The Irish Congress of Trade Unions has withdrawn from the Low Pay Commission, throwing the future of the Government-established body into doubt.
ICTU General Secretary Patricia King said the decision was prompted by the realisation that other members of the Commission were not prepared to propose an increase in the national minimum wage for 2021 beyond 1%.
Speaking on RTÉ's Morning Ireland, Ms King said a proposed increase of 1% (equating to 10 cent) to the minimum wage is "completely untenable".
The hourly rate for an experienced adult worker currently stands at €10.10.
She said that there are no circumstances where ICTU could go below an agreed increase of at least 2% for the minimum wage, adding that ICTU wanted more than 2% but it was clear that other members of the Commission would not agree to this.
However, she said, when it came down to the wire and members would not agree to more than a 1% increase, ICTU withdrew from the process.
"The lowest paid in our society suffered disproportionately during the last recession and we won't be party to a process that leaves them behind," she added.
The commission was set up in 2015 to advise and make recommendations to ministers on the national minimum wage.
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It has an independent chairman appointed by the Government and involves trade unions, employers and campaign groups.
Meanwhile, Sinn Féin's spokesperson on social protection Claire Kerrane said in a statement that the reported 10 cent increase in the minimum wage is '" slap in the face'" for workers.
"Over the last six months, we have praised workers on the front-line, the shop assistants, the factory workers, delivery drivers and those working in food services," she said.
"Many of these workers were deemed essential when Covid first hit and they continued to work under extremely difficult and stressful circumstances to keep the country running."
She added: "The suggestion of a 1% increase is an insult to workers."
Meanwhile, employers group Ibec has expressed surprise and disappointment at the withdrawal of Patricia King and Gerry Light from their positions as employees' representatives on the Low Pay Commission.
Ibec said the economy continues to face considerable challenges with the application of additional Covid related restrictions last week, with all the consequent impacts on retail, tourism and hospitality.
Unemployment stands at 16.7% and while the impact of Brexit remains unclear it is likely to further impact these vulnerable sectors next year, it added.
The employers group said that there is little evidence of pay increases across the private sector with many businesses where the national minimum wage is prevalent, availing of wage subsidy schemes and many others restructuring to survive.