The minimum wage is the lowest rate of pay that employers can legally pay to workers. Presently in Ireland the minimum wage stands at €8.65 per hour (apart from exceptions for apprentices etc.). However a low pay commission group is to be established and is expected to recommend an increase of €0.50 per hour. The commission is likely to be modelled on a similar body in the UK, which has employer and trade union representatives. Tánaiste Joan Burton said the minimum wage needs to be kept under constant review due to cost of living increases.
Employers’ groups such as Ibec and business groups such as the restaurant sector are strongly opposed any increase in the minimum wage and believe that any increase will inevitably lead to job losses and risk the economy’s fragile recovery. “There is no justifiable economic argument for imposing a 6% increase on SMEs when inflation is practically zero,” ISME’s Mark Fielding said. The Small Firms Association called on the government to reject the proposals, and freeze the minimum wage for the next three years.
Meanwhile the Unite trade union expressed its disappointment believing the proposed rise does not go far enough in its submission to the commission, it had sought a €1 increase.
The Living Wage
A living wage is based on the amount an individual needs to earn to cover the basic costs of living. A coalition of groups says this is about €11.45 an hour, significantly above the minimum wage of €8.65 an hour. Earnings below the living wage suggest employees are forced to do without certain essentials so they can make ends-meet. Ms Burton has encouraged employers to commit to paying a “living wage” to their employees. She has that this will benefit society by giving lower paid workers more spending power and reducing reliance on social welfare. However Ms Burton said the move towards a living wage should initially be on a voluntary basis, rather than a legally enforceable level of pay like the national minimum wage. In recent days Ikea in Ballymun announced that it will be introducing the living wage for all Irish and UK employees. Ms Burton has said “If people get a living wage, they have more spending power, more financial independence and can move away from welfare dependency. It benefits the family and the exchequer.”