Minimum wage cut will drive down all pay levels -- Cowen
Published 02/12/2010 | 05:00
THE Government slashed the minimum wage by €1 in an attempt to drive down all wages across the economy, Taoiseach Brian Cowen claimed yesterday.
The reduction of the minimum wage from €8.65 an hour to €7.65 was one of the key elements of the four-year plan, and also one of the most controversial.
The Government says it made the move to increase job creation, since a higher minimum wage discouraged employers from hiring more workers.
Labour leader Eamon Gilmore said there were 52,000 workers on or below the minimum wage and asked why the wage was being cut, since it would save the State no money.
Mr Cowen said the issue with the minimum wage "is that it also forms a base for other wages further up the line" but declined to say where the idea to cut the rate came from.
Green Party leader John Gormley has claimed the €1 cut was demanded by the European Commission and said it was one of the stipulations demanded by Economics Commissioner Olli Rehn. But Mr Gormley's claims have been dismissed by the Department of Finance and Mr Rehn's spokesman.
Mr Cowen said the minimum wage had increased by over 50pc during the boom, when inflation was 28pc.
"We have seen an increase in the minimum wage beyond the level of inflation since it was introduced," Mr Cowen said. "We must try to ensure that we have a competitive economy. It is difficult. We have seen reductions in wage rates throughout the board in the public sector and in the private sector as well.
"The brunt of adjustments in the private sector has been on the basis of redundancies and increased unemployment.
"The reduction in the minimum wage is about making sure that we have a competitive economy."
Mr Cowen said the minimum wage could be looked at again as the economy improves.