Low Pay Commission splits over 50c minimum wage increase

Trade union and migrant rights activists on the Low Pay Commission have disagreed with its overall recommendation that the national minimum wage should be increased by 50 cent.

In a minority report, the general secretary of the Irish Congress of Trade Unions Patricia King and Gerry Light of the Mandate trade union argued that the proposed rise was inadequate.

They contended that an hourly increase of €1.35, which would bring the minimum wage to €10 an hour, was “reasonable and proportionate”.

Edel McGinley, director of the Migrants Rights Centre Ireland, said in her minority report that a 50 cent increase, as proposed by the commission, did not go far enough to address the eight-year stagnation in pay for workers on the national minimum wage.

She urged that the rate of the national minimum wage should be increased to €9.65.

In its report, published on Tuesday, the commission said its recommendation that the adult rate for the national minimum wage be set at €9.15 per hour was supported by six of its nine members. The existing national minimum wage rate is €8.65 per hour for adults.

The commission in its report says it did not propose that there should be any change to the existing sub-minimum rates set for young people and certain trainees.

For people under the age of 18 it is set at 70 per cent of the adult rate rising to 80per cent for those over 18 for the first year of employment and 90 per cent for the second year.

For those in structured training during working hours, the minimum is set at 75 per cent of the adult rate for first one-third period, 80 per cent for the second one-third period and 90 per cent for the third one-third period.

The report says the three members of the commission with a business background and knowledge argued that any increase in the national minimum wage rate should not be implemented before the second quarter of next year.

“Those members stated that to implement a revised rate in the first quarter of the year would add additional and unsustainable costs on businesses, particularly in those sectors where low pay is most prevalent ie retail, restaurants and hospitality at the worst period of the year -- after Christmas, low retail spending and low-season for the hospitality sector.”

In its conclusion, the commission says while it is not possible to be definitive, based on Irish and international evidence, moderate increases in the national minimum wage are unlikely to have a significant adverse effect on employment as long as they did not impact on PRSI costs. However, it warns the position is less clear in relation to hours worked.

The commission also says that in its best judgment, a moderate rise in the minimum wage is unlikely to have a substantial effect on the cost of living.

In their minority report, Ms King and Mr Light maintained that because of an anomaly in the PRSI system, known as the PRSI step effect, a single adult working 39 hours a week could end up taking home less money after receiving a proposed 50 cent rise in the national minimum wage.

“There are no circumstances in which we can agree to such a scenario.”

They argued that it was inappropriate for the commission to make a recommendation on an hourly rate increase to the national minimum wage “on the basis of some prospective amendments to this scheme which the Government may or may not decide to make”.

Earlier this month Tánaiste Joan Burton told the conference of the Irish Congress of Trade Unions that any potential anomaly in the PRSI system arising from recommendations of the commission "would be addressed at the appropriate time in the Budget".

The membership of the Low Pay Commission is:

Dr Donal de Buitléir, Chairperson, Director of PublicPolicy.ie

Vincent Jennings, Chief Executive Officer, Convenience Stores and Newsagents Association

Patricia King, General Secretary of ICTU

Gerry Light, Assistant General Secretary, Mandate Trade Union

Caroline McEnery, Director, The HR Suite; HR & Business Solutions

Edel McGinley, Director, Migrant Rights Centre Ireland

Mary Mosse, Lecturer in Economics, Programme Director for Postgraduate Research, WIT Business School

Tom Noonan, Chief Executive, The Maxol Group, President of IBEC (2008–2010)

Prof Donal O’Neill, Department of Economics, NUI, Maynooth