Oireachtas Joint and Select Committees
Tuesday, 14 April 2015
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Low Pay Commission: Chairperson Designate
We have received apologies from Deputies John Lyons, Michael Conaghan and Peadar Tóibín and Senator Mary White. I remind members, witnesses and visitors in the gallery to ensure their mobile phones are switched off for the duration of this meeting, as they interfere with the broadcasting equipment, even when on silent mode. This meeting will be broadcast live on UPC channel 207, eVision channel 504 and Sky channel 574. The purpose of today's meeting is an engagement with Dr. Donal de Buitléir, chairperson designate of the Low Pay Commission, whom I welcome to the meeting.
Before beginning, I wish to draw attention to the fact by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if witnesses are directed by the Chairman to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons, or entity by name or in such a way as to make him or her identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
I now invite Dr. de Buitléir to make his opening statement.
Dr. Donal de Buitléir:
I thank the Chairman and members of the committee for the invitation to appear here today. I am honoured to have been asked by the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Nash, to chair the Low Pay Commission.
By way of introduction, I grew up in Clonmel, where both my parents worked in the local government service. I attended the local Christian Brothers school before going to UCD, where I graduated in economics. I joined the Office of the Revenue Commissioners and later worked in the department of economic planning and development. During that time, I did postgraduate work in UCD and was awarded a PhD for a study of the equity of the Irish personal tax system. I was appointed secretary of the Commission on Taxation in 1980 and served in that capacity until 1985, when I returned to the Revenue Commissioners and took on responsibility for the management of VAT and corporation tax. I was awarded an Eisenhower Fellowship in 1987 and spent over three months in the United States studying the US system of self-assessment.
I joined AIB Group in 1989, where I worked as head of group taxation, and later in the office of the group chief executive. During my time in AIB I was given the opportunity, which I greatly valued, of serving on a number of public service bodies. I chaired what is now the Citizens' Information Board, the review group on third level places, the review group on third level student support, the business regulation forum and the civil service performance verification group. I was also a member of the Nevin committee on integration of tax and welfare, the Barrington committee on local government reform, and the Brennan commission on financial management in the health service. I chaired the Lord Mayor's commission on finance of Dublin City Council in 2002 and was appointed to the board of the Health Service Executive in 2005, on which I served until 2009. I retired from AIB in 2009, when I was invited by Atlantic Philanthropies to establish publicpolicy.ie, which aims to produce evidence to contribute to public policy issues.
I have also been involved in a number of voluntary organisations. I spent 16 years on the board of the Tabor Society, founded by Fr. Peter McVerry to provide a home for young boys in Dublin’s inner city. I served on the board of trustees of Eisenhower Fellowships in Philadelphia, which was chaired by Dr. Henry Kissinger and later by General Colin Powell. I was President of the Statistical and Social Inquiry Society of Ireland and also chaired the Foundation for Fiscal Studies and the National Advocacy Service for People with Disabilities. I am currently a member of the board of management of the local primary school which my daughters attend.
The Low Pay Commission is required to recommend a national minimum wage by 15 July next. In making that recommendation, we will be examining a range of factors. I would welcome the views of members on the matter, and I am happy, if appropriate, to appear again before the committee to discuss the commission's report when finalised.
I thank Dr. de Buitléir for attending the meeting. His CV shows his tremendous mix of both public service and private sector experience, as well as his voluntarism. He is certainly a well rounded individual.
I welcome Dr. de Buitléir and wish him well in the task ahead. I suspect that being on the board of management of the local national school was probably the toughest of all the jobs he has held.
During the hearings on the Low Pay Commission legislation I expressed a concern that there was a lack of direct employer representation on the body, but I have had discussions with Mr. Vincent Jennings who assures me that he ran his own business and has experience of representing the newsagents' association and will bring that experience to the table, which is welcome. One matter that emerged during our hearings on the legislation was that there was a gulf between the employer organisations and unions on the minimum wage. I do not believe any of the employer organisations was willing to countenance an increase in it, while many of the unions were seeking very large increases. What experience will Dr. de Buitléir bring to bear in managing that gulf? How does he envisage dealing with it?
Second, Dr. de Buitléir's background is evidence and statistics based. The initial budget for the commission is a sum of €500,000 a year. Will this be sufficient to build the knowledge or background to support whatever views the commission will arrive at regarding the minimum wage?
The legislation refers to the minimum wage and related matters. Once the commission's job on the minimum wage is done in July, it will become involved in related matters which I assume will include employment agreements and wage setting. What experience does Dr. de Buitléir have of these matters and managing them?
