Mr. Neil McDonnell:

ISME and Retail Excellence Ireland thank the Cathaoirleach and members of the joint committee for this opportunity to address it on the issue of sub-minimum rates of the national minimum wage.

The Low Pay Commission has recommended the abolition of the sub-minimum rates of pay under the national minimum wage. We note with regret that the Low Pay Commission has no SME representative in its membership, a fact that contributed significantly to its missteps in the past year, principally in recommending a 12.4% adjustment in the minimum wage which has resulted in a need for the Government to provide liquidity for SMEs. The Department of enterprise’s own report, An Assessment of the Cumulative Impact of Proposed Measures to Improve Working Conditions in Ireland, acknowledges that “payroll costs account for a significantly greater proportion of overall operating costs in more labour-intensive sectors, such as hospitality, retail and personal services”. Our concerns are not academic; they are real and measurable.

We know the members of the enterprise committee are being lobbied aggressively by those suggesting that this is simply an issue of equity, and that there are no material impediments to the removal of sub-minimum rates. This lobbying ignores the reality that 56% of firms in the most recent set of Revenue corporation tax returns showed a negative corporation tax return in 2022, a figure consistent with the Revenue’s 2021 returns. These businesses are almost all microbusinesses, and mostly inhabit the services sector. It is simply factually untrue to argue that microbusinesses and small businesses are greatly profitable enterprises with a capacity to continually inflate their labour cost input. The AIB purchasing managers' index fell in June, and confidence among service providers was the weakest since April 2023.

This is not an issue of equity. The phrase “a fair day’s pay for a fair day’s work” must be interpreted both ways, and those who lack the skills and experience of older work colleagues must necessarily accept their remuneration will reflect this. Similarly, those young workers who have acquired greater skills and experience than their peers are not constrained by law from accessing higher paid employment.

The sub-minimum rates are not discriminatory on age grounds. They represent a formal recognition of the lack of experience that is a function of youth. As such, they are not discriminatory, in the same way that the legal voting age, age-related prohibitions on alcohol and tobacco use, driver licensing laws, service-related pay increments, and the fact that people must be 21 years old to stand for election as a TD are not discriminatory on age grounds. We therefore recommend retention of sub-minimum rates of pay for younger workers, even if in modified form.

As the Cathaoirleach will see, there is a longer discussion in the document we submitted to the committee.