Employers and unions last night reacted with equal dismay to a proposed increase in the minimum wage of just over 9 per cent.
Following extensive consultations with interested parties, the Labour Court recommended an increase in the rate from €7 an hour to €7.65 from May 1st.
Employers and business organisations immediately condemned the proposal, claiming that no increase was justified this year. Unions, however, said it fell short of what was required to close a growing income gap between rich and poor.
The Minister of State for Labour Affairs, Mr Tony Killeen, will decide over the next three months whether to approve the increase. He said he was required to take into account the impact of the proposed rate on employment, overall economic conditions and national competitiveness.
Mr Pat Delaney, director of the Small Firms Association, said he was mystified as to how the Labour Court could recommend such an increase.
Workers on the minimum wage had already received a pay rise of in effect 18 per cent since February last year. The rate had been increased then from €6.35 to €7 and those receiving it had since been removed from the tax net.
A further increase would put upward pressure on wage rates and would post particular difficulties for those in the services and tourism sectors. Their only options would be to raise prices, reduce staff working hours or let workers go.
A spokesman for the Irish Congress of Trade Unions, however, expressed disappointment that its arguments for an increase to €8.75 an hour had apparently not been taken on board.
He said the minimum wage was of "crucial significance" for the most vulnerable members of society and congress would continue the battle to have it restored to the original target rate of two-thirds of median earnings.
The Chambers of Commerce of Ireland called on Mr Killeen not to implement the increase, which it said would cost Irish businesses €250,000 an hour. Its chief executive, Mr John Dunne, said the increase bore no relation to the 2.6 per cent inflation rate and the timing was "extremely irresponsible".
Mandate, the union representing workers in the bar trade and low-paid retail sector, said the increase would be insufficient to tackle the problems of Ireland's "working poor". However the employers' body, IBEC, said any increase would push up the cost of goods and services and "make Ireland even more expensive".
