Concern at plan to reverse minimum wage cut

BUSINESS REACTION:THE BUSINESS sector has broadly welcomed the Fine Gael-Labour programme for government.

Lobby group Ibec responded positively to the programme’s support for job creation and efforts to tackle the budget deficit in line with the EU-IMF programme.

However, it added that any move to reverse the minimum wage reduction or introduce collective bargaining rights was “at odds with the economic needs of the country”. Ibec welcomed the commitment to Ireland’s 12.5 per cent corporate tax rate and the decision not to increase the top marginal rates on income. Further commitments to hold employer PRSI at existing rates and offer a reduced rate for some jobs were also received positively.

The Small Firms’ Association cautiously welcomed the new programme. It praised the commitment to introduce a loan guarantee scheme and support for job creation. However, the association criticised the proposal to reverse the cut in the minimum wage. Its director Avine McNally said that many firms would be disappointed there was no commitment for a reduction in local authority rates or a reduction in employer PRSI.

She welcomed the intention to address some other business costs such as commercial rents.

The Irish Small and Medium Enterprise Association described the programme as a “mixed bag” saying that while some aspects of the deal were good for small and medium-sized firms, issues such as cost competitiveness and public sector reform “were either ignored or fudged”.

The association welcomed the decision to ensure an adequate pool of credit for small and medium enterprises and the establishment of a strategic investment bank. It said decisions to cut employer PRSI and VAT on services and abolish the travel tax were steps in the right direction but was critical of the decision to reverse the minimum wage cut.

Chambers Ireland expressed disappointment that some of the measures in the programme may not go far enough to help businesses create jobs.

The organisation’s deputy chief executive, Seán Murphy, said the decision to reverse the cut in the minimum wage was “disappointing” and could undermine some of the recent gains Ireland has made in cost-competitiveness.

The Construction Industry Federation said investment in infrastructure offers the potential for a significant employment boost. But it warned of the need for “significant reform” of how projects are delivered.