Mr. Michael Taft:

I wish to cover three points briefly. In terms of studies or analyses of the impact of an increase in the minimum wage on unemployment, originally such analyses were very model-driven, with supply and demand curves for wages. The assumption was that the more expensive labour became, the less demand there would be for it; in other words, increases in wages would result in rising unemployment. This assumption was superseded some time in the 1970s and 1980s when economists left their desks, went out into the real world and actually analysed what was going on in an empirical sense. They found that raising the minimum wage or the statutory wage floors had very little impact on employment. It is hard to know exactly where the wage increase fits in because there is a lot of noise in the labour market but essentially, they found nothing. There was no negative impact and I can supply some of those studies to the committee.

The second issue is about where we took our information from. As the committee can see in the notes, the information on hourly compensation was taken from EUROSTAT's national accounts.

In terms of the purchasing power parity, I am sorry I did not footnote this but I will forward our tables to the committee. The purchasing power parity was also taken from EUROSTAT. It refers to each country that equates to the actual individual consumption, which is the preferred parity for our workers' wages. I will forward on the data.

Finally, if we replace collective provision with private provision, then we should not be surprised that prices will rise and the reverse is the case. For instance, recently an RTE programme compared public services provided by French and Irish hospitals and it was shown that it costs €7 for a person to go to a GP in France. If employee compensation was increased to provide for health care, and in most EU countries the majority of health care is expended through social insurance and employee compensation and not through the Exchequer, we can see the benefit of falling GP costs and, similarly, with child care. We all know of the situation where child care costs between €100 and €200 per month because it is provided as part of public service provision rather than €1,000 per month, and upwards, in the private sector.

There is an ability and we would invite employers to consider the following. A stronger, collective provision of services for people will mean that they do not have to demand as high a wage. If one does not pay out €1,000 per month, rather €100 or €200 per month, then a dynamic will be generated in wage setting. One of the problems we had was that wages rose in the pre-crisis period because they had to keep up with inflation, especially inflation induced by housing. If we can reach equilibrium whereby more of those services are provided through collective provision, we can have wage structures which are more egalitarian, promote living standards, remove in-work poverty and still provide a basis of a profitability for employers.