Minimum wage cut 'will hit taxpayer'
Slashing the minimum wage by €1 will increase social welfare payments and ultimately cost the taxpayer more, it was claimed today.
Under the Government's drastic four-year budget plan the payment will be cut to €7.65, with Taoiseach Brian Cowen claiming it would boost employment.
Labour leader Eamon Gilmore demanded to know how much would be saved by the cut and how many jobs could be created.
He claimed Fianna Fail's policy was to give the less well off even less and bankers more.
"I think you should tell us where this notion of cutting the minimum wage comes from," Mr Gilmore said.
"Because it seems to me to be a peculiar form of Fianna Fail economics now, that in order to incentivise people who are on low pay and or who are poor, you pay them less, but in order to incentivise the banks, you throw more money into them."
The Labour chief said cutting the wage would see family income supplement go up, while part-time workers would have a greater entitlement to social welfare payments, medical cards and social housing.
"From what I can see, the cut in the national minimum wage won't save a single cent for the public finances," Mr Gilmore said.
"In fact, arguably it's going to cost money."
Mr Gilmore claimed there were 52,000 people on the wage and estimated a person on €18,000 a year would suffer a pay cut of more than €2,000, or 11.5pc.
The Government's four-year €15bn budget roadmap claimed the current €8.65 charge was out of step with the economy and that it had been increased six times since it was introduced in 2000. The document said inflation jumped 28pc since 2001.
The Taoiseach said it was not a question of saving the state money but about being flexible.
"Labour intensive sectors like retailing and tourism, where many jobs have been lost, there is a need to try and ensure that we have flexibility in that area," he told the Dail.
"It's about making sure that we have a competitive economy. It's part of a wider range adjustment that's taking place throughout the economy.
"It's important that we also recognise that we will still have one of the highest minimum wage rates in the European Union as a result."
But Mr Gilmore branded the reply pathetic.
Mr Cowen suggested the payment could be looked at again when the economy improves.