Ictu says minimum wage should rise to €9 an hour

The national minimum wage should be increased to around €9 an hour from January to avoid "negative consequences for the economy and society", the Irish Congress of Trade Unions (Ictu) told the Labour Court yesterday.

Union leaders said there was a "compelling case for a significant rise" in the minimum wage, which stands at €7.65 an hour.

Congress called for the wage to be increased to 60 per cent of average industrial earnings, which would give an hourly rate of €9.03.

Under the Towards 2016 national pay agreement, Ictu and Ibec, the employers' organisation, were to have agreed an increase in the minimum wage by September 1st.

Talks took place at the beginning of September, but the two sides failed to reach an agreement and Ictu referred the matter to the Labour Court.

Ictu argued that the minimum wage should rise significantly in order for it to keep pace with wage growth and price rises since May 2005, when it was last increased.

Linking the minimum wage to 60 per cent of average earnings would be in line with the recommendation made by the Minimum Wage Commission before the introduction of the minimum wage in 2000. Since then the hourly rate has fluctuated between 47 per cent and 52.5 per cent of average earnings. It now stands at just under 51 per cent.

Ictu called on the Labour Court to recommend a minimum wage that achieves or makes "very significant progress towards achieving" the 60 per cent figure.

More than 100,000 employees are on or below the minimum wage. The number has increased 40 per cent since 2000, and this trend is likely to continue, according to Ictu general secretary David Begg.

"Unless we see a significant rise in the minimum wage, this could lead to the emergence of a two-tier workforce, with very negative consequences for the economy and society."

However, Ibec director Brendan McGinty said the Republic already had the highest after-tax minimum wage in Europe and that any increase would fuel inflation. "Any change in the level would have a disproportionate effect on particular sectors such as hospitality, retail and parts of manufacturing.

"There is evidence that the national minimum wage has had an inflationary effect on the services sector. We should be doing everything possible to reduce inflation, protect jobs and encourage business development."

During the Towards 2016 talks employers resisted proposals by Ictu that the deal should include a "flat rate" increase for the low-paid.

In its submission to the Labour Court, Ictu said the last increase in the minimum wage did not contribute to a growth in unemployment. It said a rise in the wage now would have no impact on inflation or competitiveness.

The Labour Court is expected to make its recommendation to the Government shortly, and the new wage will come in on January 1st.