The issue of a living wage will be on the commission's agenda during Dr. de Builtléir's term of office. Has he done any work in that area and what views does he have on it?
Dr. Donal de Buitléir:
My most direct experience is that I chaired the Civil Service performance verification group for five years. It has three union and three employer members and we had to agree on the awarding of pay increases under one of the national programmes. That is the only direct experience I have.
In terms of getting agreement between people who hold different views, I was the independent chairman of the review group on third level places in 1996, if I recall the date correctly. The question was what the number of third level places should be. The Department of Finance and the Department of Education and Skills had completely divergent views on the topic, but we managed to get agreement. Evidence takes one a long way, in that one can get agreement. If one cannot get agreement, one must deal with the matter, but I am hopeful we can do so.
We have a significant research budget. It is significant enough in the first year and if it is not sufficient, we will make this known, try to get more money and see how it goes.
As I have never been involved in wage setting, I do not have any direct experience of the matter. What will happen is that the Minister will refer specific tasks to the commission. What he has asked us to do in the first year, by 15 July, is to arrive at a figure for the national minimum wage and we will do so.
Did I miss one of the questions?
Dr. Donal de Buitléir:
I believe it was 44, although there were a couple received this morning, which brings the number to 46. A total of 13 were from individuals, while 33 were from organisations.
On the issue of a living wage, I was at the launch many years ago by Sr. Bernadette McMahon of the Vincentian Partnership for Social Justice.
I need to look at that in more detail and I am aware there is a technical group looking at it. It will be on the agenda.
I thank the Chair, and I welcome Dr. de Buitléir. His CV speaks for itself in terms of his involvement in a wide range of groups, which makes him very well-qualified for this position. He mentioned his involvement with the Tabor Society. Will he touch on how that role might shape his interests in this area?
Some of the groups we have had in before have spoken about the disparity between the Dublin region and other areas, where the cost of living might be higher than in other parts of the country. In London there is a sort of London living allowance. Does Dr. de Buitléir have any thoughts on that idea?
A member of an employers' group, who was involved in a small company hiring a small number of people, said she felt at the start of the crisis that her staff would have been agreeable to taking a wage cut to protect all the jobs, if that had been allowed. However, that was not feasible and the result was that a number of people were let go to maintain the minimum wage that was required. Does Dr. de Buitléir have any comments on that dilemma? Does he think something should be put into the legislation to allow for that? Obviously, it would have to be independently verified.
Dr. Donal de Buitléir:
I finished studying in 1980 and wanted to do some social work, so I sought out a position on the board of the Tabor Society. I thought it was important that someone like me, who has led a very privileged life, would have some exposure. I live in a middle class ghetto. One can easily cut oneself off from the problems in society. It is important to see how the other half lives, if I might put it that way. I found it an extremely valuable experience. I used to go down to the inner city eight or nine times a year for a board meeting. One saw how the problems impacted on ordinary people.
On the regional disparity, the legislation prescribes a national minimum wage. Whether that is a good idea in a small country is a question on which we need to reflect. I do not want to anticipate anything. We have had an initial meeting and we have had one real meeting. I do not want to anticipate what the commission will say. We need to look at the evidence, come to a considered view, say what we think and defend it.
On the question of a wage cut, there is an inability to pay clause in the legislation. I am not aware of how that works, but I would have thought that in the circumstances the Deputy outlined, that mechanism might have been appropriate.
I welcome Dr. de Buitléir. My first question relates to responsibility. The commission's role is to advise the Minister, who has ultimate power. It would take a very brave Minister not to increase the minimum wage if that was the recommendation of the commission. If the commission had independent decision-making power, it would be difficult for the Government not to increase it, even though it may have adverse fiscal implications for the economy. I do not have any particular view, but what is Dr. de Buitléir's view with regard to the joint decision-making powers or the relationship between the Minister and the commission?
The 2013 annual report by the Department of Social Protection found that there was a 30% increase in the number of families availing of family income supplement.
The number of families availing of family income supplement has increased to 42,000, affecting 90,000 children. I would like to know the views of the witnesses on the family income supplement being used as a State subsidy to low-paying employers, who could pay their employers more.
Dr. Donal de Buitléir:
The way this is set up is very sensible. We will produce a public report with a recommendation and the Minister, as I understand it, can change it if he wants to do so and go into the Dáil to explain why. Ultimately, we live in a democracy and Ministers must make the final decision. It is quite a good structure. We must always contemplate the possibility we might get it wrong. It is a protection against that.
