Labour costs to increase 6% as hospitality firms struggle to retain staff
Labour costs in the hospitality sector are expected to increase 6% in 2026 with changes to the minimum wage, PRSI contributions and the introduction of pension auto-enrolment.
The latest Hotel & Catering Salary Guide from Excel Recruitment forecasts wage growth in 2026 at 5.6%, with PRSI rates set to increase by 0.15% from next October.
Shane McLave, managing director of Excel Recruitment, said the sector is facing mounting challenges including persistent staff shortages, high turnover, and increasing employment costs.
The sector currently employs 245,000 people, and the pressures are particularly acute for critical roles such as chefs, accommodation staff, and experienced front-of-house professionals.
"One example from our report shows the average hourly rate for an accommodation assistant has risen from €10.10 in 2020 to €15.00 in 2025, an increase of roughly 48%, excluding the additional costs of employment," said McLave.
"At the same time, full-time roles have declined while part-time positions have grown, reflecting the combined impact of rising costs, skills shortages, limited access to training, long hours, and housing challenges.
"The annual insolvency rate for hospitality is now well above the historical average. We know that in the first three months of this year alone 150 food-led businesses (restaurants, cafés, etc.) closed and we would estimate that the numbers for the following quarters are the same if not greater. That’s a possible 600 employers that have gone out of business in just one year."
The report outlines notable salary increases in 2026 for positions such as accommodation managers (€45,000 to €47,500), bar & wait staff (€32,000 to €34,000) and kitchen porters & catering assistances (€13.50 to €14.15 per hour).
Once auto-enrolment is rolled out in January 2026 employees aged 23 to 60 earning over €20,000 must contribute 1.5 per cent of gross salary to auto-enrolment pensions, which Excel said would reduce short-term financial flexibility.
“Employees, meanwhile, are managing higher living costs and reduced disposable income due to pension contributions under auto-enrolment," said McLave.
"Coupled with the lack of cost-of-living supports and rising education and housing costs, these pressures intensify the challenge of retaining talent in the sector."
The Excel Recruitment report highlights a range of strategic responses employers are offering including enhanced pay and benefits, predictable scheduling, work-life balance initiatives, training and upskilling programmes, and accommodation support.
“Temporary and contingent workforce models are increasingly used for chefs, waiting staff, and accommodation teams to manage seasonal demand.
The cost of employing people on minimum wage in hospitality is projected to increase by 6% next year.
"Technology is also being embraced to improve efficiency, reduce workloads, and maintain service quality without undermining the personal touch of Irish hospitality.
“To sustain the sector, businesses must invest in staff, improve working conditions, and embrace operational efficiencies. Balancing rising costs with attractive careers is essential to retain talent and ensure the high-quality service that defines Irish hospitality," McLave concluded.
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