Tánaiste Leo Varadkar has waived suggestions that employees will suffer a cut to their hours if businesses can’t afford to pay the increase to the national minimum wage from next year.

Varadkar confirmed that Cabinet has signed off on the recommendation he brought forward from the Low Pay Commission, which will see an increase to the national minimum wage of 80 cent - bringing it up to €11.30 per hour.

For workers paid the national minimum wage, and working a 39-hour week, this would translate to a pay increase of €31.20 a week, more than €120 a month, or €1,600 a year. This rise will affect approximately 170,000 workers from next year.

However, businesses have warned that this move by the government will lead to a cut in workers hours, as employers suffering the effects of the surge in the cost-of-living crisis and energy bills won't be able to afford the extra payment.

Some trade unions have criticised the 80 cent increase to the minimum wage, saying it is not close enough to reflect a living wage.

Unite, one of these afore mentioned trade unions, called on the Government to set aside the Low Pay Commission report which has recommended this 80 cent increase. Earlier this year, Unite made a submission to the Low Pay Commission calling for the minimum wage to be increased to €12.50. They have now said that the proposed 80 cent increase means the Government has effectively "ripped up" its commitment to move to a living wage by the end of its term in office.

Varadkar strongly dismissed the claim that this will affect workers hours, saying that over the years, he has often heard this argument that if you increase pay or give workers’ more rights such as maternity benefits or sick pay, that employment will fall. However, he has also said that if he is proven wrong, then “it would need to be looked at again.”

The Tánaiste added that businesses have been struggling to find and retain staff, and he believes that better pay is one of the best solutions to this problem. Varadkar continued: “We've never had more people at work than we do today and I think in the end, that won't be true.”

The commission has also set out an indicative rate for what is called a Living Wage which is set to replace the minimum wage by 2026. This Living Wage is expected to be set at 60 per cent of the average wage.