MINIMUM WAGE:THE MINIMUM wage should be reduced by €1 to €7.65 and other employment agreements should be reviewed to remove barriers to the creation of new jobs, according to the National Recovery Plan.
The Government is to introduce legislation to reduce the minimum wage by 12 per cent to €7.65 to enhance the competitiveness of the economy.
The plan says the current level is the second highest in the European Union in absolute terms and sixth highest when expressed in purchasing power.
This is having negative effects by acting as a barrier for younger, less well-skilled workers to enter the labour force; preventing small firms from adjusting wage costs downwards to maintain viability; and reducing the capacity of the service sector to generate extra employment by offering lower prices to people.
“Our circumstances have changed dramatically in the last three years. Price levels have reduced and earnings have adjusted downwards to help to preserve jobs. A reduction in the minimum age level – as proposed by the OECD (Organisation for Economic Co-operation and Development) – can also be expected to remove a barrier to job creation,” it says.
Other employment agreements, known as employment registration orders and registered employment agreements, between employers and workers will also be reviewed, according to the plan.
These agreements cover sectors such as construction, agriculture, cleaning, hotels and the security industry.
The Migrant Rights Centre and the Mandate trade union said cutting the minimum wages of the lowest-paid workers would “degrade working conditions and lead to a decrease in productivity, damage consumer spending, and will place those with the lowest incomes, including migrant workers, in an impossible situation”.
Mandate general secretary John Douglas said the minimum wage was introduced in recognition of the “huge wage inequality that exists in this country”.
Labour Party enterprise spokesman Willie Penrose said: “Cutting the minimum wage makes absolutely no sense at any level. The hardship such a cut will cause will be very significant for the tens of thousands of households who rely on minimum-wage employment and will act as a disincentive to work,” he said.
There was certainly some merit in the proposals to reform registered employment agreements or employment regulation orders in the agricultural, catering, construction and electrical contracting sectors, he added.