Mr. Michael Taft:

Mr. Kelly outlined the overall position. To put the matter in perspective, in the hospital and retail sector, compensation in Ireland falls considerably behind compensation among our peer group, namely, other northern and central European countries. To reach the average level would require a substantial increase in compensation, in some cases of more than 20%.

A similar pattern is evident in the statutory wage floors. When factoring in purchasing power and a worker's full compensation package, the national minimum wage falls well below the purchasing power of our peer group. In more than half the countries with minimum wage legislation, only 5% of workers rely on minimum wage protection, whereas the figure in Ireland is close to 10%. Given that these figures are taken from EUROSTAT data for 2010, it is likely that the percentage here will have increased.

Regarding affordability, Ireland has always been a high profit country, even when one factors out the inflated levels of profit arising from multinational accountancy practices.

This is certainly the case in the wholesale and retail sector where Ireland's profit levels are above the EU average. Hospitality profits are lower than the EU average but the underlying indicators such as turnover, gross value added and labour productivity approximate European levels. This suggests the problems are structural in the sector. Whatever they might be, it is certainly not the case that wages are the problem.

As Mr. Gerry Light pointed out, there are 350,000 people in the workforce who are officially categorised as living in deprivation, that is, one in five people in the workforce. There are also three other areas where low pay has a high cost. First, there is a cost to the Exchequer where tax revenues are reduced and social protections are increased, for example, the family income supplement. This subsidy to low pay employers reduces the State's ability to invest in our economic and social infrastructure which negatively impacts on all of us. Depressed take home pay reduces consumer demand. This is exacerbated by precarious workers where they are unsure of next week's income. Essentially, the low paid are prevented from fully participating in the consumer economy to the detriment of economic performance. Finally, low paid negatively impacts on firm performance, in particular, firms dependent on domestic demand and in need of increased turnover. These firms need more customers coming to their door with more money in their pocket, therefore, wages are an indispensable element of increasing demand capacity. It is often stated that the wages must wait for the economy to recover; this is to view the process in a static and backward way. Economic growth occurs because of wage increases. A wage strategy that benefits the low paid is an important element in the growth and equality toolbox. The question is if whether the economy can afford not to have wage increases and the answer is "No".