Ireland’s minimum wage is already one of the highest in Europe and have claimed there is “no economic basis” for a 30 cent per hour increase in the minimum wage as Brexit looms on the horizon.

In a statement following the announcement, employers’ group Ibec said the increase was not justified and warned that it came at a time when businesses were exposed to competitive threats from Brexit.