IMF want cut to minimum wage and hike in Fás funds

STAFF at the International Monetary Fund have recommended lowering the minimum wage and ploughing more resources into Fás.

In proposals for returning growth to the economy it said Ireland should gradually cut the level of unemployment benefit and look at ways of making it easier for women to re-enter the workforce after having children.

It said cutting taxes for mothers, to help them overcome prohibitive childcare costs, would boost GDP by up to 1.75%.

The document was written by staff at the IMF’s european department and its distribution was authorised by Ajai Chopra, the man overseeing the rescue of the Irish economy.

It covered the entire euro area, however it listed specific measures which could help Ireland recover.

“Provide more resources to the unemployment agencies (Fás) to provide efficient job-search assistance to the growing number of unemployed.

“Review the level of minimum wage to make it consistent with the general fall in wages,” it said.

The authors also grouped Ireland with a group of countries where childcare costs were too high and restricted the ability of mothers to return to work.

“Measures especially geared toward second earners, combining tax incentives — including allowing women to file their labour income separately from their husband in countries with joint family taxation — and better child-care support, could be specifically targeted at raising female participation.

“IMF estimates show cutting income taxes paid by women by 5% points would increase the GDP level by 1.75% points, for a fiscal cost of 0.5% point of GDP,” it said.