Mr. Adrian Cummins:

I thank the Chairman and members of the joint committee for giving me the opportunity to talk about low pay, the living wage and the minimum wage. The Restaurants Association of Ireland, RAI, is happy to engage with the committee on these and other matters of mutual interest. From the outset, we are concerned about the need to create more jobs in our industry and economy. We will be talking about the cost of employment for businesses and it must be viewed in tandem with any discussion about the minimum wage. If the desire of the Government and the Oireachtas is to ensure that people have more disposable income in their pockets at the end of the week, that they be able to support themselves and their families, then I suggest we look at what emanates from elsewhere in the Oireachtas. The most direct way to increase take home pay is to reduce the excessive burden of taxation and the controversial universal social charge, USC, on employees.

In advance of this presentation, I consulted with hundreds of restaurant owners who are members of the RAI. The majority are small, family owned and family run businesses in every corner of Ireland. Many of them are in a state of disbelief that there is even talk about increasing wages, when they have been struggling to keep their doors open. Many of them will have had little or no wages paid to themselves during the past five years as they have struggled to keep their businesses alive and pay salaries to staff, pay rates to local authorities and meet the ever-increasing cost of business, including energy, insurance and, in many cases, rent. This is not about helping create employment; it appears to be about creating an environment where it is hard to do business.

The survey of income and living conditions produced by the CSO in 2012 shows that the level of poverty has drastically increased since 2004. If we are to address this issue, we need to get people working. There is no greater dignity than can be found by having a job. It gives a reason to get up in the morning and the ability to provide for oneself and one's family. In the past 18 months, through a pilot initiative, the RAI has taken 140 long-term unemployed people and put them through a structured chef training programme, and I am delighted to say that over 50% are now in full-time employment. This shows that there are jobs in our industry, especially for chefs.

An increase in the minimum wage is not the answer. It will only stifle job creation. As of February 2015, there are 355,124 people on the live register. Each person who finds employment results in a saving of up to €20,000 and the Government will benefit from tax revenue, employer's PRSI and USC. The last increase in the minimum wage was in 2007 during the Celtic tiger era before the 2008 recession. Youth unemployment stands at 21.6%. That is where the problem lies. Since the inception of the minimum wage, it has increased by 55%. Although competitiveness has slowly returned, we are, again, losing it and now there is a proposal for an increase in the minimum wage. Have we already forgotten what we have gone through during the past seven years?

Considering inflation figures during the past 12 years, the minimum wage should be €7.40 as opposed to €8.65. The poverty rate is highest amongst the unemployed, a shocking 19.2% compared to 1% of those employed. When there is a rise in the minimum wage, it hits small businesses, such as hospitality and restaurants, six times harder than other businesses.

A rise in the minimum wage will definitely deter small businesses from taking on staff. To get a job is a starting point for employees, a foot in the door. It provides opportunities and career progression, which in turn comes with pay rises. Profitable businesses are giving pay increases. However, they are doing so based on an individual’s contribution to the business, rather than across the board pay increases.

Ireland has a high minimum wage by international standards, taking into account that we have not had an increase during the recession. Our minimum wage is the fourth highest in the EU, when Luxemburg is excluded. In many other countries, people on lower rates of pay are taxed much more than in Ireland. The regions in Ireland with a weaker economic performance will seriously suffer if there is an increase in the minimum wage. We cannot allow this to happen. It is regions like this that need help to recover. There are still restaurants closing in small towns in Ireland. Many restaurants and businesses are still in debt and cannot afford to have cost increases imposed on them. Furthermore it will result in fewer jobs being created. It will have a destabilising effect on the restaurant and hospitality industry. The level of unemployment in the wider economy is the issue here.

When the low pay commission makes its final decision whether or not it will increase the minimum wage, it must conduct a detailed analysis of the cost of doing business in Ireland. This includes the 28 regulatory and inspection bodies that the restaurant industry deals with annually, the rising cost of energy and insurance, rent reviews and the ever increasing cost of product raw material.