Following the recent minimum wage increase announcement, Donna Ahern spoke with Nikki Murran, director of Grocery Retail Recruitment at Excel Recruitment, about its impact on the grocery retail industry.
Finance Minister Paschal Donohoe announced Budget 2026 on Tuesday, 7 October, outlining several measures that will directly affect the grocery retail industry. Among the changes introduced were a 50-cent increase on a box of 20 cigarettes and the introduction of a new tax of 50 cents per millilitre on e-cigarette liquids, effective from 1 November 2025. Petrol and diesel prices will also rise, adding further pressure to transport and logistics costs. In a move that will be welcomed by some, the VAT rate on food will be reduced from 13.5% to 9%, starting 1 July 2026.
However, the most significant — and potentially most challenging — announcement is that the National Minimum Wage (NMW) will rise to €14.15 per hour from 1 January 2026. This change, while aimed at supporting workers, is expected to place considerable financial and operational strain on businesses across the sector.
To better understand how this will impact the industry, ShelfLife spoke with Nikki Murran, Director of Grocery Retail Recruitment at Excel Recruitment, for her insights on the potential ramifications.
“The announcement of another minimum wage increase — this time a rise of €0.65, or 4.8%, to €14.15 per hour — will land hard for retailers. On paper, 65 cents might not sound seismic, but in the context of recent history, it’s another significant escalation on top of several steep hikes in a row,” she notes.
“To put it in perspective, since 2020, Ireland’s minimum wage has risen from €10.10 to €14.15 — that’s an increase of 40% in six years, compared to just 17% over the entire previous decade (2010–2020). For a standard 39-hour contract, that means a payroll jump from €20,500 in 2020 to €28,700 in 2026.”
“For a single staff member, that’s manageable; for a convenience store with 30 staff, the additional wage cost can easily exceed €30,000 annually once you include PRSI, holiday pay, and employer pension contributions. A supermarket with a team of 80–100 is looking down the barrel of a €90,000+ increase to their annual labour budget. And this is before any ripple effect spreads across the rest of the store,” Murran says.
“The challenge for retailers is that these rises come without any meaningful increase in productivity or margins. Grocery operates on tight margins, and there’s simply no buffer waiting to absorb these increases. While the principle of fair pay is sound, the pace of these hikes — four in four years — leaves very little breathing room for employers to plan, invest, or recover between increases.”
Impact on recruitment
“This increase will no doubt impact recruitment within the grocery retail sector, particularly for entry-level roles. The effect on recruitment is already visible. Each statutory increase immediately raises expectations at the bottom end of the pay scale, blurring the traditional pay gap between entry-level and supervisory roles.”
Three key recruitment challenges
Murran outlined that for employers, this creates three key recruitment challenges:
Reduced differentiation: A new hire with minimal retail experience now earns almost the same as someone who’s been in-store for several years. That makes retention harder, as the reward for loyalty or experience shrinks.
Compression at the bottom: The entire salary ladder tightens, so employers must raise those above entry-level to maintain fairness and hierarchy.
Cost-per-hire inflation: With higher wage floors, the value of an inexperienced candidate declines relative to cost. Employers end up paying significantly more for the same level of skill or output as before.
“This puts particular strain on independent retailers and smaller symbol groups, who already face higher recruitment costs and lower brand leverage than the big multiples. For them, entry-level is fast becoming an expensive level.”
Impact on SMEs
So, how will this wage hike affect small and medium-sized (SME) grocery businesses compared to larger chains?
“Large chains can absorb wage increases more easily because they can spread higher costs across centralised budgeting, automation, and shared back-office functions. They also have scale to negotiate better supplier terms and can offset rising labour costs through efficiencies elsewhere in the business,” Murran highlights.
“For small and medium-sized retailers, it’s a very different story. They face the exact same hourly increases but with far fewer levers to pull. Their margins are often just as tight, their cost base less flexible, and they rely heavily on personal service to compete with the multiples.”
Unintended consequences
There is growing concern that the increase may lead to unintended consequences, including reduced staff hours and a slowdown in hiring.
“We’re already seeing the signs — not so much slower hiring, but more strategic hiring for every replacement. There’s now a laser focus on staff costs, weekly labour cost reviews, and new scrutiny on hiring budgets,” says Murran.
Looking ahead to 2026, here’s what the industry can expect to see:
Tighter rosters: Expect greater scrutiny on every scheduled hour. Fixed contracts may give way to more flexible shifts that can be scaled up or down depending on trading patterns.
