Government stealth taxes and high housing costs are driving wage inflation across all sectors, a study by the Irish Small and Medium Enterprises Association (ISME) has found.
The small firms' representative group also said that its Wages and Conditions of Employment survey has found labour shortages in all sectors this year and this was also contributing to rising costs.
Steep recent rises in energy costs, health insurance fees, transport costs, postal costs, the TV licence, motor tax, waste charges and insurance "have dramatically increased the cost of living and put pressure on wage demands".
According to the survey, the companies surveyed reported an average 6.2 per cent rise in wages, more than twice domestic inflation and well ahead of the EU average of 2.8 per cent. Last year wages in Ireland for small firms rose by 7.5 per cent.
The minimum wage, which is set to increase early in 2004, was highlighted by 27 per cent of those who responded to the survey respondents as exacerbating wage pressures.
Severe shortages of affordable housing was fueling demands for exorbitant pay increases as workers struggle to purchase a home. This pressure was particularly acute in the greater Dublin area.
Broken down by sector, the survey found that service sector employees commanded the highest wage rise of 6.6 per cent closely followed by manual employees' whose wage rate grew by an average of 6.3 per cent this year.
In conclusion, ISME said this rate of wage increase is unsustainable. "This situation cannot continue. It is imperative that at the very least, labour cost increases are brought into line with the EU average, to ensure that our competitiveness is not completely eroded".
