Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank members and witnesses for participating in today's meeting in line with the exceptional measures we have to deal with due to Covid-19. I remind everyone that apart from members of the committee secretariat and me, all members and witnesses are required to participate remotely or from within the Leinster House complex only. Apologies have been received from Deputy Stanton.

Today, we will give consideration to the reactivation of enterprise, trade and employment following the pandemic restrictions. We will be assisted by representatives of the Irish Small and Medium Enterprises Association, ISME, and the Irish Congress of Trade Unions, ICTU. Next week, we will continue our consideration of this matter when we hear from the County and City Management Association. I am pleased to welcome Dr. Laura Bambrick and Mr. Liam Berney from ICTU and Mr. Neil McDonnell from ISME.

Before we start, I will talk about parliamentary privilege. I will explain some limitations to parliamentary privilege in the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. However, today's witnesses are giving their evidence remotely from a place outside the parliamentary precincts and, as such, may not benefit from the same level of immunity from legal proceedings as witnesses who are physically present. Witnesses are again reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity, by name or in any way as to make him, her or it identifiable, or otherwise engage in speech that may be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative they comply with any such direction.

To commence our consideration of this matter, I invite Dr. Bambrick to make an opening statement on behalf of ICTU. I ask her to limit her contribution to seven minutes, if possible.

Dr. Laura Bambrick:

On behalf of the Irish Congress of Trade Unions, I thank members of the committee for their invitation to share the trade union perspective on issues relating to the reactivation of enterprise, trade and employment following the pandemic restrictions. I am accompanied by my colleague, Mr. Liam Berney, industrial relations officer and the ICTU representative on the aviation subgroup of the Labour Employer Economic Forum, LEEF, which was formed to examine the catastrophic impact of Covid-19 on Irish aviation and the challenges facing the industry, employers and workers as the economy opens up.

Prior to the outbreak of the Covid-19 pandemic, there were 2.5 million people in the workforce and we were close to full employment. The essential public health measures to help slow the spread of the virus resulted in job losses on an unprecedented scale. At its peak, in May 2020, more than 1 million workers were reliant on the State for a weekly unemployment payment or to subsidise their wage. We welcome the progress made in reopening parts of the economy over recent months. Congress is, however, mindful that not all jobs, firms and sectors will recover at the same pace and to the same extent following the lifting of restrictions. As a member of the Labour Market Advisory Council, congress set out in detail our position on actions to tackle the labour market challenges arising as a result of the pandemic in our minority report to the policy paper Preparing for Economic Recovery, a copy of which we have provided to the committee.

In the brief time I have available for my opening comments, I will focus on the role of wage and income supports in reactivating workers and business. The introduction of the wage subsidy scheme in response to Covid-19, as originally proposed by congress, has and continues to be critical in keeping workers connected to their jobs and businesses to their staff. However, without a top-up from an employer, which is, unusually, not a qualification condition of the scheme, the subsidy provides inadequate income protection for many workers. The short-time work support has helped mitigate the extent of income loss. Combined, they provide a minimum level of net weekly income of around €450. Access to the short-time work support is, however, limited to 230 consecutive days. Without this supplement, workers face further falls in income and normal living standards. The recent decision to extend the wage subsidy is welcome. However, the Government must act to keep the time-limited criteria on the short-time work support in step to reduce the risk of a skill and brain drain and long-term scarring in sectors vital to the functioning of the economy.

It is the view of congress, in the medium term, that the wage subsidy should be transformed into a genuine short-time work scheme modelled on the most effective schemes in place in other European countries, particularly in Germany and the Nordic countries. The programme for Government, now a year old, commits to setting out a pathway for the future implementation of the wage subsidy, a commitment echoed in the July stimulus. Congress is disappointed that little appears to have happen in the meantime.

The pandemic unemployment payment, PUP, has proved integral to maintaining workers’ income and, hence, consumer demand and social solidarity throughout the public health emergency. When and how the PUP is withdrawn must be based on concrete evidence and not influenced by the claims of a handful of employers and their representatives, amplified by the media, that workers do not want to return to their jobs because of the PUP. The data showed that when the economy partially reopened last summer, we witnessed 400,000 workers willingly close their PUP claim and return to work. Again, the Government’s own target of 100,000 workers going back to work last month was easily reached. If we look beyond Ireland, Germany, Norway, Australia, the UK and US are experiencing recruitment difficulties in hospitality and other low-paying, precarious employment, as businesses reopen following the lockdown. What they have found is that workers have left the country, left the sectors and left the workforce. Furthermore, our per capitasectoral unemployment is on a par with other countries that do not have a PUP equivalent payment. Congress cannot and will not stand over cuts to the income supports for laid-off workers while they are locked out of their normal employment under public health restrictions.

Before concluding, we note recent media reports of comments by both the Taoiseach and Tánaiste relating to a possible earlier return to the office, which took congress by surprise. Congress is currently engaged in a consultation process with the Department of the Taoiseach on the safe return to the workplace of hundreds of thousands of office workers. Since our early discussions, this subject had been raised by us, but was set aside for further consultations in order to fully consider the safety implications. The dates for beginning the return to the office must continue to be guided by public health advice, and not unduly influenced by city centre businesses in want of office workers’ footfall.

Ireland’s labour market was facing major weaknesses and challenges before the pandemic. The pandemic has widely exposed and made worse some of these big failings, in particular, the prevalence of low-pay jobs, with few benefits and insecure hours. Many of these workers are essential front-line workers who, during the pandemic, kept us safe, kept food on the supermarket shelves, kept home deliveries arriving, kept our bins emptied and so on. It is the firm view of congress that the so-called "pandemic dividend" for workers can best and, in fact, only be achieved through collective bargaining. We will work to ensure the Government delivers on the commitment it made when launching the economic recovery plan last week - to build back better. I thank members for their attention and am happy to take any questions.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I invite Mr. Neil McDonnell to make an opening statement on behalf of ISME.

Mr. Neil McDonnell:

I wish to express our gratitude for the opportunity to address the committee. As our economy progressively reopens post-pandemic, small and medium enterprises, SMEs, are faced with acute financial, labour, operational, health and safety, and political engagement issues. Despite the presence of so many large multinationals in Ireland, almost 68% of Irish workers are employed by SMEs. Almost half that number work in a business with fewer than 50 employees. SMEs are the bedrock of the Irish economy, and the survival of the greatest possible number of them must be a priority for the House.

Almost one third of the businesses in The Irish Timestop 1,000 companies list that was published last Friday meet the EUROSTAT definition for an SME. That is one third of the top 1,000 companies. By the time one finds the last company in The Irish Timeslist, one will find a business turning over €16 million per annum, with 45 employees. Ireland is an economy and a society of small businesses. We have seen remarkably few insolvencies to date, but this number is set to rise quickly. It is imperative that members do all they can to enact the small company administrative rescue process, SCARP, before that happens.

While grant supports have been enthusiastically used by SMEs during the pandemic, debt supports have not. The employment wage subsidy scheme, EWSS, remains absolutely essential in those parts of the economy that have yet to fully reopen. Irish people do not benefit from being citizens of the second most expensive economy in the EU. Therefore, the 9% VAT rate should be maintained indefinitely, and the higher rate should permanently revert to its historical rate of 21%. Redundancy costs are likely to be a significant burden for many employers in the medium term. The statutory redundancy rebate for employers should not have been removed nine years ago. It should be reinstated in full now, or the 0.5% levy on employers’ PRSI, which financed the rebate since 1979, should be removed from PRSI.

The PUP is, unfortunately, acting as a significant brake on return to work in many areas of the economy such as agriculture, hospitality, grooming and accommodation, and should be tapered more rapidly than the current plan suggests.

