Uncertainty over minimum wage hike that would see annual pay pass €30k for first time

There are doubts over whether a proposed increase of nearly 80 cent per hour for about 200,000 workers covered by the national minimum wage will be approved by the Government. Senior sources said over the weekend it was not certain the Government would follow the recommendation of the Low Pay Commission (LPC) for a 79c increase in the hourly rate, which would bring it to €14.94 from January 1st next year.The LPC, which includes representatives of stakeholders such as employers’ groups and trade unions, recommended the increase to Minister for Enterprise Peter Burke this summer. Burke is not required to accept it, but no such recommendation, made every year, has been rejected since the establishment of the minimum wage. They are generally considered by the Cabinet as part of the budget process. READ MOREOne senior source said while no decisions had been taken, it was “certainly not a definite” that the Government would sign off on the full increase, and another Cabinet Minister shared their private view that the “recommendation is too high” – but added they were not sure what the final decision would be. That Minister also expressed the view that the LPC should be restructured. Some in Government believe an increase would drive labour costs up, which in turn could feed into the price of food and other consumer goods and services. If implemented, the new rate would take the weekly wage for a person working a standard 39-hour week to €582.66 and to €30,298.32 annually, breaking the €30,000 mark for the first time.However, employers have argued the proposed increase in the minimum wage from the start of next year would damage employment in labour-intensive sectors such as construction. Elsewhere, pressure is growing within the Coalition to go higher than a mooted €7.50 increase in weekly welfare payments in the budget, with fears of a political blowback if it is seen as coming in too low. However, senior sources warned that a higher across-the-board increase would mean less could be done on targeted measures.Negotiations over weekly welfare rate increases are “nowhere near agreement”, according to a source with knowledge of discussions – but there is considerable unease across Government about the prospect of trying to sell an increase of €7.50, which would be €2.50 less than last year.[ Should the minimum wage be raised again?Opens in new window ]Meanwhile, spending officials are resisting further steps towards scrapping the means test for the carer’s allowance after last year’s budget led to a significant increase in new applications for the payment.[ Median household income in Ireland passes €60,000 for first timeOpens in new window ]Last year, the income disregard – the portion of someone’s weekly income not taken into account during assessment – was raised to €1,000 for a single person and €2,000 for a couple. It is understood the Department of Public Expenditure wants more time to analyse the impact of the higher level of demand before agreeing to a further increase.The programme for government commits the Coalition to scrapping the means test entirely over the course of its lifetime. Any pause would doubtlessly lead to a backlash from carers’ groups, and Coalition sources said the cost of increasing the threshold again could ultimately prove worthwhile.Meanwhile, sources said the provision in the budget for a public sector pay bill is not €2 billion as reported at the weekend – but would be at least €1.2 billion.