Written Answers. - Minimum Wage.

John Perry

Question:

137 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment the impact the introduction of the minimum wage has had in the increase in inflation in view of the fact that services sector inflation is running at 7%. [22280/00]

The National Minimum Wage Act, 2000, delivered on the Government's commitment, in the programme for Government, to introduce a national minimum hourly wage.

An ESRI impact study, May 1999, estimated that 163,000 employees would benefit from the national minimum wage, particularly women and young workers. The ESRI study also concluded that the national minimum wage would directly increase the national wage bill by 1.6% and lead to an increase of 0.26% in inflation in the short term and 1.45% in the long term.
Inflation in the 12 months to August 2000 was 6.2%, which has been attributable to a number of factors, including increased oil costs, higher European Central Bank interest rates, the decline in the value of the euro, and domestic causes such as higher excise duties on tobacco products and services sector inflation.
Inflation in the services sector was 6.9% in the 12 months to August 2000 and has contributed 1.2% to overall inflation. This can also be attributed to a number of factors. In relation to labour costs, the tightening labour market is pushing up wages throughout the economy, including the services sector. The national minimum wage, as forecast by the ESRI, has also contributed to the increased costs of labour in the low paid sectors of the economy.
The statistics published by the Central Statistics Office on inflation do not show the impact of the introduction of the national minimum wage on the current rate of inflation and therefore it is not possible to precisely quantify the impact of the national minimum wage.