Restauranteurs in ‘state of disbelief’ over proposed minimum wage increase. The Restaurants Association of Ireland (RAI) says any increase in the minimum wage will lead to job losses within the restaurant sector
The RAI has told the government’s Low Pay Commission that it is opposing an increase in the national minimum wage (NMW) and proposes a reduction of the controversial Universal Social Charge (USC) for employees.
Ireland’s national minimum wage 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.
In a press statement, the association said an increase in the minimum wage will have a disproportionate negative impact on restaurants outside of the greater Dublin area, and that excluding car sales, economic activity in Ireland is still very fragile.
Adrian Cummins, chief executive of the RAI said “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 has increased faster than the average price level. An Oireachtas 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 also states that Ireland will lose competitiveness if there is an increase. The association argues that excessive wage growth fuelled the Irish economic bubble and helped undermine the competitiveness of the economy – which ultimately contributed to the collapse of the economy from 2008 onwards.
Cummins reports members were in “a state of disbelief” about the possibility of a wage increase when they were struggling to keep their doors open. He said an increase in the minimum wage will stifle job creation and cause further emigration at a time when youth unemployment stands at 21.6%.
It is currently estimated that within the hotel and restaurant sector, labour costs account for 50% of total input costs and around 11% of workers in the sector are on the minimum wage.
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