It seemed unlikely we’d ever get to the point again where substantial pay increases were the subject of serious discussion. As recently as 18 months ago, such a proposal would have been laughed out of town, but with private sector wages starting to tick up once more, some quarters are now calling for a hike of up to one third in the national minimum wage.

BGE SME Hub FinanceThe minimum wage rate in Ireland currently sits at €8.65 – giving us one of the highest minimum wage rates on the planet. As of January this year, Ireland’s minimum wage was the fifth highest in Europe – only Luxembourg, France, Belgium and San Marino were higher – and the seventh highest in the world.

While many countries in Europe have hiked their minimum wage over recent times, Ireland has bucked the trend. The last time the minimum wage rose here was in the summer of 2011 when it was upped from €7.65.

A study by EuroFound earlier this year charted the course of minimum wage rates in 22 European nations between January 2014 and January 2015. Ireland was identified as one of just five countries not to have increased their rate in the period.

But that could be about to change. Murmurings from Leinster House are that an increase in the minimum wage is being strongly considered. Minister for Business, Ged Nash, has gone as far as saying that 2015 is likely to be “the year of the pay increase”, adding that he wants to see an increase in the national minimum wage.

Not all of Nash’s colleagues are in agreement – Minister for Jobs Richard Bruton’s view is that now is not the time for wage increases. The hunch of most observers, however, is that while the Government is unlikely to go anywhere close to the €11.45 rate being called for by Siptu, an increase of some sort can be expected at some point this year.

The Government is being steered on whether to increase the minimum wage by the newly-created Low Pay Commission. Generally speaking, the creation of a Low Pay Commission has been well received by businesses. The UK has had a Low Pay Commission in operation since 1998 and, for the most part, has worked well.

Sensibly, the first job of the Commission here has been to carry out a consultation to soak up the views from all sides on what should happen to the minimum wage. The consultation closed in mid-April and the Commission will use the feedback received to make a recommendation to Government in July on what action, if any, should be taken.

Those against upping the minimum wage argue that increasing cost of labour at the lower end of the market will mean that small firms will find it too expensive to give a person their first job. Some retailers warn that wage hikes will mean they have to start charging more for their products, which could result in fewer sales.

The scaremongers take things a step further, claiming that small companies, many of them eager to create jobs, will be put out of business by a higher minimum wage. The danger for the wider economy, meanwhile, will be that Ireland’s competitiveness is harmed as we become a more expensive location for staff.

Employers group Ibec believes that the current minimum wage remains appropriate given the fragile nature of the economic recovery. Ibec has warned that excessive increases in the national minimum wage will lead to a reduction in employment, hours worked, new job creation, business investment and ultimately firm viability.

On the other side of the coin, those calling for an increase such as trade unions Siptu and Unite (who want a €1 increase), contend that a higher rate is required to address the widening gap between rising wages at the top and falling pay levels at the bottom. Unite describes this trend as “bad for the workers, bad for society and bad for the economy”.

Supporting the trade union view is a recent study carried out in the US by UC Berkeley’s Institute for Research and Labour Employment. The study found that low-income people tend to spend the money they receive in increased wages. And even better – they typically spend it locally. Another positive cited by the study was that higher wages would reduce staff turnover, which can be costly for companies (training costs etc).

One of the biggest considerations for the Low Pay Commission will be affordability for the whole country. The economic recovery continues to be stronger in the Dublin region, while other regions lag behind. While companies in Dublin may be able to soak up wage hikes more easily, increases in poorer regions could impact on business viability and employment.

Certain sectors would feel the impact of a minimum wage hike more than others. Research shows that three sectors – hospitality, retail and wholesale – account for around half of the one in 20 workers who are currently paid the minimum wage. Many businesses in these particular sectors continue to experience tough trading conditions. Consider that labour costs in hotels and restaurants typically account for 50% of total operating costs and it gives an indication of the fine line the Government must tread when deciding what to do this summer.