While we do not oppose improvements in employees' entitlements in principle, we believe the financial implications of many of them are not understood by legislators. The social fund must be used as the backstop for increased levels of employee support, as it is on the Continent. This will require higher levels of employee contribution. Significant disincentives persist against employees returning to the workforce in the €18,000 to €30,000 per annum income bands. We ask legislators to look at the four key proposals in our Jobs Kill Zone report in this regard. That has been circulated to all Members of the Houses.

There is a disgraceful lack of clarity on the rights of employers and employees to know the vaccination status of co-workers returning to the workplace. This places employers in the invidious position of being "damned if they do and damned if they don't". This is unacceptable and must be addressed before a minority of cynical members of the legal profession attempt to exploit it. GDPR is not an impediment to ascertaining the vaccination status of a returning employee.

There is a continued failure on the part of the Government to engage with SME employers. The only standing liaison body between the Government, employers and employee representatives is the Labour Employer Economic Forum, LEEF, and it excludes SME representatives. This is unsustainable. The failure to engage with small enterprise employers is having a serious impact on the development and update of the Work Safely Protocol since its focus is on large enterprises and excludes consideration of 99% of Ireland's employers.

The detail behind this summary follows in the submission. I am happy to take questions now.

Maurice Quinlivan (Limerick City, Sinn Fein)
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Thank you, Mr. McDonnell. I invite members to discuss this issue with the witnesses. I remind them to use the "raise hand" function on Teams and, importantly, when they are finished speaking to take it down. The first person who has indicated to speak - we will go with the roster we have in place - is Deputy Louise O'Reilly.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank our witnesses for giving their time and making their submissions to us. I have a couple of questions and I hope to get in on the second round to divert slightly from this topic and to have a quick chat with Mr. Berney about the aviation sector, but I will stick to the kernel of the submissions for the moment.

I will address Mr. McDonnell in the first instance. He gives links or provides what he says is evidence - anecdotal evidence - relating to people not returning to work. As Dr. Bambrick demonstrated last year, however, 400,000 people voluntarily gave up their PUP claims and returned to work, so all the evidence suggests that the opposite is the case. I refer Mr. McDonnell to a tweet from Mr. Pat Phelan of the SISU clinic. This is backed by Michael Harty of Home Care Direct. Mr. Phelan tweeted:

Sick to my back teeth of hearing it's hard to get staff

It's absolutely not

It's hard to get cheap staff

Hired 10 people in last 10 weeks not a problem.

Free private Healthcare, free contributory pension

Zero issues

Pay your teams

I will not continue reading out the tweet, but Mr. Phelan basically said that decent pay and good, fair conditions mean that it is actually not a problem to hire staff. Would Mr. McDonnell have any comment to make on that? As I said, all the available evidence presented by Dr. Bambrick this morning and by business people suggests that there is not an issue. The Department of Social Protection does not have a huge number of people complaining about it. To me it seems very simple: you pay your workers well and treat them decently and you will not have the problem that Mr. McDonnell claims is there but for which the only evidence is anecdotal at this stage. Mr. McDonnell might care to respond to what Mr. Phelan said about the treatment of workers.

Mr. Neil McDonnell:

The Deputy will forgive me for not responding to Mr. Phelan because I do not know who he is and I have not seen the tweet. What I will say is that we have been very specific. I have not said the problem is across the board. I referred to four sectors. This is no more anecdotal than the tweet the Deputy has just read out to me. It is a matter of fact in the agriculture sector, in catering and in hospitality. It is a particular issue, let us be honest, in those areas where it is not full-time work that is on offer but, typically, part-time work of the order of 20 hours per week. There is no point in saying to a pub, a hotel or a restaurant - the pubs are not open yet but the restaurants will open next month - "If you employ everyone on a 39-hour week, the problem will go away", or "If you increase your rates of pay, the problem will go away". It will not go away unless we start charging people through the nose. The-----

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Yes.

Mr. Neil McDonnell:

No. The problem will not simply go away.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I will tell Mr. McDonnell straight up, I do not accept there is a problem in the way in which he has characterised it. He has not provided any evidence and is referring specifically to sectors that are not yet fully open, so I do not think we have a full picture. The evidence we have is the fact that 400,000 people last year voluntarily gave up their social welfare claims and went back to work.

Mr. Neil McDonnell:

Yes, but we have not contradicted that at all, so that is a false equivalence. The Deputy is contradicting something I did not say in the first place. I do not see why she desires to add an element of conflict.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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What I am saying specifically is that we all know that the evidence available, the 400,000 people outlined by Dr. Bambrick, is fact. Nobody is disputing that. Those people voluntarily gave up their claims and went back to work when their sectors reopened. Mr. McDonnell is referring specifically to sectors that are not yet fully open. He is talking about part-time work. Whether he has heard of Mr. Pat Phelan or not is entirely immaterial. If we are just trading anecdotes at this stage - and, let us be frank, that is all we are doing because Mr. McDonnell has not provided any hard evidence - all the available evidence suggests that people will go back to work when the work is offered and that the best incentive to go back to work is decent pay and fair conditions. I do not see that there is anything to disagree with in that.

Mr. Neil McDonnell:

The Irish Timesreported extensively on this last Saturday in the context of fruit and vegetable picking. Jennifer O'Connell did a very substantive article in which a number of growers said they could not get anyone over the age of 18. Nobody on the PUP is applying for those jobs. The Deputy can just choose to contradict that and say she does not believe it, and I will say that is fine, but I assume, talking to legislators, that we are interested in addressing a real problem. I will not be simply castigated because I am not-----

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I am not castigating anyone, but if Mr. McDonnell is talking about a real problem-----

Mr. Neil McDonnell:

May I finish? I will not be castigated because I am not fulfilling the role of the CSO. ISME is not paid to do that.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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-----and it would be helpful if he could provide real evidence.

Mr. Neil McDonnell:

I am not paid to perform the role of the Department of Social Protection.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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An The Irish Timesarticle is not evidence. What Dr. Bambrick has provided is factual evidence in that 400,000 people-----

Mr. Neil McDonnell:

Yes, but we have not contradicted-----

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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If Mr. McDonnell might let me finish, an article inThe Irish Timesis not scientific evidence. Reports to the Department of Social Protection, yes, absolutely-----

Mr. Neil McDonnell:

I am not contradicting Dr. Bambrick, though. Why is the Deputy suggesting that anything I am saying is contradicting what Dr. Bambrick said?

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I am not. I am saying that all the available evidence suggests that when the economy reopens - Mr. McDonnell has referred specifically to four sectors not yet fully reopened - people will go back to work. What I am providing for him is information from another person in the business field who says the best way to attract workers is to pay them well and to give them decent conditions. I do not want to be diverted down a road on this, but it is a fact that Mr. McDonnell has presented no evidence to us this morning other than a reference to an article in The Irish Times, and that is just not scientific.

Mr. Neil McDonnell:

I get emails every day. I have heard from a shopkeeper from Sligo who advertised for a deli position for 20 hours per week. He said he normally gets a mix of applicants and that the position suits third level students and stay-at-home parents. He got 23 applicants. Two were from India and the rest were all leaving certificate students looking for their first jobs. No one on the PUP applied. By all means, the Deputy can say that that is anecdotal rather than evidence, but we are hearing that across the board. I remind her that the picking season is for the next three months. That will not be diverted by anything Deputies decide in Dáil Éireann. That will simply be because that is the nature of the seasons in Ireland.

We are totally free to ignore that if we want to. The committee invited me in to tell it the way it is, and I have done that-----

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I want to give Dr. Bambrick another opportunity to respond, please-----

Mr. Neil McDonnell:

If the Deputy does not want to pay attention to what I have said, that is absolutely fine by me.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I want to give Dr. Bambrick an opportunity to respond.

