The plan to introduce a £4.40 minimum wage should be abolished in favour of a tax-free weekly wage of up to £150, the chairwoman of the Small Firms Association (SFA) said yesterday. Ms Lorraine Sweeney, who welcomed "wholeheartedly" the proposals put forward by the Tanaiste, Ms Harney, on getting the unemployed onto training or employment schemes, said that the minimum wage would cost businesses about £850 million per year. Most would be borne by small companies, she added.

She also claimed it would accelerate employers' recruitment problems, not alleviate them, creating a greater underclass than was already there. "It will actually mitigate against the under-privileged because employers will be forced to pick winners because of the higher rates," she said. Ms Sweeney added that the measures announced by the Tanaiste, Ms Harney, yesterday were the first indication received from the Government that they "are doing something positive about who are making themselves available for work from the dole and who are not". Ms Sweeney also called for a lower 12.5 per cent Corporation Tax rate to be introduced in the next budget on the first £50,000 profits of companies instead of the current 25 per cent rate for non-manufacturing companies. The Government is proposing to introduce a standard 12.5 per cent rate by 2003.

"Such a change would give many small companies an extra £6,250 to re-invest in their businesses," she said. Ms Sweeney said that the theme of the conference was that small firms could not get workers. The problem, she added, was not confined to the low paid but extended across a range of wage and salary rates because people were being "head-hunted" by larger companies.

"Salaries are increasing as a result of competition for people in certain sectors and, as a result, there are companies who cannot get people at £10,000, £15,000, £20,000 and £30,000."