The increase in the minimum wage, which comes into effect today, will not slow the rate of growth in job creation, the employment minister has said.
Ged Nash, the minister for business & employment, said that the raise in the national minimum wage from €8.65 an hour to €9.15 is a step towards a living wage and will be offset by a change in PRSI thresholds for employers.
“Those who are working hard for their families should get to share in the economic recovery. We’ve seen pay increases across the economy and recent reports show that 97 per cent of all firms will be increasing pay this year. We want to ensure that those working in retail, hospitality, and some sectors of healthcare get to see their circumstances improve,” Mr Nash said.
The wage increase along with cuts to USC and PRSI will give full time working single people €14 extra per week and married people with a single income €18 more per week. Roughly 124,000 workers are on minimum wage.
Labour will include a pledge in its election manifesto to increase the minimum wage incrementally until it is closer to a living wage of €11.45. Employers’ groups have criticised this pledge on the basis that it will undermine competitiveness.
The Irish Small and Medium Enterprises Association has said a living wage is “aspirational” but not a “viable concept.” IBEC, the employers’ lobby group, and the Irish Farmer’s Association have also said that the enforcement of a living wage would cause difficulty for smaller businesses.
Mr Nash said that the Small Firms Association announcement that 30,000 jobs will be created in 2016 took into account the increase in the national minimum wage. “They are confident given the improved economic circumstances that small firms can continue to create jobs. We have heard siren calls from employer groups as far back as 1999, when Mary Harney introduced the minimum wage, about how the sky was going to fall in and that wasn’t the case.”
Damien English, minister for skills, research & innovation, said that the government’s Low Pay Commission will take into account the views of employers and other government departments when it is making its yearly recommendations.
“The Low Pay Commission has shown that it is possible to increase the minimum wage based on productivity, assessment and research without affecting job creation. We do recognise that there are ongoing costs for industry and we are addressing that,” Mr English said.
Mr English also pointed out that the increase will be coupled with changes to welfare rates to encourage people to return to work.
Dara Calleary, the Fianna Fail jobs spokesman, claimed that the living wage must be kept separate from the minimum wage. “The minimum wage is a minimum set of standards, the living wage is something that every society should aspire to but it has to be voluntary for businesses that can afford it.”
“Work has to pay and business has to pay. There are a lot of small business owners who are not being paid minimum wage themselves and the floods over the last few days have shown just how vulnerable they are,” he said.