A disagreement between trade unions and employer groups is overshadowing plans by the Government to introduce legislation on a national minimum wage. The Cabinet has approved the draft heads of a minimum wage bill but no decision has yet been taken on the level at which the wage will be set or on a mechanism for reviewing the level.
The National Minimum Wage Commission recommended an hourly rate of £4.40, to take effect from April 1st next. The unions, however, argue that this rate has been overtaken by the strong economic performance, with many employers having to offer higher wages to attract staff.
In its mid-term progress report earlier this week, the Government avoided mentioning a rate for the minimum wage. A spokesman for the Department of Enterprise and Employment confirmed the legislation would indicate the initial rate, although "no formal decision has yet been taken on what that rate will be". The Tanaiste, Ms Harney, who has responsibility for the legislation, repeated her preference for a rate of £4.40.
When the commission published its recommendations in April 1998, it calculated the £4.40 figure as two-thirds of the median of average industrial earnings.
One union source described that level as "now being unacceptable". Based on more recent economic growth and wage increases, the unions say the level would now be around £4.80 and by April 1st next £5.00 an hour would be a more realistic figure.
A business source rejected these demands, saying the initial £4.40 "was set in stone" and could only be reviewed after April 1st as part of a new partnership agreement. It is understood the Government favours the employers' preference for a review mechanism within the partnership process.
The vice-president of SIPTU, Mr Des Geraghty, said the national minimum wage was not part of the partnership deal. He believed "the Labour Court would be an ideal model, with adjustments in the minimum wage being made in line with annual pay movements".
The commission recommended a statutory body, chaired by an independently appointed individual, to review the rate.
The employer groups are strongly resisting any separation of the minimum wage from the pay negotiations within the social partnership process. The director of the Small Firms Association, Mr Pat Delaney, said: "The only way to maintain relativity between the minimum wage and pay rates is to keep them both in the partnership process."
A Government source accepted that "neither side is entirely happy" with the draft legislation.
Studies have shown that implementing a £4.40 level would add 1.6 per cent to the national wage bill, benefiting 163,000 workers.
Negotiations on a new partnership deal are due to begin in the autumn as the Government publishes the minimum wage legislation.