A recommended increase of 79 cent per hour to the national minimum wage at the start of next year would damage employment in labour intensive sectors construction, employers group Ibec has said.
The recommendation, to the Minister for Enterprise, Tourism and Employment, Peter Burke, was made by the Low Pay Commission at the start of July, which includes representatives of stakeholders such as employers’ groups and trade unions. The Minister is not bound to accept it but no such recommendation has been rejected since the establishment of the minimum wage.
Ibec’s executive director of employer relations, Maeve McElwee, said the proposed 5.6 per cent increase to the current rate of €14.15 was “significantly higher than average pay increases in the economy . . .far exceeds business forecasts and risks damaging employment and competitiveness while driving up price inflation.
“Overall, hourly labour costs have increased by 15 per cent over the past three years and the minimum wage floor has risen by 32 per cent,” she said.
“External cost pressures-including the geopolitical fallout from the US/Iran conflict- are only beginning to crystallise in a way the Low Pay Commission’s analysis could not have meaningfully accounted for”.
She said Ibec had raised concerns with the Minister about the proposal and was asking Burke “to take an approach consistent with the work of the Cost of Business Forum and recognise the competitiveness risk that government would impose on small- and medium-sized employers, were this recommendation to be accepted”.
“Demand in the labour market is weakening, and the employment outlook for the coming months points to a continued softening,” McElwee said.
“Ibec’s view is that job growth in construction and industry sectors will be weighed down by falling employment in labour-intensive, low-margin service sectors following several years of compounding, policy-driven increases in labour costs, as acknowledged by the Government. These same consumer-facing sectors showing falling or slowing employment have also seen a reduction in working hours among their existing workforces.”
About 200,000 people earn the minimum wage in Ireland, a group disproportionately made up of women, younger workers and people with disabilities. Many of them are employed in the retail, hospitality and service sectors.
However, the rate impacts on thousands more whose pay is linked, often informally, to the minimum wage, including thousands of young people whose pay is based on a proportion of it.
Irish Congress of Trade Union social policy officer Laura Bambrick said Ibec was was represented on the Low Pay Commission and so had the opportunity to argue against the 79 cent recommendation but that “having failed to persuade the other members, was now running to the Minister”.
“And the 79 cent marks another delay to the introduction of the living wage so it is actually less than businesses should have been expecting.” The living wage was was supposed have been introduced this year but was deferred until 2029.
She put the cumulative shortfall of the delay to the more than 200,000 workers impacted at €900 this year. “That’s a deep cut for what are poorly paid workers, but not deep enough it seems for Ibec.”