Dr. Laura Bambrick:

ICTU does not dispute that a small number of employers are struggling to find workers as they reopen. What we are calling into question is both the baseless claim that this is caused by the PUP and the way in which the unusual is being presented as representative. If the PUP is not causing these struggles to find new staff, what is? As was mentioned, there is an evidence base of how workers have responded because, unfortunately, this is not our first reopening.

Ours is a rich economy, and if we look at what is happening in other rich economies farther down the road in reopening, there is evidence that they too are struggling to get workers in hospitality, the beauty services and agriculture. Because they are further down the line, they have an evidence base and they are asking what is causing this. In many instances, those countries do not have a PUP-equivalent payment. They have found that these sectors are disproportionately reliant on cheap migrant labour. Many such workers over the past 15 months have returned to their home countries. We do not have the same inflow of migrant labour at the pace we normally would to pick fruit or to work in the hospitality sector because they are not coming and people are fearful that we might go into a new lockdown.

Businesses are also finding that those workers who are resident here in the long term or are native to the country have changed sectors. In many cases, they have moved into retail, which does not have significantly better conditions but can provide regular hours and regular pay. They will, therefore, have changed employers or sectors and, in some instances, left employment. This is typical for a second earner in the household People have woken up and asked why they are killing themselves working for those 15 hours at the cost of their quality of life and family life. They may have decided to cut their spending to suit and gone for time over money.

As the Deputy noted, only 75 employers contacted the Department of Social Protection during May. It is not the most robust measure, given that not all employers will pick up the phone and complain, but when those employers complain to the Department, it will take the information of the 75 people who have refused their jobs, it will have those cases investigated and tell the employers how many of their former employees are no longer in the country and not claiming the PUP, how many have changed employer and how many are under further investigation. The numbers under further investigation would not get even a footnote in the newspaper, never mind the front page. There is a need for follow-up questioning by journalists who are willing to take individual experience and generalise it as if this is widespread.

I would like to address the suggestion that part-time workers do not want to return to work. The majority of exits from the PUP in recent weeks have been from the under-25s, who are disproportionately the lowest-paid workers and are mainly from the hospitality sector. As sectors are reopening, and hospitality has not fully reopened, we are seeing movement. There are some difficulties with rehiring - Ireland is not unusual in that - but this is being misdiagnosed as a problem with the PUP. A recent report published by the IMF, not a natural bedfellow of the trade union movement, showed that during pandemics, when fiscal supports to both business and workers are removed too soon, it has a devastating impact.

As a word of warning, businesses should be careful what they wish for. Otherwise, there will be a negative impact for them because much of the PUP went into their cash registers.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank Dr. Bambrick. SMEs have warehoused about €1 billion in debt, a very scary figure, although much of it relates to the advance credit for trading expenses and so on. My fear, and I am interested in hearing Mr. McDonnell's view on this, is that much of the debt relates to rent. There are viable, good, decent businesses that could restart, but the issue with them relates not so much to the debt but rather to the back rent that will impede them. Does Mr. McDonnell have any information on the numbers in that regard or what the potential impact of that will be? For some businesses, we cannot know because they are not yet open, although we will when they pull up the shutters and the bills start to arrive. My fear is that the shutters will go up, there will be six weeks of trading and they will be forced to go, and rent makes up a considerable part of that. I cannot count the number of occasions on which I have raised this with the Tánaiste. There does not seem to be any movement on that but I would be interested in hearing Mr. McDonnell's comments.

Mr. Neil McDonnell:

There is no question but that the two biggest players in this will be the landlords or the banks, and the Revenue. During the previous recession, the banks effectively foreclosed on people and businesses. This time it is different, and the banks are now substantially behind the small company administrative rescue process, SCARP, legislation coming out of the Department of Enterprise, Trade and Employment.

I have recently been coming to town only once a month, to process the payroll. I walk up Grafton Street and I am still getting my head around the changes in some of the shop windows. There is 30% non-occupancy already in Henry Street and Mary Street, and that is in Dublin, so one can imagine the effect there will be on main streets down the country. One reason we have asked Members of the Oireachtas to be firm on this is that we know they will be lobbied hard to remove lease provisions from the SCARP legislation when it comes before the Houses. What we say to landlords is that there will be a pretty fundamental reset for businesses, and especially for bricks-and-mortar retail. They will just have to get their heads around the fact that lease values will fall post Covid for all sorts of reasons, such as working from home.

Richard Bruton (Dublin Bay North, Fine Gael)
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I thank our guests for their presentations. I will focus on solutions and issues we need to consider now, following the Government set of decisions that have been published. Many people would like to see big changes, but the Government has been supporting the economy at a cost of €2 billion per month and there is a need to draw back from that. Very large suggestions, of either new tax cuts or new spending programmes, will be challenging in that atmosphere.

What changes in viability supports are needed? What changes are needed in regard to transition measures for people who have been impacted or who are going to find it a difficult number of months? Finally, what are our guests' views on the longer-term structural issues?

As for the transition, will our guests from ICTU give an idea of how the short-time work scheme might work? Could it be piloted in a sector that has particular difficulties with a start date and an end date in order that there could be a cost-benefit analysis to see how far it might get us? I would be interested to hear ICTU's reaction to various active labour market measures, as they used to be called; I think they have a new name. I refer to measures such as work experience, the new training programmes and the evolving apprenticeship programme.

I would be specifically interested in the comment on childcare or the transition changes in childcare that we need to be thinking about.

I would like to congratulate ISME for having pioneered the examinership-lite that is now hitting the Statute Book and is a very important measure. We now have rates relief, extended EWSS, SCARP, a number of business supports, online supports, access to credit and so on. Where is the shoe pinching in terms of that array of measures? Where are the gaps that the Government could start to look at in a targeted way?

Mr. McDonnell threw out the issue that the vaccination status of co-workers could be exploited by lawyers. Perhaps he would elaborate on that.

Clearly, we have long-term structural changes. Some of those relate to sick pay, the living wage and so on, and some are more around big things like how we adapt to a circular economy and the climate challenges. In terms of direction as we exit to build back better, as they say, do the witnesses have advice on how we build back better?

Mr. Neil McDonnell:

There is quite a lot there. On the viability supports, I appreciate this is a very difficult issue and it is sectoral. Let us understand that some sectors have actually done better during this period. For example, the pharmaceutical and medical sectors and quite a lot of our multinational sector have done better. Getting visibility on this is going to be difficult. One thing that might be possible is perhaps, in some of those troubled areas, to look at the equivalent of the paycheck protection program, PPP, that was tried in the United States, so that there might be an element of debt forgiveness for some businesses that maintained their workforces, for example. That was quite popular in the United States.

We acknowledge that the supports have to taper. I hope there would not be a difference between us and, say, ICTU in terms of tapering the PUP. For example, one thing that could be done in order not to discourage people from going back to work is to apply the earnings allowance that applies to the self-employed. Perhaps we could look at giving that to people so they would not be discouraged from going back to work and they could make some earnings without disqualifying themselves from the PUP.

On the vaccination issue, I have to be very careful because a complaint has gone to the Legal Services Regulatory Authority, LSRA, in regard to a particular blog or advertisement from a solicitor. What I will say is that, in particular sectors where social distancing is very difficult to maintain, such as grooming and retail, on the one hand, a minority of staff are saying, “I am not getting vaccinated for reason X”, whatever it is, and other members of staff are saying, “I am not going to work with an unvaccinated colleague.” The employers, unfortunately, have been left high and dry on this. On the one hand, they are at risk from the Health and Safety Authority, HSA, or from a complaint going in to the workplace surveillance unit in Kilkenny if they do not act on this. On the other hand, they are dealing with the possibility that if they attempt to intervene in this area, a worker complaint could go in to the Workplace Relations Commission. In addition, committee members do not need me to tell them there are a number of solicitors who are very active in this area. Employers, unfortunately, feel they have been left to manage this issue in a complete grey area, and they are asking for some degree of certainty on this.

