Seán Sherlock (Cork East, Labour)

I wish to share time with Deputy Michael D. Higgins. I propose to take approximately seven minutes. I refer in the first instance to the Minister's speech on budget day. He stated: "In the measures I am presenting today those on the new reduced minimum wage will not be brought into the tax net". If ever there were a case of misleading the House, that was it. Some four pages later, the Minister introduced the universal social charge, which was defined in the financial resolutions that came after the budget speech as a tax. It is a tax of 2% on income from zero to approximately €10,000, 4% on income between €10,000 and €16,000 and 7% on income from €16,000 upwards. Not only have those concerned suffered the reduction in the minimum wage rate of itself but they have been brought into the tax net and must suffer the double whammy of the universal social charge, a tax, on top of it.

To give an idea of the logic and an insight into the mind of the Minister, I refer the House to the debate on the Financial Emergency Measures in the Public Interest Bill of Thursday, 9 December in which the Minister stated:

The Government decided that the pay of the Taoiseach and Ministers should be cut again. When combined with the changes in taxation and PRSI in the budget, their pay will drop by an equivalent percentage amount ...to the reduction applied to the minimum wage.

Such is the logic that dictates how this Government works. It is the logic of a Government that has thrown out the window the idea of poverty proofing any taxation or budgetary measure. It is high time it was booted out of office and that a Government comprising the Labour Party was brought in so that we can reverse these measures and restore some degree of equity. What the Government has done to people working on the minimum wage is grossly unfair; there is no other way of putting it. It is contrary to any canon of taxation and to any republican ideal that we may hold in terms of how one treats workers in an economy, especially those on the margins and the low paid. It is grossly unfair and it should be reversed.

When the Labour Party launched its budget proposals two weeks ago, reference was made to the impact of the national minimum wage and the Government strategy for job creation. According to the most recently available statistics, 41% of those on the live register have a manual, craft or industrial background. One third of those aged between 15 and 24 years who have remained in the labour force are unemployed. We are concerned that 116,000 workers, some 6.6% of the workforce, are living below the poverty line; that the working poor make up 24% of all those in poverty and 40% of all households in poverty; and that the minimum wage is especially relied upon for protection by women, migrants and other vulnerable workers.

A total of 68% of those earning the minimum wage work in the hotel, catering, retail and wholesale trades. Low or no employment growth is anticipated in these sectors in future because there will be a permanent contraction from boom-time employment levels. Consequently, a cut in the national minimum wage will not lead to any direct job creation. It is expected the primary areas in which jobs will be created in the coming year are financial services, insurance, business and communications services and health and ancillary care services, all of which are non-minimum wage sectors.

The Irish labour force has already proved itself adaptable and flexible. The decline in unit labour costs has exceeded the decrease in consumer prices, producer prices and GDP by 11.2% between 2008 and 2010. In manufacturing, the real effective exchange rate is expected to be down 20% between 2008 and 2011. Lower paid manual and craft jobs have been hardest hit by the reduction in gross earnings of -9.75% between the end of 2008 and the start of 2010.

The Government's strategy is to use supply side solutions such as cutting social welfare benefits and the national minimum wage to address a demand-led problem in a slumping economy. This is an illogical, incompetent and bogus argument for those who rely on the minimum wage.

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