Ireland has "lost the plot" in terms of having a competitive labour market and an overly generous minimum wage is contributing to job losses, according to the Small Firms Association.
In its latest attack on the minimum wage, the SFA claimed today that 500 jobs are being lost every week in Ireland and wage inflation is one of the main contributors to making Ireland a high cost uncompetitive economy.
The SFA contends that the proposed rise in the minimum wage to €7 per hour from February next year will leave Ireland with the third highest minimum wage within the EU. The Irish national minimum wage is already 25 per cent higher than US, Canada, Japan.
According to Mr Delaney "establishing a minimum level of pay by dictat rather than market forces is proving to be a negative employment strategy." He claims that employers are having to make efficiency gains by reducing the number of people they employ and the number of hours they work.
Ireland has shed 17,300 manufacturing jobs since January 2002 and we are constantly hearing that Irish prices are higher than those of other Eurozone countries. The fastest growing economy within the Eurozone is Spain which has a minimum wage of 451 per month.
From February 2004 the monthly minimum wage in Ireland based on a 39 hour week will be euro1,183 behind only the Netherlands euro1,269 and Luxembourg euro1,369 among EU countries.
Mr Delaney argues that the minimum wage has hindered the flexibility of the labour market leading to some workers being permanently excluded from employment.
Mr Delaney added "It is not the job of business to redistribute wealth, but to create wealth which can be redistributed by Government." The Government's responsibility for social equity should be achieved by prudent management of expenditure and tax reform not by making people unemployed, he concluded.