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The Low Pay Commission, launched on a high note last week by the Taoiseach Enda Kenny TD, Tánaiste Joan Burton TD, Minister Richard Bruton TD and Minister of State Ged Nash TD, has its work cut out. The establishment of this body was a key commitment in the Statement of Priorities agreed by the Taoiseach and the Tánaiste in July 2014. The Commission has been asked to recommend an appropriate rate for the National Minimum Wage, within five months. This is a tight deadline by any standards.

A National Minimum Wage was introduced in Ireland under the National Minimum Wage Act 2000.In April 2000 the Irish government set a £4.40 minimum wage. The current rate is €8.65. It has remained at that rate since 2007, except for a period in 2011 when it was cut by €1 by the previous Government. The current Government reversed that cut in July 2011.

Debate on National Minimum Wage

This is no quiet economic topic. It is a matter that gets hotly debated. Supporters argue that a minimum wage is necessary to ensure that workers are not forced to work for wages below the poverty line. Opponents argue that it is an artificial, government-imposed wage, which increases unemployment, as some employers cannot afford to pay the agreed rates.

Arguments in favour focus mostly on the fact that employers should have a responsibility to ensure that workers are given a living-wage. Of course the national minimum wage does not stop an employer from offering a higher wage. On the other hand, opponents argue that, in a global economy, where companies and countries compete with each other, there is always the threat of moving production of goods overseas, to where wages are lower and where the workers have fewer rights; known as “the race to the bottom”. There is a wide gap between the supporters and opponents of this policy.

Even before the Low Pay Commission started its work in earnest, the trade unions and the employers had already made their views quite clear.   SIPTU General President, Jack O’Connor stated that his union will engage in – “…a new battle to establish a minimum living wage of €11.45 an hour across all those sectors of the economy where the gross exploitation of vulnerable workers is the order of the day.” On the other hand, IBEC, the group that represents Irish business, said that there is no justification for a rise in the national minimum wage at this time. Maeve McElwee, IBEC’s Head of Industrial Relations has argued that “Recent cost of living trends, along with the inflation outlook for 2015, indicate that there is no justification for an increase to the national minimum wage at this time”.

The Commission at work

The Commissioner plans to take an evidence-based approach to the task at hand. They will involve examining existing data; commissioning new research if necessary, and consulting directly with workers and employers in order to decide on what the minimum wage should be. The chairperson is Donal de Buitleir and he is being supported by eight commissioners –  Vincent Jennings, Patricia King, Gerry Light, Caroline McEnery, Edel McGinley, Mary Mosse, Tom Noonan and Donal O’Neill.

There is quite a range of issues that will have to be examined before the Commission comes to make its recommendations. They include:-

•  the changes in earnings since the minimum wage was last increased in 2011;

•  the unemployment and employment rates generally;

•  the expected impact of a change to the minimum wage on employment, the cost of living and national competitiveness;

•  changes in income distribution, and

• currency exchange rates.

Report by mid-July

The Commission has been given a tight schedule. By mid-July it must settle on an appropriate wage rate. This leaves the Government quite a short to fully deliver on the wage-rate commitment set-out in the Statement of Government Priorities 2014 – 2016. But the Taoiseach and the Tánaiste have publically given their backing.The Taoiseach, Enda Kenny TD said that “…we are establishing a Low Pay Commission to make annual recommendations on the minimum wage. To protect existing jobs, I will also ask Government to look at measures to mitigate the impact any changes could have on small employers.” In turn, the Tánaiste Joan Burton TD said, “The Low Pay Commission represents the next step in the Government prioritising work and fairness as the economic recovery takes hold. Having a job is the best protector against poverty, and fair wages and conditions are essential to that.”  The recommendations from the Low Pay Commission will be closely examined by all interested parties when they are published.

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