The Minister of State for Youth Affairs, Mr Willie O'Dea, has warned that setting a minimum wage as high as £5 an hour could damage the job prospects of school-leavers and others on low pay. Mr O'Dea is the first Minister to comment on the issue since the Government set up an independent commission on low pay last summer. The Irish Congress of Trade Unions has said it wants a minimum wage of £5. It says this is only 41p above the basic pay rate in the lowest-paid industries.
Mr O'Dea said yesterday: "While we must address the position of the low-paid, there is a danger of going over the top without fully thinking out the consequences. The effects of big wage increases in low-paid sectors with high staff turnover could result in gains for those at work but opportunities drying up for new entrants into the jobs market."
He added: "I am very concerned that all effects of the national minimum wage on youth employment are evaluated. I am also concerned that the question of age differentials in setting minimum rates be examined.
"If there is no differential, then it could be more difficult for young people with no experience to compete for jobs. On the other hand, if there is one, older workers - and in particular the longterm unemployed - will be discriminated against. Cynical employers could also take young people on short-term contracts and dump them at their next birthday in favour of someone younger.
"An over-regulated labour market has a tendency to react viciously against initiatives originally intended to benefit the unemployed or the low paid. Contract, part-time and temporary employment has resulted, in part, from employment protection legislation."
The ICTU research and information officer, Mr Oliver Donohue, said the National Youth Council of Ireland had already come out against a two-tier pay system. He added: "If Mr O'Dea is serious about sharing the benefits of our new-found economic prosperity, £5 an hour is not a big increase."