Dr. Micheál Collins:

On the point raised by Deputy Calleary, while the living wage takes account of the taxation system, it does not take account of the transfer system because, ideally, one should not need transfers if one were earning sufficient income for a living wage. The living wage is structured on the basis of an estimate for a single individual. Transfers for families occur through child benefit and so forth.

The reason I referred to local authorities introducing the living wage is that this is the route by which its introduction has tended to take place elsewhere in the world. Elected representatives have decided that employees of local authorities should be paid a living wage and the living wage is introduced in that way. There is merit in that approach and a number of local authorities in Ireland have been examining the issue.

A living wage has also been introduced in other countries by large businesses, which tend to be the types of companies that embrace the living wage. Large finance businesses and some of the universities and accounting firms have introduced it. For the most part, such firms have few employees on very low wages and these tend to be cleaning and catering staff and so forth. These employees are then paid a living wage. Some of the leading supporters of the introduction of a living wage, for example, in the United Kingdom, are big businesses which like to be seen to be paying their employees properly. It often comes as a surprise to them that they were not paying their employees properly and the result is a willingness on their part to embrace living wages.

I propose to address the logic of an increase in the minimum wage, an issue on which I disagree somewhat with Mr. O'Brien and Ms McElwee. To take first the change in consumer prices since the previous increase in the minimum wage in July 2007, prices had increased by 2.3% between July 2007 and the end of last year. There is, therefore, an issue related to the value of the purchasing power of those earning the minimum wage, which has declined over time. Throughout this period, there were significant variations in prices, with periods of deflation and inflation. To some degree, we are in another period of deflation. None the less, there are issues around the decline over time in the purchasing power of those on the minimum wage.

I agree with Deputy Calleary that there appears to be some logic in the argument that, in a period in which wage increases are broadly beginning to appear in the economy, as shown by data from the Central Statistics Office and reports from IBEC for two years in a row indicating that its members are awarding wage increases, it would seem to be almost a bit mad that the wages of those at the very bottom who need an increase most are not increasing. The idea that there would be no increases for this group but increases for those further up the ladder does not make sense. There is merit in ensuring further divides do not emerge. This returns us to the logic of increasing the minimum wage.

One of the great problems with the structure of the minimum wage in Ireland is that we tend to revisit the level at which it is set only occasionally. In other words, we only consider increasing it every couple of years. Asking employers to pay, for instance, one increase of 60 cent rather than four increases of 15 cent spread over four years is a much more difficult request to implement. The decision of the Government to establish a Low Pay Commission to examine the minimum wage on an annual basis is very welcome. We should consider making smaller changes in the minimum wage over time to maintain its adequacy for low income workers than to revisit the issue occasionally, as has been the case until now.

That would make a lot more sense than the occasional visiting we have been doing up to now and I think will give us better outcomes.