Automation creep: Each wage rise strengthens the business case for technology — from self-checkouts to AI-based stock management — gradually reducing reliance on manual labour.
More deliberate replacement hiring: When staff leave, replacements aren’t hired automatically. The focus is shifting to productivity and ROI per employee. “It’s no longer about filling gaps quickly, but about hiring smarter, based on the store’s real needs. This is where we’re seeing a strong demand from our clients since the last wage increase — ensuring every new addition is worth the higher salary they now command,” says Murran.
Salary advice
Will the increase in the minimum wage change how she advises her clients on salary benchmarking and workforce planning?
“Absolutely,” Murran asserts. “Many of our clients rely on us for market analysis and salary benchmarking, and looking ahead to next year, here’s what I’ll be recommending.”
Adopt deliberate, value-driven hiring: ensuring every new addition genuinely strengthens performance and delivers a return on investment.
Refresh salary bands: now so they still ladder above €14.15 in 2026. It’s essential to protect pay differentials and avoid compression between entry-level and supervisory roles.
Use the widened USC 2% band: to communicate net pay clearly to staff. A full-time minimum wage earner will now see fully within that band, so it’s worth showing employees their true take-home improvements.
Lock in structured progression: so trainee and duty manager roles don’t collapse into the new floor as it rises. A clear development pathway protects morale and retention.
Invest in in-house training: to upskill and empower these now-more-expensive recruits.
Wage compression
No doubt, the wage increases could influence wage expectations across the sector, particularly between entry and mid-level positions.
“This is happening already,” she explains. “Pay expectations and conversations are rising across the board, not just at the base level.”
“Let’s take a sales assistant earning €14.15/hour — that same person might have earned €10.50/hour only a few years ago. A senior assistant earning €13.50/hour or a €30,000 salary now finds themselves overtaken. To maintain parity, that senior or duty manager will need to earn €17–€18/hour just to maintain the same gap.”
“That’s a €4/hour increase, or roughly €8,000 extra annually for one mid-level employee. Multiply that across an entire management team, and you can see how the ‘ripple’ quickly becomes a wave.”
“The result is that even roles never intended to be linked to the minimum wage — trainee managers, assistant managers, fresh food supervisors — all require upward adjustments to preserve internal equity and morale. Otherwise, you risk new hires earning nearly as much as their supervisors, which is demotivating and destabilising.”
“In practice, this means a 5% minimum wage increase often translates into an 8–10% increase across total payroll costs once knock-on adjustments are made. Retailers can’t simply freeze those higher-level salaries without risking turnover.”
Team values
Murran highlights that every retailer she works with truly values their teams and wants to see staff paid fairly and rewarded for their hard work.
“Nobody in this industry is arguing against fair pay,” she points out.
“If this were the only recent cost increase, it would be far easier to shoulder.”
“But this latest hike comes on top of so many other pressures — continuous increases in energy, insurance, and compliance costs — alongside the Deposit Return Scheme, new pension auto-enrolment, PRSI increases, and the imminent carbon tax. For many retailers, this keeps pushing margins to breaking point.”
“And yet, despite all of that, we still have an army of small, motivated, and dedicated retailers showing up day after day, delivering exceptional standards and outstanding service. Their resilience, passion, and pride in what they do are what keep the Irish grocery sector running strong,” Murran concludes.
USC increase
The increase in the 2% USC band to €28,700 is a notable change for low to middle-income earners, potentially offering modest relief by reducing the portion of income subject to higher USC rates. However, its overall impact may be limited when weighed against ongoing inflation and cost increases.
“It helps at the margin for lower earners. A full-time minimum wage worker at €14.15 earns about €28,696, which nearly fits under the new €28,700 ceiling (once they are on 39 hours or less). That prevents them tipping into the higher USC rate in 2026, which is sensible. But it doesn’t offset the full employer cost increase; it just limits the employee’s USC exposure,” she explains.
Those budget measures raise important questions as to whether they strike the right balance between supporting workers and managing business burden in the retail sector.
“Protecting low earners is important, and aligning the USC bands is logical,” she maintains.
“But with wage floors advancing by around 40% since 2020, many grocers operating on slim margins are absorbing a lot of structural cost with limited offset elsewhere. Without parallel measures that lower operating costs or raise productivity, such as insurance relief, targeted employment supports, or genuine red-tape reduction, this keeps pushing stores towards tighter margin, asking how much is really left to squeeze”.
