One-third of restaurants face closure within next six months
Published 03/02/2010 | 05:00
RESTAURANTS are warning that one in three will close within six months if the Government fails to take action to help the sector.
Eighty per cent of restaurants are operating at a loss, but Irish workers in the sector are on the highest wages in Europe.
The Restaurants Association of Ireland (RAI) told a Dail committee yesterday that high wages are their biggest concern. Around 200 restaurants have already shut their doors since the downturn.
And many more will follow suit if the Government does not take urgent steps to help them cut costs, the association said.
Presenting a 10-point plan for survival to the Dail Enterprise Committee, RAI chief executive Adrian Cummins said that restaurant owners here are forced to pay the highest wages in Europe.
The minimum wage in the catering trade is €9.32 per hour in Ireland -- compared with €5.38 in the UK and €1.93 in Spain -- as restaurant wages are pegged at 8pc above the national minimum wage.
And restaurants are still forced to pay time-and-a-third for Sunday work -- or €12.10 per hour -- making it too expensive for some outlets to open even though this could be one of the busiest days of the week.
Abolishing this premium payment could create jobs as more restaurants would open on Sundays if it was not too expensive to do so, Mr Cummins said.
The RAI called for the Joint Labour Committees, which govern the restaurant sector and set wages, to be abolished, claiming they were a "throwback to the 1970s and 1980s" when unlike now there was little legislation to protect workers.
"They are pro-union and anti-business, it took 18 months of negotiations to reduce the Sunday premium from double-time to time and a third. Too many businesses went to the wall in that period," said Mr Cummins.
Irish food costs are also 24pc above the European average, according to a Failte Ireland report.
Restaurateurs are also being crippled by high rents, as they are often locked into 25-year leases with landlords who won't reduce rents as they are property speculators desperate for cash.
The RAI also wants a 10pc cut in local authority charges as these were crippling businesses, with, for example waste licence fees increasing from €1,200 to €4,000.
Some 3,000 new jobs could be created if the Government implemented this strategy, meaning it would benefit everyone, Mr Cummins added.
Restaurants already employ 64,000 people and contribute €2bn to the economy each year.