Under the National Minimum Wage (Low Pay Commission) Act, 2015, the Low Pay Commission has made recommendations to the Minister that are designed to set a minimum wage that is fair and sustainable, and when appropriate, is adjusted incrementally, and that, over time, is progressively increased to assist as many low-paid workers as is reasonably practicable without creating significant adverse consequences for employment or competitiveness. The primary aim is to have a minimum wage that will provide an incentive to work and help as many people as possible without having a significant adverse effect on the economy or a negative effect on employment.
The Low Pay Commission has recommended an increase of 10 cent to bring the new minimum wage to €9.25.
The government appointed people to the Low Pay Commission in March 2015 to examine the National Minimum Wage (NMW) rate which is currently set at €9.15 since January 2016. On an annual basis this body will advise Government on the appropriate rate for the NMW. The NMW was first introduced in April 2000 at €5.59.
Some Commission members backed the proposal to raise the rate by 10 cent. In making the decision the Commission considered the regional aspects and the cost of living in essentially a three tiered economy made up of Dublin, major cities like Cork and Limerick and then the rest of the country. The considerations of Brexit, inflation and the fundamental concern to balance a basic statutory minimum pay rate that is fair, with one that is sustainable and which allows employers to continue to create quality sustainable jobs were all taken into account in reaching this decision.
The Commission have examined the employment and unemployment rates generally, how earnings have changed since the minimum wage was last increased and what impact a change to the minimum wage would have on employment, the cost of living and on national competitiveness. Many employees on the minimum wage are those within the services sector and there lies the biggest challenge for employer wage cost management e.g. hotels, restaurants and retail and where the wage bill constitutes one of the largest overheads.
The rate has been viewed by the Commission as a sustainable increase and the Commission are hopeful that the government will implement it in the upcoming October budget. The Commission made strong recommendations to the government that the anomalies that currently exist for both employees and employers in relation to PRSI and taxation variances need to be addressed.
It has been recommended by the Commission that any increase would be implemented from January 2017. This recommendation and report will now be considered by the Minister who will decide if he will approve the same.
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