Regarding the family income supplement, other countries have in-work benefit that tries to make work pay. Looking at the poverty numbers in this country, one in ten children are in poverty compared to one in 50 older people. Where people have a large number of dependants, we cannot have pay relating to family circumstances. We had that in the Civil Service when I joined in the early 1970s, with married men being paid more than single men and single women. Single women had to retire on marriage. That is a completely outdated notion and the question of having a supplementary in-work benefit is positive. The last time I looked, a number of years ago, one of the problems was the question of take-up of the family income supplement. It may be an issue and getting it working properly may be an issue. In principle, it is a good system.
I welcome the witness. I am broadly supportive of the Low Pay Commission but there are fears among some members of the trade union movement and workers that it could depoliticise the issue of low pay on the basis that we have farmed out this issue to a commission to come back with recommendations. What is the view of the witnesses on the fact there is a wealth of reports, from the OECD to TASC and many others, including State reports, clearly showing we have a difficulty with low pay. It is a problem not just in some sectors but across the economy. Why do we need a commission in the first place to tell us what we already know about these reports? How many of those on the commission are on low pay? What does the commission constitute as low pay? We can see examples of people on low pay in some sectors. Without naming names, workers are on strike because of pay. What is the personal view of the witnesses on low pay? What do the witnesses classify as low pay in terms of annual income?
The heads of the Low Pay Commission Bill seems to give the commission the power to increase and decrease the minimum wage. Is it not better to have only an increase? Why would one decrease the minimum wage? Under what circumstances is it a possibility? The British model has been in place for many years and has learned many lessons. One of the lessons it has learned is that where people are in low-paying jobs or are victims of low pay, if I can describe them as that, the solution is not just increasing pay. An argument can be made that it involves access to public services, such as proper access to housing, health care and transport.
All of these issues feed into the experience of somebody on low pay. Mr. de Buitléir mentioned the relationship between welfare and low pay. There are lots of people who end up in poverty traps. If they take up work, they lose all of the benefits they would have if they were unemployed. There is no step down, as it were, but rather a system of very harsh cut-off points. What is Mr. de Buitléir's view on that issue?
If the commission is going to deal with low pay, then it must have some notion of what qualifies as low pay. Why should people be on low pay anyway? Why do we need a Low Pay Commission to tell us what we already know, namely, that we have a problem in this area? What we need is political action and policies put in place to deliver on this issue. We must take account of the views of those outside of the commission and particularly of those who are on low pay.
Dr. Donal de Buitléir:
On the issue of poverty traps, I spent three years on the Commission on Taxation in the 1990s, chaired by Mr. Donal Nevin, which tried very hard to deal with the issues of poverty and unemployment traps which can be a real problem. As a result of the work of that committee, there was a substantial improvement in the situation with regard to poverty traps. For example, if I recall correctly, people no longer automatically lost their medical cards when they took up a job but held onto it for a number of years.
Low pay is only one element of the income distribution picture. The availability of work and the number of hours one works are also important factors. Pay is only one part of the jigsaw. In terms of living conditions, much depends on one's personal circumstances. A single student still living at home on a low income could have an acceptable standard of living while a person with four or five children and a heavy mortgage who might ostensibly have a high income could be in real financial difficulty. It is quite a complicated issue and does not lend itself to putting a simple number on it in terms of disposable income.
Dr. Donal de Buitléir:
One does not necessarily have to have personal experience of a problem in order to come up with sensible ways of dealing with it. Members of my extended family, for example, have been on low pay. I have not personally experienced low pay because I got the opportunity to get an education, I worked hard and was able to get well-paid employment throughout my life but we all know people who are in low-pay sectors.
I welcome Dr. de Buitléir. This is a very interesting debate. I am puzzled as to how one arrives at a balance between the existence of a job and low pay. It seems to me that there are some jobs that would not exist at a certain rate of pay. A balance has to be found. When I started in business, all of the shops had counter service and employed many people. Then these nasty supermarkets came along and introduced self-service, which meant they did not need to employ as many people. There were major objections from the traditional shops who said, "We are going to lose jobs"-----
We need to consider the balance between changes in the way the work is done and the availability of jobs. There will always be an objection to those who say change will damage the opportunity of finding work. The introduction of barcodes and scanning in the 1970s led to major objections on the grounds that there would be job losses because one would no longer need to employ people to stick little labels on every single can and packet. Nowadays people would not understand that. Luckily enough, the case that the community as a whole would benefit was accepted. How does Dr. de Buitléir achieve a balance, knowing that if he increases the rate of pay, it is quite likely that there will be fewer jobs? It must be difficult for somebody in his position or a person in the Low Pay Commission to strike that balance.
