Minimum wage plan polarises opinion

The Government is facing a backlash over leaked plans to raise the minimum wage by 50 cent, with workers warning it has not gone far enough and business groups claiming the increase will repeat the “short-sighted mistakes that led to the crisis”.

The polarised views on the wages 100,000 people nationwide depend on were outlined by the competing sides of the debate after details of the long-awaited Low Pay Commission report were revealed at the weekend.

The commission was set up last year in response to calls to ensure any economic recovery is properly shared across society.

In its first report, which was given to junior jobs minister and Labour TD Ged Nash on Saturday and will go before cabinet tomorrow before potential budget changes in October, it said the minimum wage should be increased from €8.65c to €9.15c an hour.

The rate has remained the same since 2007, except for a short period in 2011 when the previous Fianna Fáil-led government reduced the figure by €1 before the Coalition reversed the decision in July 2011 after its election.

However, despite Government figures emphasising the move will benefit the working poor while not overly burdening employers, representatives of both sides of the debate have heavily criticised the potential raise.

In a statement hitting out at the move, employers group Ibec’s chief executive, Danny McCoy, said the decision is “at odds with all economic evidence” and claimed it risks “repeating short-sighted mistakes that led to the crisis.”

He added that the 50 cent raise “simply doesn’t stack up” and warned that, if adopted, the move “would heap pressure on companies still struggling to stay in business and erode crucial competitiveness gains of recent years.

“It is inexplicable how such a rise could be proposed,” he said. “Prices across the economy are below where they were in 2008 and the real value of the minimum wage has actually increased during the crisis.

“If the Government accepts the recommendation it is vital that the budget reduces employer PRSI to off-set the negative labour cost implications.”

The Restaurants Association of Ireland was equally critical, expressing “alarm and anger” at the plan as it will lead to “cuts in hours and job losses” for workers.

Arguing Ireland will have the “second highest minimum wage in Europe after Luxembourg” if the move is agreed by cabinet, the group’s chief executive, Adrian Cummins, said its members are in “a state of disbelief.”

Unions representing low paid workers had an entirely different view of the news, saying the 50 cent increase does not go far enough and is “half of what is needed”.

Unite secretary Jimmy Kelly said it had urged the commission to impose a €1 increase.

“Unite’s research has consistently shown Ireland is a low-wage economy compared with the EU 15,” he said. “The 50% increase recommended will only bring the minimum wage to €9.15c, well below the 2015 living wage of €11.50c recently calculated by the living wage technical group.

“Once again, it seems low paid workers are at the back of the queue when it comes to sharing in the fruits of recovery. The question is not whether we can afford to tackle low pay; it is whether we can afford not to tackle low pay.”