Ciarán Lynch (Cork South Central, Labour)

I thank my colleague, Deputy Penrose, for bringing this important motion before the House. The decision by Fianna Fáil and the Green Party to reduce the pay packets of minimum wage workers in this country by 12% is ill conceived, is badly thought out, and is detrimental not just to the future of minimum wage workers, but of all workers in the country. It is saying something to say that this is one of the stingiest decisions ever made in this House, considering the decisions the Government has made in recent times.

Many Members have referred to the direct impact it will have on people who are currently earning the minimum wage. I would like to look at this from a different angle. The measure cannot be examined in isolation, when we look at some of the finer details included in the EU and IMF documentation. If we look at that document and at what is happening to the minimum wage, then we see the greater strategy falling into place. Among the structural reforms we have signed up to in the IMF document is the movement towards the elimination of a cap on the size of retail premises, "with a view to enhancing competition and lowering prices for consumers", as the plan puts it. If we take these two measures together, namely, the reduction in the minimum wage and the change in the existing retail planning guidelines, we cannot avoid the conclusion that the Government is preparing the ground for international multiple chains like Walmart to come into Ireland, by slashing the prospective wage bills of these companies and easing the regulatory framework in which they will work. Of course, we should not ignore the fact that many of these companies will be acquiring lands that are in NAMA and will end up being a bailout to the type of friends that Fianna Fáil acquired over the last decade.

Not only is the reduction in the minimum wage a step too far, it is also a step in the wrong direction. It will have seriously negative ramifications for the existing retail sector, workers in the retail sector, and the broader community. A Goodbody study that was published in recent times shows that the economies of scale in food retailing are exhausted at 2,000 sq. ft. The research also shows that moving towards hypermarket formats inevitably lead to job losses. It is curious to see that the minimum wage provision included in the IMF deal was in there at all. It is unclear at whose behest it was included . The Minister for the Environment, Heritage and Local Government states that Ollie Rehn insisted upon it, the Taoiseach stated it was a Government decision, but the fact is that it is in there.

The Government's amendment to the Labour Party proposal this evening refers to the minimum wage being good for the retail industry. However, workers did not want to see a reduction in the minimum wage and employers did not want to see a reduction in the minimum wage. In its own submissions to the Government, the retail industry stated that it did not want to see any change to the minimum wage, rather reform in the area of the JLCs. However, it has been put on the table by the current Government. The biggest issue facing the retail industry is the tyranny of upward-only rent reviews. That is what is causing jobs to be lost in this country. Thirty thousand jobs have been lost in the retail sector in the past two years because of the Government's choice not to deal with the tyranny of upward-only rent reviews.

No doubt we will hear this evening that the slashing of the minimum wage will create more jobs, more competition and will lead to cheaper products, but at what price? Any proposed move to cheap labour and out-of-town retail hypermarkets will sound the death knell for small and medium shops in towns, villages and high streets across the country. How on earth will local companies be able to compete with cheap employment, cheap rents and unregulated planning guidelines that allow companies like Walmart to create a devouring mechanism within the retail sector? This will drive sustainable and good employers out of the industry, and create greater unemployment levels.

The decision by the Fianna Fáil Party and the Green Party to reduce the minimum wage this evening is not just an attack upon existing jobs and working conditions in those jobs, but also an attack upon existing businesses that are struggling against the tide to stay afloat in these tough economic times. We are seeing a softening up of the existing workforce - not just those on the minimum wage - for lower wages in the future by the type of deregulation that has got this country into the mess it currently finds itself.

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