Maurice Quinlivan (Limerick City, Sinn Fein)
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Thank you. I call Dr. Bambrick.

Dr. Laura Bambrick:

I am going to share my time with my colleague, Mr. Berney. To clarify, Congress acknowledges that the income and wage supports are temporary and are intended to be a temporary measure. We are not looking for them to be made permanent. However, we want them to remain in place until the economy fully recovers. It is not possible to take a sectoral approach to the PUP. The Department of Social Protection does not collect information in that way and many people have jobs that are indirectly related to business coming from different sectors. There are all types of problems. That was really at the root of continuing with the PUP as it stands until September, which was to give us that opportunity to reopen and see where we are before we taper. When we say we are not standing over it, we mean that tapering will start if parts of the economy are still not fully reopened but that should be done in tandem with the myriad supports that are there for businesses as well. We cannot remove it from workers and, at the same time, say it is needed for business. We cannot say "There is a job there for everyone who wants it” to the 270,000 people who are still on the PUP, but at the same time-----

Maurice Quinlivan (Limerick City, Sinn Fein)
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Sorry to interrupt. We are running out of time if Mr. Berney wants to come in.

Dr. Laura Bambrick:

I will conclude. At the same time, we recognise that not all previous jobs will return and that the impact of the pandemic on the labour force has been uneven. It has impacted younger workers, unskilled workers, migrant workers and part-time workers, and if we cannot deliver their jobs back, we are going to have to deliver them the skills. Unfortunately, we have not had the new pathways to work strategy and the new youth employment charter, so we cannot comment on that. My colleague might want to comment on the other issues.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I am sorry. We are out of time and we will have to go to the next speaker. Mr. Berney will be able to comment later. I call Senator Róisín Garvey.

Róisín Garvey (Green Party)
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I thank the witnesses for attending. I believe the whole situation is much more nuanced than some people might like to categorise it. From my own experience of listening to small businesses, we must remember that small business owners are workers as well, so it is not a simple black-and-white case of the poor workers and the mean employers. We have 250,000 small businesses in Ireland which, for the most part, treat their staff excellently and pay them well, and that is why they have survived and why many of them have managed to stay alive despite Covid. It is very important that we value and appreciate that. It is nuanced and we have to be careful how we oversimplify the challenges for both workers and employers, who are often workers themselves.

Probably the hardest work is in small companies. Both of my sisters are small employers and they both have about ten staff. They probably work 80 hours a week, probably harder and longer than any of their staff, who are absolutely brilliant and who they value a lot. It is very important that we make it clear that many small business owners treat their staff really well. That is why I want to hear how we can further support small businesses, and when I say that, I do not just mean the owners but their staff as well. I would like to hear more on what else we can do to support them and help them to survive, because it is such a huge area.

A previous speaker said that the sectors are not fully open. However, the agriculture sector is fully open, from my point of view down in Clare, although I do not know about Deputy O’Reilly’s area. As far as I am concerned, they are working 15-hour days when they get a chance to cut silage and so on. Many food growers have contacted me to say they cannot get the staff. Dr. Bambrick made the interesting point that they have been dependent on people from overseas but they are paying the minimum wage.

How will we solve this problem? People who cannot get staff are willing to pay any amount to get the job done. They need the food harvested because it is seasonal. They cannot wait until people come back from other countries. They are not trying to take shortcuts and not pay them properly. They will pay any amount at this stage to get people to help them with the harvest. How will we do that? There are some cases - do not shoot me down for saying it - of people staying on PUP when there are jobs available.

I have spoken to an Intreo office about this. As an example, a mushroom grower contacted me a couple of months ago, in Carlow or Kilkenny, and he could not get staff. Nobody applied for jobs yet there were 470 people in the same area on the live register or the PUP. I contacted the Intreo office and it clarified for me - if members want statistics and facts, not just a little anecdote - that there were more than 400 people on the PUP but none of them applied for the job. I am not saying that people have to come off the PUP because there is a job available picking mushrooms, but are we missing a piece to this? Employers are not allowed to engage directly with Intreo offices and I am not sure how we fit that piece into the jigsaw. I believe most people want to go back to work, but perhaps there is a missing piece or the way we link people who are on PUP or unemployment benefits with the businesses that want to pay them properly to go to work, even if it is only short-term. We cannot blame people for wanting only part-time workers if it is a seasonal thing. That does not mean that they only want part-time staff. It just means that they need more staff when crops are in season. I am curious to hear from Mr. McDonnell about that. What is the missing piece in this because pay is not an issue as they are paying above the minimum wage?

Mr. Neil McDonnell:

We briefly summarised much of that. Many of the statistics Senator Garvey referred to will only emerge in time, when the Department of Social Protection and Intreo say what is going on on the ground. At the beginning of my submission, I used the expression of being in "a state of denial" and we appeared to have some words about it. Further on in our submission, we referenced a previous submission given to the committee on the Jobs Kill Zone. We should talk about to the disincentives that exist for workers earning between €18,000 and €30,000 per annum. If we take that back to hourly wages, €30,000 per annum equates to €14.79 an hour, in a standard working week. When earning €17.41 an hour, a person goes on to the marginal rate of tax. Ireland's tax system scoots up very quickly and there are significant inducements for people, especially single parents or parents of two or more children, who are on any form of social protection payments. There are significant disincentives for them to exit unemployment.

We have made four simple recommendations - I will be quick outlining these. First, the PRSI charge should be adjusted to eliminate the very high marginal rate deduction on people earning between €18,300 and €22,000 per annum. Second, the basic rate for qualifying for the medical card should be set at more than 30% above the jobseeker's rate. Third, the child element in the jobseeker's payment, and in all other welfare payments, should be replaced with a significantly increased child benefit payment. The working family benefit should be phased out and that higher child benefit payment should be taxed. Fourth, and final, the income thresholds for access to social housing should be looked at, which in some parts of the country are as low as €25,000 for a single person. Let us not kid ourselves: our welfare system actively discourages people from going to work. It is not that people are lazy, they are economically rational by not going to work. If I were in their position, I would not go to work because I would have a family to feed. It is as simple as that. It is in the members' gift to address those things in the social welfare system.

Róisín Garvey (Green Party)
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I was on social welfare as a single mother. When I went back to work, I was certainly out of pocket, so I completely concur with McDonnell. It was a hard thing to do but for my self-worth it meant more to me to go back to work. I lost the medical card and rent allowance. I was not on high earnings so I was down in terms of money. I understand where Mr. McDonnell is coming from. There are probably more nuanced situations for other people in different cases. I appreciate that.

Paul Murphy (Dublin South West, RISE)
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I thank the witnesses for their presentations. I will start with Mr. McDonnell in regard to the call for an accelerated cut in the PUP. Previous speakers have gone over the evidence, or lack thereof, of the case he is making, that ISME's members are finding it difficult to get workers as a consequence of people being on the PUP. Is the other side of that equation not an admission that some of ISME's members are paying poverty-level wages? If ISME wants to get people back to work, should businesses not be paying people a decent level of income that is more than €350 a week? Therefore, taking Mr. McDonnell's view that people act as rational agents, people would be incentivised to go to work because they are going to get an improved standard of living. Let us be honest: €350 a week does not provide people with have a high quality of life, especially if they have to pay to go to and from work and so on.

