Wage war as employers vow to fight minimum pay hikes
A 'wage war' is in the offing as small businesses vow to fight plans to increase the minimum wage to €9.15 per hour.
Vintners, hoteliers and retailers are unhappy with the suggestion that they should boost pay just as they are starting to recover from the recession.
They argue that raising the minimum wage will increase expectations among higher paid staff who will seek to maintain a fair differential.
As he launched the Low Pay Commission's report yesterday, Taoiseach Enda Kenny tried to reassure employers that the pay hike will not increase PRSI costs.
Mr Kenny said the Government will deal with the Low Pay Commission's recommendation in the Budget next October. He said the main aim is to tell people that a job with proper pay is the way out of poverty.
"We will respond to the issue of PRSI and take it on board in the Budget," Mr Kenny told the Irish Independent.
However, business representatives remain unconvinced. "There is no justifiable economic argument for imposing a 6pc increase on small and medium-sized business when inflation is practically zero," Mark Fielding of the Irish Small and Medium-sized Enterprises said.
The Small Firms Association urged the Government to reject the commission proposals, and freeze the minimum wage until 2018. The main employers' organisation, Ibec, said there was not enough evidence to support the increase.
But three commission members wanted a bigger increase. Irish Congress of Trade Unions general secretary Patricia King said the minimum wage should be fixed at €10 per hour.
Jobs Minister Ged Nash added that he hoped the minimum wage can be increased more in the future and this would mean €1,000 per year extra for full-time workers on the minimum wage.
The Low Pay Commission chairman, Dr Dónal de Buitléir, suggested employers might make a "slight adjustment" in the hours they give workers due to the 50 cent increase.
But he said there was no hard evidence reduced hours would happen.
The Low Pay Commission report, its first in its three-year term, found that "moderate increases" were unlikely to hamper job creation and sustainability. But it was less certain on the prospect of bosses giving fewer hours.
Mr Kenny also said the rise in the minimum wage would be accompanied by Budget tax changes. These include changes to the Universal Social Charge, and welfare changes as part of government efforts to "make work pay".
"The recommendations of the Low Pay Commission will be addressed in the Budget in October, alongside changes to the taxation system and the welfare system, so that all elements of our plan to make work pay will reinforce each other," Mr Kenny said.
The Low Pay Commission said just over 70,000 workers, or 4.4pc, were on the minimum wag. Two thirds worked fewer than 35 hours a week.