SENIOR government ministers are convinced the minimum wage rate is too high and is contributing to the current high level of unemployment.

While the issue is currently before the Labour Court for review, privately a number of cabinet ministers believe that a reduction in the hourly rate of €8.65 will become inevitable.

A reduction will be fiercely opposed by the trade unions, which argued for the rate to be increased in a submission to the Labour Court last year.

Both the government and employers' group IBEC argued for the status quo in their submissions, but the sharp deterioration in economic conditions in recent months has led to a hardening of views within cabinet on this issue.

Given that none of the three relevant parties argued for a cut in the rate in their submissions to the Labour Court, it is thought unlikely the court will recommend a reduction in the minimum wage.

However, the final call on the rate lies with the government and, specifically, labour affairs minister Billy Kelleher, who can accept, reject or vary the Labour Court recommendation.

There has been no detailed debate on the issue at cabinet, but it is understood that it has been discussed "in a very general way" by ministers. Attention is likely to focus on the matter in the coming months.

A number of ministers believe the rate, which is the second highest in Europe, is acting as a deterrent to small businesses, particularly in the tourism sector, to take on staff.

They also point to the large differential between the minimum rate here and north of the border, where it is over €2 less at €6.37 an hour.

Government sources also acknowledge there are potential negatives to reducing the minimum wage and there would be concern about the impact it would have on low-income earners.

Backbenchers are being regularly lobbied by small business employers who say the minimum wage is preventing them hiring staff.

Currently, it is believed that around 4-5% of the workforce is on the minimum wage, many of whom would be migrant workers.

Any move by the government to change the minimum wage would be expected to be put on the table for consideration by the social partners when talks resume on the national recovery plan.