Kieran O'Donnell (Limerick East, Fine Gael)

I wish to share time with Deputies Clune, Damien English, Paul Connaughton and Richard Bruton.

I support the motion and I commend Deputy Penrose for bringing it forward. The Minister of State, Deputy Kelleher, spoke of making decisions with regard to competitiveness. Government's role is to strike a balance and find a fair solution. Competitiveness for the small employer can be dealt with in two ways. First, there is the crude measure of cutting the minimum wage. The other is to eliminate the employers' PRSI contribution of 8.5% on employees' earnings which would save €30 a week per employee on the minimum wage for each employer while the Government would save €40 per employee a week. Both measures benefit the employer; the first penalises the employee.

How can the Minister of State expect someone to live on €297.62 a week? Under the old minimum wage rate of €8.65 an hour, an employee on a 40-hour week would earn €346 a week, €17,992 a year. On top of that, he or she would pay an income levy of €359.84 a year. The new rate will see a reduction in weekly pay of €41.46, or €2,080 a year, with the gross wage coming to €306 per week, €15,912 a year. In addition, a minimum wage earner will pay €435.76 on the universal service charge and an extra 21%, €75.92, in tax. Not only has the minimum wage been reduced, the amount of tax minimum wage earners pay has increased.

There is a contradiction in the Minister of State's claim that those on the minimum wage will not remain on that wage level. Many of them are women in temporary employment in cleaning and the hotel trade. They will not come off the new minimum wage quickly.

We all agree employers have difficulties with rising costs. I had that experience over many years as a self-employed accountant. A measure, however, must be found that does not penalise the less well-off. A single person on the minimum wage will more than likely not qualify for either a medical card, rent supplement, because they work more than 30 hours a week, or fuel allowance. Under the old rate, the margin between jobseeker's allowance and the minimum wage averaged at €143 a week. Under the Government's new rate, the difference will be €110 a week. The Government should be putting in place measures which will encourage people to go into employment. Instead, it has come up with a proposal that if a jobseeker gets a job that pays the minimum wage, he or she will actually lose many social welfare supports which may not be to his or her benefit with little difference in income rates.

The Minister of State pointed to minimum wage rates in other countries. However, Ireland has its own standards. Would the Minister of State be able to live on €297 a week? It would be a good effort if all Members, once a year, tried to live on the minimum wage for one week. If that happened, I am sure the Minister of State would not be introducing this proposal.

The Minister asked where the Opposition parties would find budgetary savings. The reduction in the minimum wage actually makes no savings for the Exchequer. All it does is further penalise the less well-off and create a greater social wedge. Yet, the Government had no problem putting €40 billion into the two failed entities of Anglo Irish Bank and Irish Nationwide Building Society. We also need to know when the Minister for Finance first learned about the €40 million AIB bonus package. His road to Damascus conversion yesterday to get the AIB board off the hook does not ring true.

I commend the motion to the House. I hope the Government will see some rationale and common sense on this matter and reverse its decision on the minimum wage.

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