Row over call for minimum wage cut

Calls for a €1 cut in the minimum wage were branded 'immoral' today.

The Small Firms Association (SFA) wants pay to drop to €7.65 an hour in a bid to curb rising dole queues.

Director Patricia Callan said the National Minimum Wage (NMW) is also a major contributor to youth unemployment.

Last month more than 220,000 people claimed unemployment benefits, a jump of almost 20,000 from May. The last time the Live Register was this high was in August 1998.

“Ireland has lost the plot in terms of having a competitive labour market,” said Ms Callan.

“Minimum wage comparisons are symptomatic of what Ireland has become – a high-cost, uncompetitive economy.

“If we continue in this way there is no future in Ireland for labour-intensive industries.”

The Irish minimum wage is the second highest in Europe. Set at €8.65 per hour (€1,462 a month), it lags only behind Luxembourg where it is €1,570 a month.

The hourly rate is more than twice that of the United States – the largest economy in the world – 9% higher than the UK, and 13 times that of Bulgaria.

Ms Callan called on the Government to decrease the statutory minimum wage in order to regain lost competitiveness of Irish small businesses vis-a-vis their international competitors and to boost job prospects amongst younger people.

However, the union Siptu claimed the process to tackle current economic difficulties was far too serious for people to engage in nonsensical grand- standing.

General president Jack O’Connor said: “Apart from the immorality of suggesting our problems can be resolved by crucifying those earning the minimum wage, it would do nothing to address the problems we face.

“These arise from spiralling, largely imported inflation and collapsing business confidence.

“Not only would cutting the minimum wage contribute nothing to resolving these problems but it could exacerbate them by depressing the spending power of consumers still further and sending out a message that things are so desperate that we are prepared to single out the most vulnerable members of the workforce for punitive treatment.”

Almost a fifth of companies have said the minimum wage was a major problem for business, with payroll costs accounting for 30% to 40% of costs.

Ms Callan said news of a 42% surge in young people (under 25) signing on the dole in the past year was a clear symptom of the fact that the national minimum wage was too high.

Some 48,000 young people were now looking for full-time work.

“Unemployment is increasing and new job creation is low,” she continued.

“It is imperative for the competitive position of Ireland that wage levels are decided in a competitive labour market.

“In the first six months of the year, Irish companies have made 16,519 people redundant (30% of job losses were in the services sector and 29% in manufacturing).

“When you compare the Irish minimum wage with other international economies it becomes clear why Ireland is facing increased competitive pressures; why we are constantly hearing that Irish prices are higher than those of other Eurozone countries and why we are losing jobs to lower cost economies within the EU.”