Dr. Donal de Buitléir:
Ultimately, one must look at the evidence as best one can. One must obtain econometric evidence on the extent of the impact. For example, if one was to double the national minimum wage, it might have a major effect on employment; however, a graduated increase might have less of an impact. Ultimately, one considers the best evidence one can find, but it may come down to a matter of judgment. A principle that has guided me is that if I am not sure what to do, I think of what is correct in the circumstances. Evidence takes one part of the way and often a great deal further than one thinks, but it does not lead to the position where one can say with absolutely certainty, "This is the right answer;" it could be 10 cent either way. It is a judgment call and one does the best one can.
I congratulate Dr. de Buitléir on his appointment and wish him the best of luck in this role. Is the allocation of €500,000 to the Low Pay Commission sufficient to do what he is seeking to do? I know that a previous criticism was that those appointed to the commission were not from those in the low paid category. Will Dr. de Buitléir have an opportunity to bring in people from outside to advise the commission? Will he be holding public hearings to allow other viewpoints to be heard?
Dr. Donal de Buitléir:
The Low Pay Commission is widely representative. As the other members came though an appointment process, they have a wide range of experience. We have advertised for submissions, the closing date for the receipt of which was yesterday.
Part of the difficulty this year is that the timescale is very tight. We must report by 15 July. This is the date by which we will report every year. If we do not get it right the first time, we will have another chance.
I will be seeking wide-ranging opinions, as one must hear people's real experiences. The only problem is whether we can do this in the time available, in the first round.
The Deputy asked about public hearings. I hope we will have a chance to seek a range of opinions on the topic. The normal procedure is that one consult people orally. Our first job is to review the submissions and decide on the aspects we want to explore with individual organisations or individuals.
Dr. Donal de Buitléir:
The first question we have to address is a pretty limited one. It is possible that we will be asked much wider questions in later years, when we have more time. As I said earlier, we will do the best we can to come to an evidence-based conclusion, which can be considered by the Government, on the matter.
I join my colleagues in welcoming Dr. de Buitléir and wishing him well in his new and challenging role. It is obvious to me, having looked at his CV and his career to date, that he has been involved in many very interesting projects. I am sure he has had to address some very challenging issues. What does he consider to be the greatest challenge he faces in his new role as chair of the Low Pay Commission? He has indicated that he intends to consult widely as part of this whole process. Does he propose to meet his UK counterpart to see how the UK authorities are faring? That should be of particular interest, given that the UK minimum rate of pay applies on part of this island. Dr. de Buitléir mentioned that in addition to looking at low pay, the commission will look at issues like hours of work and hours available to work. Is it likely that the commission will make recommendations about the minimum hours of work that companies should make available to employees? I am conscious that an ongoing dispute at a major company relates to the scheduling of hours of work.
Dr. Donal de Buitléir:
I am sorry if I implied that we are looking at hours of work because that is not the case. A separate research proposal commissioned by the University of Limerick is looking at zero-hours contracts and is due in August. We have been asked in the first year to look at what the national minimum wage rate should be. We have been fortunate in so far as the day the commission was announced, the Minister of State, Deputy Nash, arranged for Mr. David Norgrove, who is the chair of the UK commission, to be present. I had a chance to speak to him the previous evening and again on the day in question. He came to our first meeting and engaged in a very detailed discussion with us on the experience in the UK and on how the commission there works. The UK commission has promised to co-operate closely with us. It is particularly interested in the cross-Border element of the issue. I am very happy that the experience of the UK commission, which has been in operation for some years, is available to us. We will take it up. I hope I have covered all the questions asked by the Senator.
Dr. Donal de Buitléir:
I was very surprised to be given this opportunity. When one avails of opportunities, sometimes one does not know what one is letting oneself in for until one gets into it. I might be in a better position to answer the Senator's question about challenges the next time I appear before the joint committee, if it decides to invite me back.
I thank Dr. de Buitléir sincerely for engaging with us today. I wish him and the other members of the Low Pay Commission every success in their roles. I do not doubt that we will be seeing him again in the coming months. We will suspend for a few minutes to allow our next guests to take their seats.