Varadkar defends 80 cent increase to minimum wage amid criticism from unions and business groups

Tánaiste Leo Varadkar has defended an 80 cent increase to the minimum wage, bringing it to €11.30 an hour, which a trade union described as an “insult to workers” and employers’ groups have said will put businesses struggling with rising energy costs under further pressure.

Mr Varadkar said the increase, recommended by the Low Pay Commission, would come in from January and result in a full-time worker earning a further €1,600 annually. He said it represents a “big increase” despite it being lower than the current rate of inflation.

“There won’t be that many people in Ireland getting a 7.6 per cent increase this year,” he said at a press conference on Wednesday.

[ Minimum wage to rise to €11.30 per hour ]

The Fine Gael leader and Minister for Enterprise said 170,000 people would benefit from the move and that “it’s not the end of our response when it comes to helping people on low pay with the rising cost of living”.

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Siptu said the 80 cent increase was an “insult to workers” and that the minimum wage should be set at “at least €12 an hour”.

“Increasing the minimum wage to at least €12 per hour would benefit hundreds of thousands of workers and provide greater protection from rising living costs,” said the union’s services division organiser Teresa Hannick, who added that such an approach would “be of assistance to domestic businesses that rely on workers’ purchasing power”.

“One of the best ways to avoid a recession is to drive up wage floors since those on low pay spend almost all the additional income they receive.”

Tom Fitzgerald of the Unite union, which earlier this year called for the minimum wage to be increased to €12.50, said: “If the Government is serious about addressing the cost-of-living crisis, which impacts disproportionately on the lowest paid, it must set aside the commission’s recommendation and announce a significant increase in the minimum wage which will make real progress to its living wage commitment.”

Mr Varadkar noted that the commission had set an “indicative living wage” for next year of €13.10 per hour, or 60 per cent of the national median income. The Government has plans to phase in a living wage between now and 2026 when it would become mandatory.

However, workers’ representatives on the commission dissented from this figure, saying the living wage needed to be set at 66 per cent of the national median.

The Small Firms’ Association described the 80 cent per hour increase as “disappointing”. Its director Sven Spollen-Behrens said it was being “imposed” on small businesses when their costs were “at a never-seen-before high”.

“The cost of labour is the most significant driver of business costs in small firms, amounting to 82 per cent of overall monthly costs,” he said.

Mr Varadkar acknowledged the minimum wage increase would be an additional expense for businesses, but said employers regularly raise two issues with him – high energy costs, and difficulty recruiting and retaining staff. He said one of the best ways of solving the latter issue was “better pay terms and conditions”.

The Tánaiste also announced he would commence the Sick Leave Act on January 1st which will, for the first time, introduce an entitlement for all employees to sick leave paid by their employer in addition to illness benefit from the State.

The European Parliament voted on Wednesday to adopt new legislation on adequate minimum wages across the European Union. The legislation says a minimum wage should “provide for a decent standard of living, thus meet a threshold of decency; can contribute to the reduction of poverty at national level, can contribute to sustaining domestic demand and purchasing power, strengthen incentives to work, reduce wage inequalities, the gender pay gap, and in-work poverty as well as limit the fall in income during bad times”.