Employers' representative body Ibec has claimed the Government's plan to reverse the minimum wage cut will undermine job creation.

Ibec was responding to Minister for Enterprise Richard Bruton's announcement yesterday that the Government intends to restore the minimum wage from €7.65 per hour to €8.65 per hour by the summer.

In a statement today, Ibec said this plan was at odds with the economic needs of the country, adding that a total overhaul of regulated wage rules was needed rather than "tinkering" with the system.

"If Ireland is to recover, labour costs right across the economy need to come back into line with those of our competitors, including the minimum wage," said Brendan McGinty, Ibec's director of industrial relations and human resources.

"At the increased rate of €8.65 the minimum wage would be nearly 30 per cent ahead of the rate in Britain and Northern Ireland."

He said the change will make it even more difficult for companies to create jobs.

"With 440,000 on the live register, it is the wrong approach and sends out a very negative message internationally about how Ireland is dealing with its very serious economic challenges," he added. "Current wage rules are putting viable businesses in jeopardy."

However, Mr Bruton said yesterday that the measures had the backing of the IMF and insisted the new laws would improve competitiveness in the economy.