Mr. Neil McDonnell:

I do not know who is paying €350 a week because that is below the minimum wage. If Deputy Murphy knows of an employer who is doing that, he or she should be reported. I deliberately went into detail with reference to our Jobs Kill Zone report. The minimum wage is now €10.20 and there is an argument for a living wage in excess of €12. The point we are making is that the jobs kills zone tops out at €30,000 per annum - that is equivalent to €17.41 per hour. I do not know at what level Deputy Murphy wants to set the minimum wage because he is using loaded comments like "poverty wages". If it is the decision of the members as legislators to increase the minimum wage to €17.41, do so but there will be economic and employment consequences.

We find this debate very circular, sterile and not very productive. The fact is, if the cost of labour keeps being increased, employers will use less labour. I referred Members of the Houses to the Seattle minimum wage study, which was a large-scale study of what happened when Seattle increased its minimum wage from $9 to $11. It did not have much effect in Seattle because Seattle was going gangbuster but there were severe impacts elsewhere. Washington state is very much like Ireland. It is a rural state with a big city on a seaboard. The increase in the minimum wage did little or nothing, or reversed the situation, for lower paid people outside Seattle.

I do not see why we should be at loggerheads about this. There are things that can be done within our social protection system that do not involve bidding up the cost of labour. It should be the priority of members to look at that rather than simply putting up the minimum wage to €17 an hour.

Paul Murphy (Dublin South West, RISE)
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Many ISME members pay workers less than €350 a week because many of them are employing people for less than a 40-hour week, there are significant numbers of precarious temporary contracts and so on. As it happens, my partner was the organising director for the 15 Now campaign in Seattle. She would certainly dispute some of what Mr. McDonnell has said about the impact that had in terms of raising the floor for all workers in Seattle. That obviously became a national campaign.

Moving on to the issue of sick pay, Mr. McDonnell was quoted in the Sunday Business Postat the weekend, and he referred to it in his submission, effectively criticising elements of the statutory sick pay scheme. He opposed the ten-day entitlement which will be in place by 2025 and called for the burden of payment to be place on workers, so that workers pay for their own sick pay scheme.

One of the things Mr. McDonnell is quoted as saying is that he had had the unfortunate need to dismiss people for that level of absence when he was working in the haulage sector, when people were taking ten days of sick pay. Is it ISME policy to sack workers for taking sick days?

Mr. Neil McDonnell:

I have literally only had one occasion to do that, but that is how it was reported. When that termination was over and I left the room, and I will not say where, with a trade union official, he said to me, "You should have done that a long time ago, Mr. McDonnell." There is a notion that many people think that co-workers should be able to go sick as often as they want, and the people who are most discommoded by that are their colleagues. What we have said, and again, this is very clear in the submission we have made, is that the burden for this should fall on the Social Fund, not on the employee, but what we are saying, and the Deputy is correct when he says this much, is that where Ireland is a significant outlier by comparison with other European countries is on the social contribution made by employees at 4%. It is in excess of 20% for some income earners in France. Yes, our 11.05% contribution is relatively low by comparison with some, but I ask the committee members to bear in mind that the auto-enrolment proposals which are before them - I know they have been pushed out somewhat - refer to about a 6% contribution to auto-enrolment from the employer. That would take the employer's wage tax to 17.05%, so the committee needs to look at these things in the round.

The kind of philosophical point we are again making is that the Members are the legislators, it is in their gift to increase these charges as much as they want, and it should be borne in mind we have the second highest minimum wage in Europe. We also have the second highest cost of living in Europe, and the country with the highest cost of living does not have a minimum wage at all. But we also have the most progressive tax system in the EU and the second most progressive tax system in the OECD. These are-----

Paul Murphy (Dublin South West, RISE)
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We do not, but-----

Mr. Neil McDonnell:

We are almost back to Deputy O'Reilly's thing about evidence, but that is what the OECD says-----

Paul Murphy (Dublin South West, RISE)
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No. That is what the OECD says when you look at a particular area of taxation. When you take taxation in the round, it is not the case. But could I just get confirmation? Mr. McDonnell is saying he sacked someone for taking too many sick days.

Mr. Neil McDonnell:

Absolutely, yes.

Paul Murphy (Dublin South West, RISE)
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If that person is out there, he or she is entitled to sue Mr. McDonnell for unfair dismissal. You are not entitled legally to sack somebody because of how many sick days he or she takes. That is not a grounds for dismissal.

As to where this gets paid for-----

Maurice Quinlivan (Limerick City, Sinn Fein)
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Sorry, Deputy. Your time is up, I am afraid. Sorry about that.

Paul Murphy (Dublin South West, RISE)
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No problem. I will come back for a second round.

Maurice Quinlivan (Limerick City, Sinn Fein)
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No bother. The next person is Deputy Matt Shanahan.

Matt Shanahan (Waterford, Independent)
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I thank our guests. I do not wish to get involved in philosophical arguments about employee rights or enterprise rights. Many people out there, particularly in the private sector, are looking for answers and support from the State. I commend ISME on the work it has done on SCARP, which I think Deputy Bruton has already mentioned, and on insurance reform. I think those measures have been very much welcomed by private sector employers in particular, and it is hoped we will see reforms and cost savings from that.

I refer to the ISME report. Senator Garvey spoke about it. We have to do something about the jobs kill zone. There is a lot of anecdotal evidence supporting the fact that many people just cannot afford to take on employment in that threshold area. We have to try to see how we can incentivise people to get back into the work zone. It is also worth noting in ISME's statement that only 40% of SMEs, according to the Central Bank's April report on SMEs, are functioning profitably at the moment. I think that might be an overstatement when we get into the far side of understanding what Covid has delivered.

I have brought up at this committee a number of times the absence of ISME from the Labour Employer Economic Forum, LEEF. I am a firm believer that ISME should be a member of that. Will Mr. McDonnell outline why he thinks this should be the case and why it is not the case?

Mr. Neil McDonnell:

I will not go into a long history of partnership, but when partnership originated back in the day, for whatever reason ISME was not involved. Then partnership effectively went by the wayside. Parties withdrew from it in the great recession and then it sort of restarted quietly under the Administration in the Thirty-second Dáil as the Labour Employer Economic Forum, but we are not members of that. This is not simply an issue of negotiating terms and conditions of employment and so on. We make specific reference to, for example, workplace health and safety, which have obviously troubled us since the start of the pandemic. I mean this as no criticism of the people who came up with the Work Safely Protocol 1 and 2, but they were very clearly drawn up with big businesses and big premises in mind and assigning a manager who would look after someone on the premises who was symptomatic, having an allocated room in which to put someone who was symptomatic, sending him or her home and making sure he or she did not use public transport. Quite frankly, we have people doing these protocols who have never worked in a corner shop, a café or a hairdressing shop. Those Work Safely Protocols would never have been generated as was had there been a small business involvement in it. Obviously, now, as we talk about other things such as those we have talked about today, for example, statutory sick pay, the living wage, the minimum wage and so on, these things are meaningless if the 99% of employers who make up the business demography in the country are ignored. ISME would say that unless LEEF somehow takes in the SME sector, it is just a group of people in the State sector and the multinational sector talking to each other.

Matt Shanahan (Waterford, Independent)
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I asked this question of the Tánaiste some time ago on this committee and he said the SME community was captured under the Small Firms Association component of IBEC. Would Mr. McDonnell agree with that? Where does he lie with that comment?

Mr. Neil McDonnell:

I am certainly not in the business of denigrating other people, but we have made the point very simply at the back of our submission to the committee that if that component of LEEF were representative of small business, it would be banging on the table with the committee now about antigen testing in the workplace, understanding the vaccination status of employees, the high cost of housing for employees, the high cost of insurance, defamation reform, perjury, small business rescue under SCARP and affordable examinership. These issues have all been brought to the table of the Government from outside LEEF because they are not priorities for anyone inside LEEF. It is as simple as that.

