Cowen silent on who demanded minimum wage cut

SPECULATION that a minimum wage cut was imposed because of demands from the European Union intensified after Taoiseach, Brian Cowen, avoided Dáil questions about who requested the move.

Labour leader Eamon Gilmore said the €1 cut from €8.65 to €7.65 an hour will end up costing the state more in welfare benefits and “won’t save a single cent for the exchequer”.

Last week Green Party leader John Gormley told the Dáil the cut was the first demand of EU Commissioner Ollli Rehn “and others” when discussions on a possible bailout for Ireland were taking place.

Yesterday, Mr Gilmore said he was not aware of any groups in Ireland demanding the wage reduction and asked the Taoiseach: “Did the request come from outside the country?”

Mr Cowen avoided two opportunities to answer the question and, instead, defended the cut saying it was needed to ensure “maximum flexibility in the labour market”.

He said it was “not about trying to save money for the exchequer but to remove barriers to employment”.

The Taoiseach, speaking during Leaders’ Questions, continued: “If it can create jobs for people in the semi-skilled or unskilled sectors, all the better for them and all the better for society in general.”

Mr Cowen said the minimum wage “forms a base for other wages up the line” and the cut was part of a wider range adjustment that was taking place throughout the economy.

Just 52,000 workers in the country earn the minimum wage, or 3% of the workforce.

The Taoiseach said the rate has increased by 55% during a period in which inflation rose 28%.

Mr Gilmore said it means the most vulnerable will be effected in a move that “saves nothing” for the state finances.

“Somebody working a 40-hour week will have their weekly earnings of €364 cut by €40 a week. Somebody on less than €18,000 a year will suffer a pay cut of more than €2,000 a year or 11.5%.”

The cut will end up costing the exchequer because it will mean those affected would be entitled to higher family income supplement, more secondary social welfare benefits and there would be an impact on local authority rents, according to Mr Gilmore.

Mr Gilmore asked if the cut preempts cuts in other areas.

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