VFI says new government supports for business don’t go far enough

The VFI says that grants are not the answer to the crisis facing their members and that they need more long term supports

The Vintners Federation of Ireland (VFI) says that urgent challenges facing the pub trade, including unsustainable labour costs and the escalating overall cost of doing business, is forcing many publicans to consider retirement in the next two years. The Federation has been calling on the government to introduce key supports to ensure the sustainability of this critical hospitality sector.

In response in recent days the government has announced new supports, such as a second payment of the ICOB scheme. While the VFI welcomes this, it says the hospitality sector requires strategic measures that will support the pub trade over the long-term.

Pat Crotty, chief executive, VFI, says: “While we welcome the reopening of the Increased Cost of Doing Business (ICOB) scheme for a further 14 days and an additional payment for businesses in the hospitality sector, grants are not the answer to the crisis facing our members.

“Publicans require meaningful changes to their cost base, such as lowering the standard VAT rate and a reduction in the alcohol excise rate, currently the second highest in Europe. The announcement of a change to the Employer’s PRSI threshold only covers the recent increase in the minimum wage so doesn’t result in any real benefit for our members,” he adds.

“Sick pay benefits and the move to a Living Wage are massive threats to the pub trade without the correct supports. Wage increases have to be paid every Friday so any measures offered by Government must be in the context of that reality,” said Crotty.

“If we don’t see a long-term reduction in costs we face the real prospect of a decimated hospitality sector,” said Crotty.

AGM

Speaking in advance of the VFI’s national AGM in Donegal, Crotty  expressed concern over the projected increases in labour costs due to the planned shift to a living wage by the start of 2026. “If we to move to a living wage within 18 months, bank holiday pay will be almost €35 per hour for our most junior staff. Such costs are simply unsustainable for our members and could severely impact the ability of pubs across Ireland to operate viably,” he says.

The call for action comes in light of a recent VFI benchmarking survey which paints a stark picture: 36% of pub turnover is currently consumed by labour costs alone and that figure will increase to over 40% with the introduction of a Living Wage.

Also, the survey reveals a worrying trend about the future of the pub trade, with 37% of publicans considering retirement within the next two years and a staggering 84% reporting that no family member wishes to inherit the pub.

VFI president John Clendennen says: “While it must be acknowledged that some pubs are doing a thriving business, the findings of our survey underscore the urgency of the situation for many others. With such a significant portion of publicans looking to exit the industry, combined with a lack of succession plans, we risk losing many of our cherished local pubs unless decisive action is taken.”

The federation says the challenges extend beyond labour costs, with increases being felt across all areas of operation. “Our members are facing rising costs across the board — from food and drink to utilities and insurance. These factors are placing immense pressure on the viability of pubs,” said Clendennen.

The VFI is urging the government to consider specific measures to support the pub sector, including the re-evaluation of the impending shift to a living wage and targeted relief measures like a reduction in employer’s PRSI, a reduction in alcohol excise duty and a commitment to set the hospitality VAT rate permanently at 9%. They are also calling for a reduction in the standard VAT rate from 23% to 21%.  They are suggesting the development of a transition scheme for new entrants and next generation publicans to encourage streamlined succession and ensure pubs remain viable in towns and villages.

“These pubs are more than just businesses; they are the heart of many of our communities, offering a place for social interaction, celebration, and tradition,” says Pat Crotty. “Supporting them through these challenging times is essential not just for the pub owners but for the cultural and social fabric of the country.”

The VFI  says it looks forward to engaging with government representatives to discuss these proposals further and to collaboratively identify solutions that will support the continued viability of the Irish pub trade.