Matt Shanahan (Waterford, Independent)
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Mr. McDonnell made a comment about SCARP in the context of leaseholders, landlords and so on. We had the Minister of State, Deputy English, with us yesterday morning and I asked him this question. I do not want to say he was evasive but he certainly did not give any comfort or say leases and landlord arrangements would come under the remit of SCARP. It sounded as if he was saying legally they could not. Will Mr. McDonnell outline what he believes the main problems with scoping this in terms of SCARP will be and the pressures that will bring on employers into the future?

Mr. Neil McDonnell:

Whatever about employers, I can tell the members of the committee as legislators - and I suggested this to Deputy O'Reilly - that they will come under considerable pressure from the big landlords. They will probably also come under pressure from Revenue, telling them what they can and cannot do. I got a call this morning from a business that has been shuttered since March of last year until this month.

This is not just an issue with private landlords. This business has been contacted by Dublin City Council advising it that its rent will be increased but it has been shut for a year. The State acts as landlord as well.

We have been arguing for a long time about upward only rents and so on. A completely bogus assertion has been made that leases constitute property rights that cannot be touched and it is verbotento go near them at all. That simply is not true under the Constitution. We had a legal opinion to that effect from a senior counsel who is now a member of the Supreme Court. Anyone can take that on, including Dublin City Council by all means.

We need to get real. We have had a kind of a steroidal residential and commercial property market in Ireland. In commercial property, it has been underpinned by these leases that do not reflect real commercial value. We now have Dublin City Council putting the gun to the head of a business that has been shut for a year. The committee needs to understand where some of the pressure will come on legislators in the next number of months.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I have some questions on aviation. I represent the constituency of Limerick. The mid-west region is totally dependent on Shannon Airport. It is important to get that back up and running. Has ICTU any views on where we are with aviation policy or the lack of it?

Mr. Liam Berney:

I have attended this committee previously when we have spoken about aviation and the perilous situation in which it finds itself. The decision by Aer Lingus to close its cabin crew base in Shannon Airport, as well as the more recent decision of Stobart Air to cease trading in the Republic of Ireland, along with the implications of that, brings into sharp focus what we have been trying to point out for a number of months, namely, aviation will be one of the last sectors to emerge from and recover fully from the pandemic, if it ever does.

We need to be focused on what particular supports are required to keep a functioning aviation sector in the economy. As an island economy, we rely crucially on aviation for connectivity, business and many other purposes. We need to be mindful that decisions could well be taken outside of the country about companies that operate in the aviation sector. The Oireachtas and trade unions with members in those companies will have little or no say in this. Shareholders and multinational companies may well decide that keeping an aviation business in Ireland that continues to make losses is not something they are prepared to do.

Much has been said about the aviation sector. Yesterday, the Minister for Transport spoke about the ending of the restrictions on non-essential travel on 19 July. Even after that date, supports will be required for the aviation sector. Deputy Bruton asked earlier about an appropriate place for the piloting of a short-term working scheme. Aviation would be a perfect fit for that. It will take some time for workers in aviation to get back to the level of activity that they would have been involved in prior to the pandemic.

Shannon Airport has been significantly challenged for quite some time. A decision was taken by a previous Government to separate Shannon Airport from the Dublin Airport Authority. That was a mistake. We said so at the time. We believe the reintegration of the three State airports into a single company would be the best way to protect Shannon Airport in the future.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I agree that the separation of Shannon Airport from the Dublin Airport Authority has proved to be a mistake. Hopefully, we will look at reintegrating that.

Richard Bruton (Dublin Bay North, Fine Gael)
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How would a short-term working scheme work? Would the employer continue to employ people for part-time hours? Would training schemes make up the balance? Will the witnesses talk through how a scheme like that might work in the airline sector?

If the rebate for employers on redundancy were to be a temporary scheme for a short period, how would it work? I assume it would be substantially expensive to do that forever. Would it work as a temporary scheme?

Should we consider a revival of the back to work allowance, which allowed people to go back to work but retain some supports such as the pandemic unemployment payment? Mr. Neil McDonnell put forward some more permanent tax changes. In the context of the small company administrative rescue process, SCARP, Mr. McDonnell talked about the availability of equity. Will there be many zombie companies coming out of that process that cannot rebuild because of difficulties due to the lack of equity undermining their access to finance? Has there been any thinking about those areas?

Dr. Laura Bambrick referred to the transition period and issues in accessing childcare. Are there practical suggestions that might bridge the difficulties for certain people who are trying to return to work but have childcare problems in that transition period?

Mr. Liam Berney:

The Deputy characterised succinctly the type of short-term working scheme we have in mind. Workers would be given a guarantee of a significant proportion of their net income. The employer would employ them for as much time as they could. The remainder of the time may be used to engage in upskilling to address future skills needs of the company or the general sector. That is the way these schemes work in other places. The balance of the money not paid by the employer is paid through the social welfare system.

Some of the forecasts for the aviation sector from industry experts are quite scary. Some have said that 2019 levels of activity will not be seen again in aviation until as late as 2026. That shows the need for a detailed look at how aviation employers and workers are supported into the future. If we do not, there is a possibility that decisions will be taken outside of the State that will damage the aviation. The sector is important to its workers and to the economy more generally.

Mr. Neil McDonnell:

Deputy Bruton addressed two issues to me. The first was on the rebate and the notion that it would be temporary. If I can be blunt for a moment, we say that the removal of the rebate ten years ago was a mistake. Therefore, the mistake should be reversed and the rebate should be reinstituted because the 0.5% charge on employers' PRSI is quite permanent. We are simply saying that the money is paid into the Social Insurance Fund by employers to fund statutory redundancy and one can only recover 60% of statutory redundancy. We understand that as well, because there had to be some moral hazard on employers to stop them laying off people willy-nilly. An employer bears 40% of the cost of laying people off. It was a mistake. If you make it very hard for businesses to lay off people when times are bad, they will be extremely reluctant to hire people full-time when times change. By way of illustration of that, one of the queries we get now from the grooming sector is that people are setting up hair dressing salons where they are not employing anyone: what they are doing is setting up a nicely branded salon and doing what is known as "rent a chair". They are letting people come in, which is discouraging full-time employment. The Government really needs to think about the unintended consequences of the actions that are taken.

On the zombie company issue, post the small company administrative rescue process, SCARP, there is no greater risk of zombies emerging from SCARP than there is from examinership. When an insolvency practitioner looks at an insolvent company and tries to put in a scheme of arrangement, in most cases he or she will be seeking equity. If no one is willing to put in equity, that is the first red flag that we are not dealing with a business that is going to survive. There is moral hazard in this system. If the creditors do not like it and if the insolvency practitioners themselves do not like it then it is not going to happen. Perhaps one of the advantages of the pandemic is that we are going to see a lot of zombie companies exit the economy because there is a considerable number of them. I know it is something that the Department of Enterprise, Trade and Employment tracks. We must bear in mind that where there is a good examinership regime, if we look at the UK, they will only rescue 10% to 15% of businesses that become insolvent. To be honest, I do not see a risk of maintenance of zombie companies.

Dr. Laura Bambrick:

Childcare as a barrier for PUP claimants returning to work is not the issue it was earlier in the pandemic when schools were closed and childcare facilities were not operating at full capacity. However, many carers, who are entitled to work for 19 hours a week, are claimants in the €200 to €250 PUP category. We have not had a return of day services centres for older vulnerable people so a lot of carers who are also PUP claimants are not in a good position. This has been a really neglected sector and group of people.

On the return of the statutory redundancy rebates even for a short time, there is already a facility whereby if a company that is continuing to trade but is unable to make statutory payments, once it is able to show an inability to pay either through an accountant or legal person, the Social Insurance Fund will pay the statutory payment but the business continues to have a liability to the Social Insurance Fund.

