On 9 February, the SFA made a written submission to the Low Pay Commission on the appropriate level for the National Minimum Wage (NMW). The SFA called for the NMW rate to remain at €9.55 in 2019. This is the preference of two-thirds of SFA members as expressed in a flash survey last week.
The submission focused on the threats to competitiveness if the NMW continues to rise. It has increased by 10.4% since 2015, outstripping average wage increases across the economy and well ahead of inflation, which has been minimal over the period. The submission suggests that at the current economic juncture, cost competitiveness is of upmost importance if Ireland is to avoid repeating the mistakes of its recent past. Policy should take the path of least harm as the economy navigates this critical period.
The submission also analyses new data from the Central Statistics Office that shows that minimum wage workers are predominantly young workers, carrying out basic tasks on a part-time basis. In the labour market as a whole, unemployment is declining but those that remain on the Live Register face challenges to entering employment due to their circumstances (low skilled, young people and the long term unemployed). It is important that no additional barriers to employment are created.
Furthermore, a detailed examination of economic activity in certain sectors and regions demonstrates the varied circumstances and prospects of businesses. SFA members have identified wage pressures as the biggest threat to their businesses in 2018. Taking these factors into account, the submission states that across the board pay increases are not appropriate at this time. Firm level negotiation remains the most appropriate method for setting wages, taking into account the performance of the business and of the individual employee.
The full SFA submission is available here.
More information about the Low Pay Commission can be found here.