An increase to the national minimum wage, from €12.70 to €13.50 an hour, is set to be considered by Cabinet when the Government resumes formal consideration next month of measures to be taken in the budget.
The Low Pay Commission is understood to have recommended an 80 cent increase per hour to the current rate at the start of summer.
If agreed by the Government, it would mean pay increases of 6.3 per cent from January 1st for the lowest paid workers in the economy, from €495.30 to €526.50 for a basic 39-hour week. The increases would be above inflation this year of about 2.4 per cent and average private sector pay increases across the economy of about 4 per cent, but below what unions would have been hoping for.
About 165,000 people earn minimum wage in Ireland, a group disproportionately made up of women, younger workers and people with disabilities, many of them employed in the retail, hospitality and services sectors. The rate set, however, impacts on thousands more whose pay is linked, often informally, to the national minimum wage.
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The Minister for Enterprise, Trade and Employment Peter Burke said on Thursday that any forthcoming increase to the national minimum wage would be “sustainable” and accompanied by supports for small and medium enterprises in the budget.
Speaking on RTÉ radio he denied previous reports that the recommended increase was in the region of €1 to €1.20, saying he “would not countenance” an increase of that scale.
Both the department and Mr Burke have said the recommendation will be considered in the context of the budget but there is a feeling in some quarters that some form of further assessment of the impact of such an increase on the SME sector could be sought. This has been done in relation to a recent recommendation by the commission to abolish the lower minimum pay rates applied to workers under 20.
Last year’s increase to the national minimum wage of €1.40, or 12.4 per cent, was regarded as a part the widely flagged transition to a Living Wage, set at 60 per cent of median gross earnings across the economy, by 2026.
At the time another substantial increase was anticipated this year in order to keep the process on track. Increased pushback by the SME sector against cost increases it sees as attributable to the Government, repeated assertions by Mr Burke he is listening to their concerns, and the proximity of an election all served to dampen those expectations.
There have been considerable disagreements on what figure the formula of 60 per cent of median earnings actually yields, with Ibec arguing the national minimum wage is far closer to it than the union side contends.
Speaking on Thursday, Minister for Public Expenditure Paschal Donohoe said the current and previous governments had accepted the recommendations of the Low Pay Commission regarding the national minimum wage. “We have done so because of the need to ensure that those who are on lower incomes within our society have also benefited from an economy that has grown and they have seen their wages grow, which in turn offers the opportunity to see their living standards grow.
“The Low Pay Commission does really, really important work in providing impartial evidence to Government regarding important decisions on minimum wages. We will, of course, have to give the report very serious consideration, because what we’re also aware of is the growing challenges that many small businesses are facing at the moment in keeping jobs and staying viable and staying open. And the Government will give all that very serious consideration in the coming weeks.”
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