Proposed increase will create false wage expectations across Economy.
Labour intensive small business under increased pressure.
National Minimum Wage a blunt instrument to tackle poverty.
ISME, the Irish Small and Medium Enterprises Association, has warned that the proposed increase in the minimum wage to €9.15 per hour will cause further damage to Irish business competitiveness, calling it another body blow for many small businesses, struggling to maintain a competitive position in an already high cost, high wage economy.
According to ISME Chief Executive Mark Fielding, “It is almost magical that the proposed increase is exactly the amount that the Government gave in their surrender to the Public Sector unions recently. It shows, not only a lack of innovation but a total lack of independence of thought and a triumph of politics over economics”.
“This proposed 6% increase will be devastating for many small businesses who are struggling to come out of recession. From the perspective of a small business, the Minimum Wage at the proposed level, will further distort competition by imposing a raised artificial floor for wages and trigger a knock-on effect, as higher paid employees use it as a benchmark from which to negotiate larger wage increases”.
“As the Government talks, but does nothing, about addressing competitiveness, small business continues to suffer through incessant, interminable increased costs, many of which are Government driven or sanctioned, thereby undermining that very drive for competitiveness. This proposed increase in the Minimum Wage will exacerbate the situation for many small businesses, who, unlike Big Business, which is almost totally unaffected by the Minimum Wage and better able to absorb increases in cost. The SME sector, on the other hand, is highly price sensitive.”
“While the Association has always accepted and championed employees earning a minimum income, this proposed increase in the minimum wage will have a detrimental impact on a significant number of small businesses, particularly those hiring part time and unskilled workers.”
“It should not be the responsibility of employers to be wealth distributors in the economy. It is ironic that in attempting to address poverty, the Government will in fact penalise another exposed and vulnerable sector, namely the small business sector. Increasing the minimum wage is a blunt instrument in addressing poverty and only serves to increase the cost base of small business, which in turn leads to higher prices or job cuts, “he continued.
“ISME is not against legislation that addresses poverty, marginalisation, and social exclusion. Such legislation must be balanced however, by the ability of employers to pay and the economic consequences of increases, way beyond the level of inflation and European levels,” concluded Fielding.