Cutting minimum wage won't create jobs - Varadkar

FINE GAEL enterprise spokesman Leo Varadkar yesterday questioned the benefit of cutting the minimum wage from its current rate of €8.65 an hour.

Mr Varadkar said he did not believe that cuts in the minimum wage would benefit job creation and said he agreed with the trade unions in this respect.

He was responding to comments made by Minister for Finance Brian Lenihan at the MacGill summer school in Co Donegal where he said cuts in the minimum wage would be justified if it was shown that the current rate was an obstacle to job creation and job retention.

“I don’t honestly believe that reducing the minimum wage would achieve anything in relation to job creation,” Mr Varadkar said.

He said a 50 cent decrease in the rate would yield savings of only €16 per week to the employer. He said that even with six employees, this would be minimal savings.

Speaking on RTÉ's Morning Ireland, Mr Varadkar said it would be hard to imagine a company going "to the wall" on the basis of those figures.

He pointed out that the minimum wage had been frozen since 2007.

He said the solution was to change social welfare to make it more advantageous to be in work.

He denied that this policy would involve cuts in social welfare rates. He also denied that Fine Gael was trying to play the issue both ways.

The Labour spokesman on enterprise Willie Penrose described the call for a cut in minimum wage as “misdirected” and said that other ways should be looked at to cut the costs of small employers.

“The Minister for Finance and the economic consultant, Dr Peter Bacon have now joined the predictable chorus of calls from organisations like Isme for a cut in the minimum wage,” Mr Penrose said yesterday.

“Those on the national minimum wage did not create our current economic difficulties and should not now be asked to bear the brunt of corrective action,” he said.

“It is easy for somebody with the massive earning potential of Dr Peter Bacon to call for a cut in minimum wage.”

Aengus Ó Snodaigh of Sinn Féin said that any such move was simply not an option.

“The minimum wage has played an important role in keeping Ireland’s lowest-paid workers out of the poverty trap.

“Brian Lenihan knows that the right to an annual wage of €18,000 has not adversely affected Ireland’s competitiveness,” he said.