A leading economist has said that a recovery in the Irish economy is unlikely before 2010.
In his Quarterly Economic Outlook for Friends First, Jim Power said Ireland is still seeing the effects of the sub-prime crisis in the US, and would continue to do so for several years.
His comments came as the latest figures from the Central Statistics Office show the biggest monthly drop in retail sales in more than a decade.
There was also a further sharp fall of 5% in the value of Irish shares.
Mr Power added that pay restraint in the public sector was warranted; however the suggestion by the Small Firms Association that the minimum wage be reduced by €1 an hour was naive, he said.
The SFA has called for the minimum wage to be cut to €7.65 in order to preserve competitiveness in the workforce.
SFA Director Patricia Callan said Ireland had 'lost the plot' in terms of having a competitive labour market.
However, SIPTU described the proposal as nonsensical grandstanding which would punish the poor.
The minimum wage in Ireland is €8.65 an hour. At 39 hours a week, that is €1,462 a month.
It is the second highest in Europe after Luxembourg, according to Ms Callan. It is also more than twice that of the US, and 19% higher than the UK.
The director said small firms which are vulnerable to payroll costs want the minimum wage cut by €1 an hour.
She pointed out that in the first half of this year, there were over 16,500 redundancies in Irish companies.
She claimed that the Irish minimum wage level was contributing to jobs being lost to lower cost economies, and to a 42% surge in youth unemployment.
However, SIPTU President Jack O'Connor said the cost of living was being driven up by profit taking by the business community - including some companies that only pay the minimum wage.
The proposal is expected to be discussed at the next round of national pay talks.