THE DEPARTMENT of Finance has said that it does not consider that an increase in the minimum wage could be countenanced in the current economic climate.
In a submission to the Labour Court on the issue, the Department of Finance argued that the minimum wage in Ireland - currently set at €8.65 per hour - was high by international standards.
It said that growth in the minimum wage levels had exceeded inflation since it was introduced in 2000. It said that the rate had been raised on six occasions totalling 54 per cent, whereas inflation, measured by the Consumer Price Index, had risen cumulatively by 37 per cent.
The issue of the rate for the national minimum wage is being considered by the Labour Court and employers, unions and the Department of Finance have all made submissions.
The Irish Congress of Trade Unions has said it is seeking an increase in the rate, but has not put a precise figure on the amount. However, the employers' body Ibec strongly opposes any move to increase the minimum wage. It said that this did not make sense at a time when thousands of jobs are being lost every week.
"Companies simply cannot afford an increase and any rise will result in job losses. No increase is justified," it said.
Under legislation, if there is no agreement between the social partners on the minimum wage level at national level, the Labour Court can make a recommendation to the Minister of State for Labour Affairs. The court can recommend either increasing the rate, reducing it or leaving it unchanged.
On receipt of any recommendation from the Labour Court, the Minister has three months to accept it, vary it or reject it.
The Labour Court received the Department of Finance submission as well as those from the other social partners several months ago and held meetings with the parties at the beginning of the year.
While the issue is still under consideration by the court, some informed sources have suggested that the future rate of the minimum wage could be considered as part of any new social partnership agreement on national recovery, if this can be agreed.
The Department of Finance document said that increases in the minimum wage "reduce the ability of exposed lower-wage sectors to respond, through wage and price adjustment, to changing economic circumstances". "This can have detrimental effects in the form of increased unemployment among lower-skilled workers," it said.
