Labour’s Liam Hogan has come out and condemned the reduction of the minimum wage from €8.65 to €7.65 as the ‘last callous act, the bitterest sting of a dying wasp that was this government.’

The reduction of the minimum wage for new workers came into effect on Tuesday February 1^st but Mr Hogan maintains that the business community should question the claims by government that this will make our economy more competitive and lead to job creation.

‘In my conversations with employers in the Cavan/Monaghan constituency, the cost of labour is not the main issue and none who I have spoken with actually employ staff on the minimum wage so they will not benefit.  In my experience employers want to see the cost of doing business reduced and they want access to capital from the banks – both of which will be dealt with if Labour are in government.  The Fianna Fáil/Green government sold the reduction of the minimum wage as good for business but for most businesses the exact opposite is the case.  Those on the minimum wage spend locally – and they spend every penny they have.  Reducing their income may benefit one employer but it effectively reduces spending power in the community with the result that retail and other local businesses will suffer.  It is a deflationary measure that hurts the most vulnerable in society and is generally bad for business because local business suffers. People cannot spend what they do not have.’

Mr Hogan added that, ‘Any business man or woman will tell you that wage costs are just one element of competitiveness. Many studies have indicated that wages are just a portion of overall labour costs and labour costs are, on average, approximately one third of overall business costs. Labour is committed to reducing the other costs which will make businesses more efficient and competitive but without deflating the overall economy.  After all, deflation undermines the very businesses we are supposed to be protecting.  For example, Labour will end upward only rent reviews, seek to reduce red tape and has already called for a full review of other business costs that influence competitiveness including utility bills; commercial rates and other input costs.’

‘Our export market output rose at its fastest pace in more than 10 years in January which is a clear signal that reducing our minimum wage has absolutely nothing to do with exports which is the only segment of our economy that continues to thrive in the midst of this recession. What does this tell us? The part of our economy which has not been cut is doing fine while it is clear that our domestic market needs a jump start.  By reducing the minimum wage however we are smothering it rather than breathing new life into it. Labour will reverse this short-sighted, ill thought out decision if we form part of the next government. February 1^st has been branded as Ireland’s ‘Day of Shame’ for what have done to the most vulnerable in our society but under a Labour government we will see to it that the reduction in the minimum wage is reversed not just for their sake but for the sake of the overall economy.