The national minimum wage should be scrapped, a business lobby group has urged.
Irish Small and Medium Enterprises Association chief executive Mark Fielding said the national minimum wage - which is currently set at €8.65 perhour - had failed in its stated task of addressing poverty. He said the concept of a national minimum wage was "wrong from the beginning". He said it placed an onus on employers to pay a wage that was sometimes not economical.
Mr Fielding told the Oireachtas joint committee on Jobs and Enterprise that while it was the responsibility of employers to pay a fair wage, it was the responsibility of the Government to re-distribute wealth. He said it was not the job of employers to pay workers above the rate they could afford.
Mr Fielding urged the Government's new Low Pay Commission should "concentrate its efforts on projects to assist job creation rather than finding excuses to increase the national minimum wage".
The Low Pay Commission, which begins its work this week, is to make recommendations to the Government by the summer on the appropriate rate for the national minimum wage.
The association, which represents over 9,000 small and medium-size firms, proposed there should be a minimum income policy which “which would include earned income tax credits to encourage people to take up jobs rather than remain on the dole”.
It said the Government could introduce an incomes policy which could include an earned income tax credit, “which could be a process to remove all tax and other deductions on income that equate to two-thirds of the average industrial wage of €32,000, ensuring that individuals can earn up to €20,000 per annum before being taxed”.
It said this would have the advantage of removing all low paid employees from the tax net, enhancing the progressive structure of tax policy, making gainful employment more rewarding than the live register, fulfilling the Government’s obligation to redistribute income through the tax system and take the onus and cost of income distribution from employers.
Mr Fielding said he did not have costings for his proposal for an earned income tax credit and suggested that this work should be carried out by the Low Pay Commission.
He said that when low-wage workers were supported through tax cuts and rebates, all taxpayers would share the financial burden.
“The Government should use the tax and welfare system to put money into people’s pockets, rather than facilitating and encouraging an economically damaging upwards spiral in wages,” Mr Fielding said.
He said the notion of pushing up wage costs at this time failed to recognise the business realities in what was still a very challenging economic environment.
Isme was one of a number of groups and individuals who made submissions to the committee on Tuesday in relation to the national minimum wage.
"Central Statistics Office figures on income and living conditions show that consistent poverty has increased since 2004 and deprivation rates are steadily increasing despite a 55 percent increase in the national minimum wage since its introduction in 2000. The consistent poverty rate is highest among the unemployed at 19.2 per cent , while those at work have the lowest consistent poverty rate at 1.9 per cent . These figures would point to the fact that employment is a much more important factor in the fight against poverty, while the blunt instrument of a national minimum wage and the resultant knock-on effects of pay increases will reduce employment", Mr Fielding said.
“We don’t have to wait for Central Statistics Office figures to see that the national minimum wage is a failure, just listen to Father Peter McVerry, on a daily basis draw attention to the increase in homelessness.
“People are not in poverty because the minimum wage is too low, or because their hourly pay is too low, even when they make above the minimum wage. People are in poverty because they are not working or not working enough. They need jobs, not an increase in the minimum wage. “
