Tánaiste dismisses claims rise in minimum wage will see workers' hours cut

The minimum wage is going up by 80 cents, a 7.6% increase, from the current amount of €10.50 per hour

Employment Minister Leo Varadkar has announced an increase in the minimum wage. Picture: David Keane

Tanáiste Leo Varadkar has dismissed suggestions that workers will see their hours cut because businesses can’t afford to pay an increase to the national minimum wage from next year.

Cabinet signed off on the recommendation brought by Mr Varadkar from the Low Pay Commission which will see an increase of 80 cent - bringing the minimum wage to €11.30 per hour.

For someone on the national minimum wage working a 39-hour week, this translates to a pay increase of €31.20 a week, more than €120 a month, or €1,600 a year.

Around 170,000 workers will see the boost to their wage from next year.

However, businesses have warned that the move will only lead to reduced working hours for employees as employers won’t be able to afford the increase due to the surge in the cost-of-living crisis and energy bills.

But Mr Varadkar dismissed this and said over the years, he has often heard this argument that if you increase pay or give workers’ more rights such as maternity benefits or sick pay, that employment will fall.

He said, however if he’s proven wrong, then “it would need to be looked at again.”

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Mr Varadkar said that businesses are struggling to recruit and retain staff and he believes one of the best ways to help this is better pay.

He added: “We've never had more people at work than we do today and I think in the end, that won't be true.”

The commission also sets out an indicative rate for what is called a Living Wage.

It is set to replace the minimum wage by 2026 and it will be set at 60% of the average wage.

However, employers who opt to pay this wage from next year would pay staff €13.10 an hour.

Despite the 80cent increase in the minimum wage, the Commission has warned that the rate alone cannot compensate workers for inflation and recent increases in the cost of living.

Mr Varadkar said the Budget will further help low and middle income workers who are struggling with the cost of living crisis.

He said there will be help with energy bills, reductions in taxation, increases in welfare such as the working family payment and cysts to the cost of childcare.

Mr Varadkar also said a 30% tax band is still a budgetary measure that he has asked to be considered. However, he admitted that “pushing for it is a different story,” when asked about the progress on this measure which he has

He also announced the Sick Leave Act will come into effect next January.