Lines are clearly drawn in battle over benefits of a minimum wage

THE trade unions are revelling in the debate on the minimum wage. It brings them right back to basics; fighting for the lower paid and being seen to win them a fairer share of the national cake.

Employers, in contrast, have been defensive. After the Small Firms Association brought an avalanche of trade union abuse on its head for attacking the concept, big brother, IBEC (the Irish Business and Employers Confederation), came out in opposition to a national minimum wage earlier this week.

The Programme for Government says that the new administration will provide for: "The introduction of a national minimum hourly wage, following early consultation with the social partners".

A Fianna Fail spokesman says while the concerns of all the social partners will be taken on board it is intended that the introduction of a minimum wage "will be a quick process". The figure the Government is most likely to settle on is about £3 an hour, or 50p less than the proposed British rate.

Such a low rate actually begs the question - will a national minimum wage have any impact at all? It would give someone on a 39 hour week gross pay of £117. The weekly rate for short term unemployment assistance is £65.40.

An unemployed married couple with one child would be entitled to £118.60. If one spouse took a job, the family would be entitled to the Family Income Supplement and the Back to Work Allowance to help make ends meet.

Nor would such a minimum wage make much difference to 100 000 people in low paid environments covered by joint labour committees. These committees, with joint union and employer representatives, agree minimum rates in sectors like agriculture, catering, contract cleaning, hairdressing, shops, millinery and women's clothing.

Only in retailing is the minimum hourly rate below £3. A shop assistant starts at £2.50 and needs to work for more than two years before earning £3 an hour.

While some of the other rates are not much more than the proposed new minimum national wage, most workers in unionised employments earn considerably more.

IBEC, however, is primarily concerned at the prospect of a national minimum wage leading to a wave of pay relativity demands. It also probably tears that the Irish Congress of Trade Unions will seek to extend the rule of thumb for calculating JLC rates across the labour market.

JLC rates are based notionally on 55 per cent of average earnings in the sector concerned. As the accompanying table shows, most other countries in Europe have minimum wage rates ranging from 50 per cent of average earnings to over 70 per cent.

The European exceptions are Spain and Portugal. The USA has a national minimum wage set at only 39 per cent.

Even if the ICTU secured such an approach, it would not push minimum rates much beyond £3.50 an hour, bringing Ireland into line with the proposed UK rate.

The attraction of a minimum wage, not just for trade unions but for vulnerable workers, is that it provides a simple legal mechanism for ensuring they are not left working for virtually nothing. It would also reduce the burden on the taxpayer of subsidising low wages through Family Income Supplement.

Employers, of course, reject the suggestion that FIS is a subsidy rigging the labour market in their favour. The director general of IBEC, Mr John Dunne, points out that if the unions were so concerned about a national minimum wage they had their chance to raise it in negotiations on Partnership 2000.

He says the evidence shows that the introduction of minimum wage rates tends to price people out of the labour market. Mr Dunne cites a new study by the Institute of Economic Affairs in Britain which says the introduction of a national minimum wage will lead to job losses there and cutbacks in training by employers.

Irish trade unionists may dismiss the institute as a free market think tank but Mr Dunne also cites a 1994 OECD study of minimum wage systems which suggests that setting minimum wage rates at too high a figure can damage employment growth. Such a policy would affect young people entering the labour market disproportionately and these are the workers most at risk of remaining unemployed.

The study suggests that because young people often live at home and usually have no family responsibilities, they should not receive the same minimum wage as older workers. However, such a scheme might evoke opposition from their elders, afraid of being driven out of work by cheap labour, not to mention those who argue for keeping young people in the education system.

Mr Dunne may be on stronger ground when he argues that a minimum wage should not be used as a means of eliminating poverty. Unemployment is an even bigger cause of poverty in Irish society than low pay. A minimum wage rate that destroys jobs would be self defeating.

Nevertheless, it is hard to believe that the large employers who form the bulk of IBEC's constituency are seriously perturbed at the advent of a minimum hourly rate of £3 an hour. As ICTU assistant general secretary, Ms Patricia O'Donovan, says companies based on paying their employees that little don't deserve to be subsidised - and probably aren't here for the long haul anyway.