The Facts

The minimum wage is €8.65 per hour and has been frozen at this level since July 2007. The rate is 30% lower for those under 18 and 20% lower for those over 18 but working for the first time.

Only 1.6% of industrial workers were on the minimum wage in the final quarter of 2008, down from 2.5% in the first quarter of 2007. No figures are available for the numbers on the minimum wage in other sectors.

The minimum wage was introduced in April 2000, at a rate equivalent to €5.59 per hour. In the meantime, average industrial earnings for manual workers increased by 60% up to the final quarter of last year.

If there had been a pro-rata adjustment in the minimum wage, it would have been set at a level of €8.95 from this January (2009).

The rate is set by the Minister for Enterprise, Trade and Employment, but the process is embedded in Social Partnership arrangements. The legislation gives Social Partnership the key role in proposing changes to the Minister. If there is no such Partnership agreement in place, the Labour Court must recommend any changes. It is not clear that the legislation gives the Minister the power to act without such inputs.

In May 2009 there was a de facto cut in the minimum wage, when the Minister for Finance subjected it to a 2% income levy, thereby reducing the take-home minimum wage to €8.48 per hour. On top of that, the Harmonised Index of Consumer Prices increased by 1.8% between July 2007 and June of this year. Minimum wage earners have, accordingly, already suffered a 4% cut in their living standards.

The legislation allows companies to apply to the Labour Court to pay below the minimum wage for a period if they believe this will prevent them going out of business. No company has availed of this provision.
The introduction of the Minimum Wage had a particularly positive impact on female earnings and on reducing the gender pay gap. The Government’s National Women’s Strategy (2008) commits to ‘ensuring effective monitoring and enforcement of the National Minimum Wage’ as a core action to ‘decrease the gender pay gap in Ireland’.

The State of the debate

Proposals that the Minimum Wage should be cut have been put forward by employers’ organisations for several months. The Small Firms Association (SFA) is seeking a €1/hour cut in the rate – 11.5%, some Fianna Fail TDs added to the call in February 2009 (Irish Times). Calls for a cut reached a new level in July 2009 when the Minister for Finance Brian Lenihan commented that reductions should be considered if they are a barrier to maintaining jobs. 

Statements by Fianna Fail Ministers have gone no further than that the rate ‘should be open to discussion’ (Michael Martin and Brian Lenihan). The Taoiseach has stated that this is a matter for the Labour Court and not the Government (Irish Times, 23 July 2009).  This statement might make it difficult for the Cabinet to return to this matter.

Several sectors of employment have other forms of collective agreement on wage levels which are above the Minimum Wage (sometimes only marginally).These are the Joint Labour Committee (JLC) and Registered Employment Agreement (REA) systems. The new Minister for Labour Affairs, Dara Calleary, proposed that these be subject to a similar ‘inability to pay’ provision to that which exists for the National Minimum Wage.

Fine Gael has come out strongly against reducing the minimum wage because: ‘it would mean more people on social welfare’ (Enda Kenny) and argued that it is not an obstacle to provision of jobs (Leo Varadkar).