When the idea of a minimum wage was first mooted in discussions on the Partnership for Prosperity and Fairness (PPF), many employers complained that it would increase labour costs to such an extent that many jobs would be lost.
At the time of its introduction at the rate £4.50 (€5.71) per hour in April 2000, the Tβnaiste Ms Harney said that "the introduction of the national minimum wage will ensure that those sectors of the labour force, especially women and young persons, currently on low pay, will get a better share of the fruits of the economic growth of recent years".
Last July the rate was increased to £4.70 and that figure will rise to £5.00 in October 2002.
A new report by the Economic and Social Research Institute (ESRI) on the impact of the minimum wage in the Republic says that its implementation has been very successful, and relatively painless for employers, thanks in part to good timing.
Indeed, it may only be now, 18 months after it was introduced, that the economic impact of the minimum wage policy will be felt among employers and employees.
"I think you'd have to say that in those terms the minimum wage was very successful precisely because it was introduced at a time of unprecedented buoyancy and falling unemployment, so it had as little effect on jobs as it possibly could have," said Prof Brian Nolan, a research professor at the ESRI and co-author of the report.
Around 13 per cent of the workforce is estimated to have benefited from the minimum wage last year. More than half of those below the minimum wage were women.
However, since then the labour market had become more competitive and many employers started pegging their bottom rates above the minimum wage to attract staff.
"Just because it didn't have a significant impact at a time of strong buoyancy, doesn't mean it wouldn't have an impact now," said Mr Aebhric McGibney, a senior IBEC economist and a member of the PPF committee that monitors minimum wage policy.
"The ESRI report said that it hasn't really affected that many employees but that's missing the point because if you look at any aggregate picture you're going to miss what happens in individual sectors," said Mr McGibney
According to the ESRI, the only sectors where a substantial number of firms had a lot of workers at £4.50 or less included textiles and clothing manufacture, clerical and personal services, retailing and hotels/bars/restaurants. Its survey of employers found that many firms in these sectors might have experienced a decline in employment as a result of the minimum wage.
As far as the setting of the hourly rate at £4.50 was concerned, Prof Nolan acknowledged some people may have been disappointed at this level given how quickly average wages had risen. However, a successful introduction was seen as greater priority than the level it was to be set at, he said.
"We have set up an institutional mechanism and put a floor on the wages levels very successfully. There's every indication it's working well in those terms. Now we can decide where exactly we want that floor to be, as economic circumstances change and as the labour market changes."
Aside from the ESRI report, there is plenty of other evidence pointing to its successful implementation. For example, the Equality Authority said there are few reported cases of employees taking legal action or complaints against employers for not paying them the minimum wage on the grounds of age, race or gender.
Although there is no reference to geographical impact in the report, anecdotal evidence suggests that it has had a much bigger impact outside Dublin, according to the Irish Congress of Trade Unions (ICTU).
Despite the apparent painlessness with which firms have adapted to the minimum wage, some employers claim that the economy has already been paying the price for its introduction.
Mr Pat Delaney, director of the Small Firms Association, said, on the basis of ESRI data, up to 11,000 jobs may have been lost as a direct result of the minimum wage.
Mr Delaney added that, with the downturn in the economy, it is likely to have a further adverse effect on the economy, as the corresponding decline in opportunities will acutely affect those earning the minimum wage.
Mr Delaney said he was not against the movement to a high-wage, high-skilled economy, but there could not be increased costs to business without an increase in skills and education levels of those at the minimum wage level, particularly with 7,000 young people leaving school early.
"The threat of the minimum wage is that it would encourage young people to leave school early just when we need them to stay."
Although Delaney claims that 11,000 jobs have been lost, the only reference in the ESRI report on the impact on employment levels is the 5 per cent of survey respondents who said they would employ more people if the minimum wage did not exist.
The ESRI calculated this to represent 5,000 extra jobs throughout the State that were not created. However, the report considers this to be an over-estimate, as half of those employers who responded did not actually employ people at £4.50 or less.
As far as the ICTU is concerned, the minimum wage is a "very useful economic instrument" in the fight to eliminate low pay, according to industrial officer Mr Liam Berney, who sits alongside Mr McGibney on the PPF minimum wage committee.
However, the Irish National Organisation for the Unemployed (INOU) said there was evidence from Northern Ireland that the long-term unemployed were being pushed into short-term unsustainable jobs that have no permanency or training involved. Nearly half of those on job-seekers' allowance who found work since the introduction of Britain's minimum wage more than two years ago are back on job-seekers' allowance within a year, said INOU spokeswoman Ms Noeleen Hartigan.
The ICTU would like to see a more scientific way of upgrading the minimum wage in the future.
"It should be linked to some other index, such as the average industrial wage, rather that just the vagaries of the market," said Mr Berney.
