The small and medium sized business organisation ISME has said there would be no justification for a further increase in the national minimum wage of €1 in the budget.
It follows a report in today’s Irish Independent that the Low Pay Commission has recommended increasing the basic pay rate to at least €13.70 next year.
ISME said this would represent an 8% increase on the current rate of €12.70 and come on top of a 12.4% increase in January of this year.
“Now, Ireland’s minimum wage is second highest in Europe after that of Luxembourg,” the organisation said in a statement.
“With inflation currently running at just 2.2%, there is no justification whatsoever for a minimum wage increase almost four times that rate.”
“ISME and many other trade associations have advised Government that any increase in the minimum wage, if there is to be one at all, should not exceed the rate of inflation.”
It added that the move would end up being counter intuitive as small firms, especially those in the services sector, will require more supports from the Government to meet the increase.
“The alternative will be business closures and job losses,” it said.
Asked about the report on RTÉ Radio One’s Morning Ireland this morning, Minister for Enterprise, Trade and Employment, Peter Burke, said the information was not correct.
“I’m not going to go into the amount, but the information isn’t correct on that, I want to be very clear to businesses that are listening in up and down the country,” he said.
“I’m not going to conduct negotiations on the Budget over the airwaves … I cannot go into negotiations and say before my Cabinet colleagues are aware of what the recommendation is.”
The Government has previously committed to replacing the minimum wage with a new living wage by 2026 set a 60% of median wages in the economy.
However, businesses have for some time been complaining about the increased costs they are facing, many of which are being driven by Government policy changes and initiatives.
Previously a Low Pay Commission recommendation has never been rejected by the Government.
Govt to consider commission’s recommendations
Minister for Public Expenditure Paschal Donohoe has said that the Government will consider the Low Pay Commission’s minimum wage recommendations as part of its pre-budget work.
Speaking to reporters in Dublin, Minister Donohoe said the Low Pay Commission plays a key role in discussions on the minimum wage.
Asked about reports today that the commission has recommended increasing the minimum wage, he said: “Over many years now this and previous governments have accepted recommendations from the low pay commission, and we have done so because we need to ensure that those on low incomes also benefit from an economy that has grown and also see their wages grow.
“The low pay commission does really, really important work. I have not yet received the report, but I know the report will be brought to Government as part of work we do in preparation for the budget.”
Minister Donohoe was also asked about potential changes to the VAT rate for restaurants and pubs, including calls to potentially reduce it to 9%.
He said the issue is “not just a question of commitment” to the sector, as there are also issues such as “how much those changes cost”.
He said reducing the VAT rate to 9% “would have a cost well in excess of €700m”, and that while “I recognise how demanding it is to run a business, what Government will have to do is look at the competing pressures” involved.
Additional reporting Fiachra Ó Cionnaith