Paul Murphy (Dublin South West, RISE)
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I will return to sick pay with Mr. McDonnell. We were talking about who is going to pay for this. He spoke about low rates of employees' PRSI. We could make the choice to improve workers' conditions but then someone has to pay. How about we make the choice that employers' PRSI should rise, considering that we have the lowest employers' PRSI in all of Europe? Part of developing a proper social insurance model would be to significantly increase the amount of employers' PRSI. That way we could afford to pay decent sick pay and other benefits. How would ISME respond to that?

Mr. Neil McDonnell:

We are not in disagreement with Deputy Murphy on that. What we are saying is we do have one of the lowest rates in Europe. That is not contested. We are ad idemon that, so let us not make differences where we seek to make differences. One of the interesting factors with our social insurance system is that while we have a low rate of deduction, we also have a very low rate of entitlement and those entitlements are means tested. If we go back some years, there used to be something called the income cap. I will not comment on the Deputy's age, but he may not remember it. In recognition of the fact that benefits were capped, there was a €50,000 cap on employees' PRSI. It went to €75,000 and then it was eliminated altogether. There is no cap on employers' PRSI. Albeit PRSI is at rates that are a European low, we do not have universal access to healthcare and our benefits are all capped, so jobseeker's benefit, for example, has a hard cap on it. I note this is under consideration and it will be among the issues considered by the welfare and taxation commission. Thankfully, one of the good things to come out of the pandemic is that we are talking about social insurance now, so one will get a benefit as a percentage of one's salary rather than as €203 a week.

If the Government decides it wants to put employers' PRSI to 30%, that is an entirely valid output and consideration from the Legislature. What we are saying is that if that happens, the ability of employers to employ labour will decrease commensurately. The other point is that it would disproportionately affect the low-skilled and the no-skilled. It would simply put up the cost of labour. The Government must put employers' PRSI at whatever rate it thinks is appropriate. It will not get an intellectual or moral pushback from us. We are just saying that if one has a business that delivers a service or manufactures a good, in SMEs the cost of labour can be up to 86%. If the Government severely impacts the cost of labour, then it will impact the ability of the business to sell. That is all.

Paul Murphy (Dublin South West, RISE)
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Could I ask Dr. Bambrick to comment?

Dr. Laura Bambrick:

There is quite a bit to unpack there. In rich economies, of which Ireland is one, having an occupational pension - auto enrolment was mentioned earlier – and having paid sick leave from one's employer is a normal part of the worker's compensation package. Ireland is the only OECD country that does not have an occupational pension with contributions from the employer. Up until last week we were one of a handful of rich countries where the employer is not legally required to pay sick pay. Should employers pay more social insurance? Absolutely. That is where the gap in the Government's revenue is coming. We are a low tax economy and the gap is mostly made up from social insurance contributions from employers and the self-employed. However, the normal practice in how sick pay works is that for a period, from anything between two weeks and two years, the employer is responsible for the full cost and after that it is social insurance, if the illness continues longer than the entitlement. It is not a case of saying if we increase social insurance then employers will not have out-of-pocket expenses for pensions and for sick pay. It is the way the rest of the developed, rich economies have worked.

They do not have massiveunemployment or underemployment. We have heard the same arguments against employer groups every time we have had modest, progressive improvements in the pay and conditions of workers. This was the case with the introduction of annual leave in the 1930s, equal pay for women in the 1970s, a national minimum wage in 2000 and every other modest improvement since. The sick pay scheme introduced last week, contained in the Bill that will be coming before the House, is very modest. It will be introduced over four years. At the maximum, it will involve the equivalent of a 2.5% increase at the top of the income earned before the cap over four years.

Paul Murphy (Dublin South West, RISE)
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I thank Dr. Bambrick.

My final points are for Mr. McDonnell. His submission states SMEs now need "a bailout with recovery funds ... on favourable terms of at least €15 billion to reboot the recovery of society and our economy". I am not necessarily opposed to his suggestion but I would have to see the details of what such bailouts would look like. He also mentioned that two thirds of his members would have availed of the TWSS or EWSS, or have been in receipt of billions of euro of State funds to allow them to survive and continue. I wonder, however, whether there is not a certain irony in his coming here today with his two core messages, one being that there should be an acceleration of the cuts for workers who lost their jobs during the pandemic because the money being given to them is distorting the labour market and the other being that more money should go to businesses. Does the second one not also distort the market? I base this question on ISME's vision of rational agents and people not doing work because they get so much on the PUP, etc. I am not advocating this but if we cut the supports for businesses across the board, would it not incentivise them to be more efficient based on the logic Mr. McDonnell applies to PUP recipients?

Mr. Neil McDonnell:

The billions of euro in support to which the Deputy correctly refers are not to business but to labour. To be very clear, the PUP is a payment made directly to an employee or former employee and the EWSS payment is a payment that goes via the company to the employee. The Revenue Commissioners are quite rightly auditing businesses to make sure this occurs. The direct non-debt supports to business have been very small. They have been among the smallest in Europe. I do not have the direct grant-assistance figures in front of me. The last figures were produced by the Department of Enterprise, Trade and Employment on 21 May but the grant supports have been of the order of €350 million to €400 million. This is greatly appreciated and we are not knocking it but the rest has been debt-based. There has been no appetite to take up that debt. The credit guarantee scheme-----

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. McDonnell. His time is up. I am sorry about that. Deputy Paul Murphy's time is also up.

Paul Murphy (Dublin South West, RISE)
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I thank Mr. McDonnell.

Matt Shanahan (Waterford, Independent)
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May I return to a comment that Mr. McDonnell made on upward-only rent reviews? He said there is potentially a constitutional problem with addressing upward-only rents and that he has legal advice — from the Supreme Court, I believe — to that effect. Could he clarify that?

Mr. Neil McDonnell:

I will be happy to share that advice afterwards. Funnily enough, a constant refrain from landlords before the establishment of the rent pressure zones was that one could not go near leases for constitutional reasons, yet when the State had to intervene to control rents, lo and behold, we had rent pressure zones. There has been a persistent invocation of the Constitution to state leases cannot be touched because they involve a property right. I said somewhat flippantly at a different forum, thereby revealing my age, that when I did constitutional law in University College Galway in the 1980s, the then lawyer said the 1937 Constitution is a very flexible document that protects the rights of the unborn and the right to life but also allows a convict to be taken out of his or her cell and hung by the neck until dead. In short, there is no right in the 1937 Constitution that is not balanced by another. Essentially, the guidance on leases refers to a public good requirement. I appreciate that the Oireachtas has banned the signing of future upward-only rent review contracts but a great many historic ones remain extant, including ones involving the State or local authorities. I gave only one example of one. A local authority notifying a small business that has been shut for a year that its rent is going up is absolutely absurd. It shows the intellectual disconnect between some people and what has been going on for the past year.

Matt Shanahan (Waterford, Independent)
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I thank Mr. McDonnell. I look forward to receiving that correspondence.

Could I ask Mr. Berney a question on aviation? He has highlighted his thoughts on the reintegration of State airports but there is also a problem regarding airlines. What activity has Congress undertaken to support the air travel protocols that are being used, particularly in the United States, but which we have not decided to use yet? Has Mr. Berney any perception of IAG's present attitude to Aer Lingus? Does he believe Congress has a position on the State taking an increased shareholding in Aer Lingus?

Mr. Liam Berney:

On the question on the opening of aviation, Congress's view has been consistent. We have recognised aviation as a problematic sector and have been encouraging the Government to act to open aviation as quickly as possible within the parameters of the available public health advice. All the time, the view of Congress is guided by the public health advice. The Government has taken a decision to open aviation or allow non-essential travel from 19 July. We support that and believe there should be continued support for employers and employees in the aviation sector until it recovers. As I pointed out in response to a question by Deputy Bruton, there are varying forecasts as to when there will be a full recovery of aviation.

