The Irish Business and Employers' Confederation has told the National Minimum Wage Commission that "across the board" legislation, which compels firms to pay artificially determined wage rates, would price many jobs out of the market.
IBEC's director general, Mr John Dunne, told the commission yesterday that the most effective way of combating poverty is to create jobs, while maintaining competitiveness. The Government's priority should be to increase take-home pay through reduced taxation, rather than by increasing nominal rates of pay.
Because of the high level of union membership in the Irish workforce, it was only necessary to monitor pay rates in sectors where trade union organisation is relatively light, he said. This was already being achieved through the system of Joint Labour Committees, where statutory minimum rates are regularly agreed. Mr Dunne suggested that a widening of the JLC system might be the best the way to establish a minimum wage system. "Considerable flexibility in pay levels is required - not only in the interests of maintaining business competitiveness - but in the interests of a variety of job seekers," he said. However, he accepted that the existing JLCs were inadequate to deal with the situation comprehensively.
He cited a 1993 report on low pay by the Economic and Social Research Institute, which suggested that most poor households would not benefit from minimum wage legislation, as most of the people concerned were unemployed. The issue of minimum pay was a complex one, Mr Dunne said. The "tax/social welfare system", strong negative attitudes towards certain occupations and the high level of tolerance of the black economy all militated against employers and employees in legitimate businesses. These were frustrated to "see some unemployed people with incomes that are apparently higher than their own".
A survey of IBEC members in the western region last April found that 57 per cent of employers had difficulty recruiting staff. Of these, 41 per cent ranked the "tax/social welfare system" as the biggest obstacle. A quarter ranked skill availability was their greatest problem in recruiting suitable staff and 19 per cent said it was the attitude to the job of potential applicants.
The best way to tackle the issue of low pay and poverty, Mr Dunne said, was to make employment more attractive. This should be done through tax and social welfare reforms aimed at increasing take-home pay, reducing the cost of recruitment for employers and facilitating the transfer from welfare to work.
