Minimum wage cut reversed
Published 15/04/2011 | 12:24
Ireland is on track to meet its commitments under the €85bn European Union/International Monetary Fund bail-out loan deal.
After a two-week review, the Government has been given the green light to reverse cuts to the minimum wage, taking the rate back to €8.65.
Finance Minister Michael Noonan said the EU/IMF team were happy with the country's progress.
"In terms of renegotiating the programme, we have done what we set out to do," he said.
A revised memorandum of understanding agreed with the IMF, the European Commission and the European Central Bank will be formally signed off on May 15 and 16.
The Government said the restoration of the minimum wage - one of the highest rates in Europe - will be done in tandem with changes to the rates of Pay Related Social Insurance paid by employers.
Mr Noonan said a so-called jobs initiative, the Labour-Fine Gael coalition Government's plan to reverse the unemployment crisis, will be published in May.
He also said the revised loan deal will take account of the jobs plan, a public sector spending review due in September and the massive bank restructuring plan to create two "pillar" banks announced at the end of last month.
Mr Noonan said the IMF was "very complimentary" on decisive actions the Government has taken to finalise the bill for rescuing bank - €70bn.
"The negotiators have to revert back to their principals so the final signing off will be May 15-16," he said.
The minister said the IMF, Commission and ECB agreed that Ireland is fully in line with the bail-out programme at the end of the first quarter.
"That is very satisfactory from our point of view," Mr Noonan said.
Meanwhile, Taoiseach Enda Kenny said Government actions on the banks, employment and spending would help provide the confidence needed for recovery.
"The engine of our economic recovery has not been working the way that it should," he said.
"And the reason that the Government is now taking action across a range of areas is actually to get that engine working before you can give the fuel of confidence for people to get through this frustrating period of austerity and economic difficulties."
The key points of the revised bailout agreement include:
- Minimum wage is restored to €8.65 in exchange for 50pc cut in employers' PRSI;
- Ireland is on track for its commitments for the first quarter of 2011;
- The IMF, EC and ECB support plans for the Government`s jobs initiative as long as it is revenue neutral;
- A second phase of loan transfers out of troubled banks known as Nama II, and dealing with borrowings under €20m, is cancelled;
- The IMF and Europe wants banks fully recapitalised by July 31.
In a statement, the IMF said: "Ireland is making good progress in overcoming the worst economic crisis in its recent history.
"The new Government, through its Programme for Government and its decisive approach to banking sector reforms, has taken full ownership of the goals and key elements of the EU/IMF-supported programme."
The IMF said the bank reform plan announced on March 31 is a major step to bringing the sector back to health.
The Government will also remove competition restrictions in the legal, medical and pharmacy professions to further reduce costs.
The IMF will return to Dublin to check progress in July.