With respect to the attitude of IAG to Aer Lingus, I would only be speculating. I do not believe it is useful to do that. Aer Lingus comprises 5% of the IAG group. It is a small component of what is a very large organisation. As everybody at this meeting will know, large business is very unsentimental in making business decisions. I would genuinely be careful about decisions that may be taken strictly on the basis of revenue generation and such matters in boardrooms outside this country. Whether IAG would be open, or the State would be willing, to take a shareholding in Aer Lingus is an interesting question. I remember being in discussions with Deputy Paschal Donohoe and the current Tánaiste when the State was desperate to get rid of the last 15% of its shareholding in Aer Lingus. Various individuals, including me, have said decisions made in the past were mistakes. Depending on how circumstances unfold, maybe we will reflect in a little while on whether the Government's selling of its 15% share in Aer Lingus was not also a mistake. I would not like to speculate, however, on what IAG thinks of Aer Lingus at the moment. It would not be worthwhile and I could possibly be wrong.

Matt Shanahan (Waterford, Independent)
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I thank Mr. Berney.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I had to step out to make a small contribution in the Dáil Chamber so if I am asking a question that has already been asked, the Chairman may stop me and I will listen to the response on the video afterwards. I apologise for having had to step out. It was an unavoidable absence.

In respect of financial supports available, in his opening statement Mr. McDonnell mentioned that credit is not currently available at affordable rates or, indeed, on reasonable terms in comparison with our European neighbours. While we may not agree on everything, I tend to agree with Mr. McDonnell on that. I ask him to expand on that point and outline what could be done to address it. There is not an endless supply of money. Everybody knows that. However, equally, we are storing up problems for ourselves if we do not support small to medium-sized businesses to recover from the pandemic. Will Mr. McDonnell outline for us what he thinks could be done? I ask him to be realistic and ambitious, if possible.

Mr. Neil McDonnell:

In the base case, I have to be honest and say there is no debt appetite among many SMEs. Many of them are not applying for credit. When the revamped credit guarantee scheme was announced last year, there was a lot of interest in it. However, it should be borne in mind that the credit guarantee scheme has been on the go since 2012 and, historically, there has been an uptake rate of only 13%. That did not substantially change with the new scheme. Many members contacted me to tell me they had gone to the Strategic Banking Corporation of Ireland, SBCI, completed their application, got an application number, gone to the bank and then the process went into the dust. It seems to me that even with the State shouldering 80% of the risk, the banks did not view some of the SMEs as good risks.

I am aware that the Minister for Finance said, if the State gave a 100% guarantee, it would remove all moral hazard from borrowers. I do not accept that. We should not forget the debt is between the borrower and the lending institution. The State only steps in if the debt is not repaid. Only €250 million of the €2 billion available under the credit guarantee scheme has been lent to date. There is no desire to take up the scheme.

That is why I referred at the outset to the US scheme. I am not being naive. I know the system is sometimes prone to some level of abuse. However, when the abuse argument is raised, I make the point that robust anti-abuse measures should be put in place. We should not refuse to take a measure because it is potentially subject to abuse. Frankly, every law that is ever passed is going to be subject to some level of abuse. If we were to follow the American model, there would be debt finance and there could be forgiveness for some of the debt down the line. For example, the Legislature could take the view that if a business has maintained 100% or 90% of its workforce, a certain amount will be forgiven. That is the sort of thing we could look at doing to potentially make debt more attractive.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I want to reserve a small portion of my time to have a brief conversation with Mr. Berney on aviation.

I had a conversation with Mr. McDonnell earlier on the pandemic unemployment payment, PUP, workers and workers' rights. I note he referred in his submission to two pieces of legislation, one of which I brought forward concerning domestic violence leave, and both of which are small amendments to the Organisation of Working Time Act 1997. He stated very clearly he and his organisation are not in the habit of opposing legislation on workers' rights. I offer him the opportunity to put his views on the record. For my benefit and that of the other members, will outline what legislation in support of workers' rights his organisation has welcomed and supported? I can see he has no great enthusiasm for the legislation to which he referred in his submission to the committee. He also referenced the sick pay scheme. I ask him to provide an example of two pieces of legislation on workers' rights he has welcomed. He has the opportunity to put that on the record.

Mr. Neil McDonnell:

I am not sure what the Deputy is seeking to achieve. As a legislator, the Deputy is charged with bringing in laws that work for people and their employers. I have no criticism of the legislation to which the Deputy referred inasmuch as they are well-intentioned pieces of legislation. However, I and the people I represent are at a loss. Why do we not simply bring in a compendium act? Currently, we are dealing with six or seven pieces of primary legislation that deal with time away from work. If we continue down the track of talking about taking leave on miscarriages or domestic violence, we will eventually end up with workers taking leave because they have been involved in a car accident or because something else has happened.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I do not believe that is the case. I will give Mr. McDonnell the opportunity to correct his point. Comparing miscarriage and domestic violence to a car crash is really not appropriate. I do not believe it was Mr. McDonnell's intention to make that comparison. It is highly inappropriate. He can correct his statement if he wishes. Those two comparisons are not correct or right. I wish to give Dr. Bambrick the opportunity to speak on the topic now.

Dr. Laura Bambrick:

I do not imagine Mr. McDonnell intended to make that comparison. When measures such as the sick pay scheme are introduced, they are brought in to bring us into line with what is happening elsewhere. If we want to become a modern economy and continue to attract workers who have experience of working in labour markets internationally, we must be on a par with the normal standards those workers expect.

With legislation for leave for domestic violence, maternity, breastfeeding and so on, only the very unusual person will require all the leave. That should be borne in mind. ICTU can only hope any legislation we call for is delivered. We are most fortunate when it happens. A lot of the legislation we have called for is only in the early stages. I return to the point that very few workers will require the legislation and all the measures if they are introduced.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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One of the pieces of legislation to which Dr. Bambrick referred is legislation I and an Teachta McDonald have written. It is our intention to progress it and to use every opportunity we have. We believe it is genuinely important legislation.

If there is time, I wish to address Mr. Berney on the issue of aviation.

Maurice Quinlivan (Limerick City, Sinn Fein)
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Very briefly.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I was concerned to hear from some of the trade unions representing workers in the aviation sector that they fear jobs will be lost if a substantial package is not put in place to support the aviation sector. Does Mr. Berney sense that is the case? I ask him to provide an estimate on it. If I had more time, I would raise the issue of connectivity, but I do not.

Mr. Liam Berney:

The two recent announcements of Aer Lingus closing its cabin crew base in Shannon and the decision of Stobart Air to exit the Irish market should serve as a wake-up call for us to focus on the aviation sector and to see what supports we can put in place to continue employment and keep businesses operating within the Irish State. If we do not, the Stobart announcement will not be the last. Like the Deputy and the committee members and my colleagues in the trade union movement, I am deeply concerned about the position of the aviation sector. I must assert we have been raising those concerns for some time. I will leave it at that.

Maurice Quinlivan (Limerick City, Sinn Fein)
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Does Deputy Bruton wish to contribute?

Richard Bruton (Dublin Bay North, Fine Gael)
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No.

Maurice Quinlivan (Limerick City, Sinn Fein)
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That concludes our consideration of the matter. I thank all those who attended today, including the delegations from ISME and ICTU, for assisting the committee in considering the matter.

I thank everybody who has turned up and has helped us with our considerations today.

The next meeting of the committee will take place in public session at 9.30 a.m. on Wednesday next, 23 June. I thank all members for their participation at today's meeting under the exceptional circumstances we have to carry on these meetings because of Covid-19. Apologies for cutting people short but that is, unfortunately, what we have to do. Go raibh maith agaibh. Again, I thank everybody for their help and assistance.