Minimum wage hike could cost jobs

THE increase in the minimum wage from €6.35 to €7 will cost thousands of jobs and act as a serious disincentive to the struggling small business sector, a leading employer spokesman has warned.

Due to come into effect on February 1, 2004, Mark Fielding, chief executive the Irish Small and Medium Enterprise Association (ISME) said the move came at a time when manufacturing in Ireland is shedding up to 500 jobs a week.

It has also led to a blazing row between ISME and IBEC the top employer body, who Mr Fielding accused of acting against the best interest of thousands of struggling small companies.

In the week of the Special Olympics Mr Fielding said the move to a higher minimum wage could also damage the work prospects of those with special needs, who have been forgotten about also in the rush for a new pay deal under Sustaining Progress.

“This is unwarranted and unnecessary at a time when business was never under such sustained pressure.”

The deal was “typical of IBEC who look after their own large companies where the minimum wages doesn’t enter onto the richter scale.”

The increase will hit recruitment and cause job losses and it’s a “double whammy,” he said.

Mr Fielding said from a social point of view the move to the higher minimum wage was also regrettable.

It is forgotten that throughout Ireland small businesses are “often prevailed upon to take on people who are unemployable. There are people who just wouldn’t be normally able to get a job but you will have small firms who will take on people.”

The problem is that from a “purely economic sense” it will make it more difficult for employers to engage in that form of social activity and that’s the sad fall out from this.”

Again it was a case of people not thinking beyond just getting an national wage agreement and it was pushed through by the unions and IBEC, he said.

This is just another instance of Irish business conniving to price itself out of the market at a time when firms are under attack from stealth taxes and wages increases well ahead of our competitors, said Mr Fielding.

Brendan McGinty, head of Human Resources, IBEC, said “it was the best deal that was available” and the main employer body was also aware that it puts the small firms sector under additional pressure.

But it was part of the compromise between employers and trade unions in getting a new national wage deal and IBEC accepted on that basis only, he said.