The National Minimum Wage should rise by almost 3% or 30 cent to €10.50 per hour from next January, according to the Irish Congress of Trade Unions.

In a submission to the Low Pay Commission which recommends the legally binding minimum wage, Congress describes the context for this year's review as "somewhat unique" - given the pandemic and Brexit.

However, it notes that the arrival of vaccines has opened up the possibility that life will return to a form of "near normal" over the coming period, and that some of the potential impact of Brexit has been minimised.

It says that the Programme for Government has committed to increase the rate to a living wage over the lifetime of the current administration.

"The Living Wage Technical group estimates the Living Wage is €12.30 per hour in 2020/21. Assuming a modest 1.1% increase in the Living Wage to €12.45 would leave a €10.20 Minimum Wage at just 81.9% of the Living Wage rate, while a €10.50 Minimum Wage would be at 84.3% of the Living Wage," the submission states.

Congress argues that the commitment by government to value the contribution of workers in low paid employment means the LPC must use this year's review to begin the process of implementing a Living Wage - which in turn means recommending an increase in the hourly minimum wage "... which is in line or ahead of the general movement in earnings in the economy".

It forecasts that the economy will bounce back with a "prolonged economic expansion" when the pandemic eases.

Reasons for this include an unprecedented level of pent-up demand for activities currently constrained by the lockdown, the normalisation of the household savings rate from its current "excessive and historically high" level, and an increased demand for exports arising from a generally strengthening global economy boost in capital investment.

"Crucially, low paid workers have higher propensities to consume. This means that wage increases for low paid workers and income supports for low-income households are particularly suited to the goal of stimulating aggregate demand," it states.

The Congress submission notes that in 2020, total compensation of employees fell marginally (0.1%) in 2020 compared to 2019, though some sectors saw significant falls. 

ICT saw an increase of 8.9%, but wages in arts and entertainment were down by over 15%, distribution transport hotels and restaurants saw a decline of 11.3% while pay in real estate activities fell by over 7%.

"In particular, job losses and reduced hours were concentrated amongst lower paid workers. This makes year-on-year comparisons extremely difficult," it notes.

The Congress submission also argues that that increasing the hourly rate of the minimum wage dose not result in increased unemployment.

Meanwhile, the body representing small and medium businesses has said there is no case for any increase in the national minimum wage but that reforms are needed to avoid lower-paid workers from making a rational financial choice to exit the workforce.

In its submission to the Low Pay Commission, ISME has argued instead for a range of reforms of social welfare and issues related to rents.

It says the taxation system is highly redistributive and progressive and recognises that the level of personal taxation should not discourage work.

However, it acknowledges that low earners can suffer much greater proportional losses through deductions and loss of benefits.

ISME says its analysis reveals that a significant cohort of people in low income or marginalised communities, are financially better off exiting employment and entering the welfare system.

It describes this as a "rational financial choice, not a lifestyle one".

It says that to help these people, rather than raising the minimum wage, it would make more sense to increase the income limit for medical cards, setting it at the Jobseekers' rate plus at least 30%.

It also advocates restructuring PRSI.

Finally it advocates eliminating the "child element" in unemployment assistance, replacing it with increased child benefit which would be taxable.

"These would constitute meaningful changes for the working poor, instead of offering them a few cents on the hourly rate of the NMW," ISME states. 

ISME accuses the State of abrogating its responsibility for the high costs "inflicted" on working people such as "capricious" planning laws as well as high energy, insurance and housing construction costs.

"The continued attempt to "outsource" to domestic employers the cost-of-living increases incurred by Irish workers is bound to fail. The State must start to take responsibility for those elements of the cost-of-living it enjoys legislative control over," it states.

ISME also criticises the tax treatment of rental income which it claims has resulted in a flight from property by many small landlords, leaving a concentration of rental property in the hands of a small number of corporate landlords, along with ever-increasing rents and a reduction in availability of rental accommodation. 

"This is a political choice," the submission states.

"In the meantime, it would be well for the Low Pay Commission not to exacerbate the problems for lower-paid workers and their employers by increasing the cost of their labour further. There is no justification for increasing the NMW."