Dr. Seán Healy:

I thank the Chair. There is a model of how to deal with this in the living wage technical group. I mentioned it earlier but did not go into it in detail. In that technical group we recognised we could not have sudden increases in the living wage either. We basically had a situation in which we set a limit and that in any particular year the increase, or decrease for that matter, could not exceed a particular number. That is set out and explained and so on. We could have a similar situation here.

I have a concern about the way the increase would be based on the last four or six quarters, or whatever. This is simply because of people on welfare, who are already on the margin and have no space whatsoever in their budget. If they hit an increase, telling them they must wait 12 months to get recompense, that leaves them in a very vulnerable position. They are going to be struggling with less than is required for a whole year. We should be able to work it that we have predictions every year on what the increases in these areas are likely to be, so when we are talking about wages we should have some kind of idea. At the end of that year, the first part of setting out what the new rate for the following year should be would be an adjustment based on what the actual outturn for wages that year was. Then we can make the adjustment and add or subtract depending on what has happened and what is predicted for the year ahead. It is possible to do it in a way that would protect people who are vulnerable and also protects businesses and the economy generally from sudden lurches.