RAI See No Rationale Behind the Proposed Increase in the National Minimum Wage
July 17th, 2015
Any Increase in the Minimum Wage will Lead to Job Losses within The Restaurant Sector
Restaurants Association of Ireland (RAI) are opposing an increase in The National Minimum Wage and proposes a reduction of the controversial Universal Social Charge (USC) for employees. The National Minimum Wage in Ireland was introduced under the National Minimum Wage Act 2000. It currently stands at €8.65 per hour. In January 2015, Ireland had the fifth highest minimum wage in the EU compared to €8.50 in Germany.
An increase in the minimum wage will have a disproportionate negative impact on restaurants outside of the Greater Dublin Area. Excluding car sales, economic activity in Ireland is still very fragile. Adrian Cummins, Chief Executive of the RAI commented, “If the desire of the Government and the Oireachtas is to ensure people have more disposable income in their pocket at the end of the week, that they are able to support themselves and their families, then I suggest we look at what emanates from elsewhere in the Oireachtas; the most direct way to increase take-home pay is to reduce the excessive burden of taxation and the controversial USC on employees.”
Since 2000, The Minimum Wage increased faster than the average price level. The report found that a person earning the Minimum Wage was better off in 2012 than when it was introduced in 2000. If the ratio of the Minimum Wage to the price level were the same in 2012 as in 2000, the Minimum Wage would be approximately €7.42 per hour.
The RAI’s submission to the Low Pay Commission sets out the key arguments;
- Ireland has one of the highest minimum wage packets on the planet (seventh highest).
- An increase in the minimum wage will stifle job creation.
- The last increase in the minimum wage was in 2007, before the recession. Now is not the time to increase the minimum wage. We will lose competitiveness if there is an increase.
- An increase in the minimum wage would have a disproportionate negative impact on restaurants outside of the Greater Dublin Area. Economic activity in rural Ireland is still very fragile.
- Excessive wage growth fuelled the Irish economic bubble and helped undermine the competitiveness of the economy. This ultimately contributed to the collapse of the economy from 2008 onwards.
Given the still fragile nature of Ireland’s recovery and the difficult environment for the Restaurant sector, increasing The National Minimum Wage which would have a push through effect on wages up the line, does not make any sense. Mr Cummins commented. “I have spoken to members across the country and they were in a state of disbelief that there was talk of increasing wages when restaurants are struggling to keep their doors open.” An increase in the Minimum Wage will stifle job creation and cause further emigration at a time when youth unemployment stands at 21.6%.
Notes to the Editor:
The restaurant sector is highly labour intensive and so wage costs account for a significant part of total operating costs. It is estimated that in the Hotel & Restaurant Sector, labour costs account for 50% of total input costs and around 11% of workers in the sector are on the minimum wage. An increase in the minimum wage would add to wage demands up the line and add significantly to total input costs. For a sector that is starting to experience a gradual recovery in business performance and which plays such an important role in national and regional employment, adding to operating costs at this juncture would be premature and potentially damaging.
For further information contact:
Restaurants Association of Ireland
11 Bridge Court, Citygate,
St. Augustine Street, Dublin 8.
Mobile: +353 86 8263311
Telephone: +353 1 6779901
Fax: +353 1 6718414
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