IT WAS ONE of Labour’s pre-election shouts – that it had increased the minimum wage to €8.65 but now some members of Fine Gael want to take it away from them.

In its policy on youth employment, the youth branch of the party (YFG) has set out its views on the current minimum wage.

In a proposed policy, YFG suggests lowering the minimum wage by €2 while, at the same time, implementing an earned income tax credit so workers’ pay would not be affected.

At present the minimum wage rates in Ireland are:

• €8.65 per hour for an experienced adult worker
• €7.79 per hour for those over 19 and in 2nd year of first employment
• €6.92 per hour for those over 18 and in first year of first employment
• €6.06 per hour for those aged under 18.

Here’s YFG’s rationale for reducing each category by €2:

These are among some of the highest minimum wage rates in Europe and act as a barrier to job creation. With youth unemployment rates of 26% and an overall unemployment rate of 12% in the first month of 2014, a high minimum wage disincentives businesses from locating in Ireland and employing workers.

Explaining the ‘earned income tax credit’, it says:

To institute an earned income tax credit on the part of the government of €2 for the workers whose wages have been reduced. This would mean that although the minimum wage would have been cut, these workers would still receive the same amount of pay as the government would subsidise the difference in earnings through an earned income tax credit.

Put simply, workers would continue to earn between €6.06 and €8.65 per hour but the government would pay €2 per hour of that, keeping costs for businesses down.

• READ THE FULL POLICY DOCUMENT HERE. 

Despite claims that the policy is both pro-worker and pro-business, the youth party has been widely criticised today.

Labour Youth came out with a statement, saying that the “State should not subsidise or indeed incentivise low pay and should not encourage a race towards lower wages among employers”.

President of YFG, Dale McDermott responded to questions, pointing out that the €2 per hour would be subsidised and that take-home pay would not change.

However, there were still questions about how the policy would work in practical terms. Would it come from the Department of Social Wefare’s budget? Would there be administrative costs? Would be an upfront loss to the worker?

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