Monday 26 September 2016

Coalition forced into rethink of minimum wage hike by Brexit

Niall O'Connor and Gavin McLoughlin

Published 15/08/2016 | 02:30

Jobs Minister Mary Mitchell O’Connor. Photo: Dougas O'Connor
Jobs Minister Mary Mitchell O’Connor. Photo: Dougas O'Connor

The Government is veering away from introducing any increase in the minimum wage in the upcoming Budget as a direct consequence of Brexit.

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Government sources say there has been a "rethink" of the minimum wage issue on the back of a series of economic warnings surrounding the impact of Britain's decision to leave the European Union (EU).

As a new report from business group Ibec warns of troubling times ahead as a result of Brexit, a planned 10 cent hike in the minimum wage looks set to be delayed.

Jobs Minister Mary Mitchell O'Connor has been told that employers slashed workers' hours in a bid to cut wage costs following the decision last year to increase the minimum wage by 50 cent to €9.15.

Read more: Mary Mitchell O'Connor: 'Don't shoot people for creating wealth'

Ms Mitchell O'Connor, a TD for Dún Laoghaire, is also understood to be concerned about creating unrealistic expectations across various sectors.

The Low Pay Commission recently recommended a 10 cent rise in the minimum wage, which would benefit 70,000 workers.

Trade unions and opposition TDs expressed disappointment at the proposal and have called for the introduction of a so-called 'Living Wage' of €11.50 per hour.

However, business groups have piled pressure on the Government not to adopt the proposal, due to fears stemming from Brexit.

A Government source last night expressed major caution about introducing the increase in October's Budget.

"Brexit will impact on the economy and will slow down job creation so we have to be careful that we are still competitive," the source said.

"Employers say that in the context of the last rise to €9.15, many employers gave shorter hours, thus cutting wage costs. It's not the rise of minimum wage that's the entire problem but by raising it a special percentage it gives an expectation of wage increase right across the whole sector," the source added.

But any failure to increase the minimum wage will put Fine Gael on a collision course with the Independent Alliance.

Minister of State John Halligan has joined the chorus of calls for a Living Wage of €11.50.

Meanwhile, a new report from Ibec indicates dark clouds on the horizon for the Irish economy on foot of Brexit.

Ibec said that in recent weeks retailers had reported a slowdown in positive momentum, saying that the fall in Sterling had intensified competition from Northern Ireland and the mainland UK.

The group's 'Retail Monitor' said the first half of the year had demonstrated "continued recovery" in the domestic economy. The UK vote to exit the EU occurred at the tail end of the period, on June 23.

Weakness

Among the trends highlighted by the report was a 1.6pc year-on-year jump in the value of sales at department stores in the second quarter of the year. But stores in Dublin city centre underperformed, due to reduced footfall spurred by city-wide roadworks.

Fashion and footwear sales jumped 5.8pc in value in the second quarter, despite weakness from traditionally important tourist markets, Ibec said.

Irish Independent

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