Clare Daly (Dublin North, Socialist Party)

It is clear that most Deputies in the Chamber support the reversal of the cut in the minimum wage. However, in section 3 the State is assuming responsibility for the burden of the associated cost by letting employers off the hook by means of tying into the reversal the idea that employer PRSI will be halved. The State will, therefore forfeit revenues which could be accrued.

Section 3 is extremely flawed in that it contributes to the myth that wages and the cost of employment act as a deterrent and have given rise to unemployment and that if we reduce the level of employer PRSI, this will give rise to an increase in the number of jobs being created. That simply does not add up. Wages in Ireland are below the EU average. Those who work in the areas targeted by this provision, namely, the lower paid sectors of the economy, including catering, cleaning and other types of minimum wage employments, have already endured reductions in their wage rates. As a result, wage rates have fallen further behind the EU average. I do not believe there is any evidence to support the idea that what is proposed would give rise to job creation.

There is, however, evidence which shows that this country already has one of the lowest levels of employer PRSI in the world. This has been a contributory factor with regard to the poor state of social services in this country. We are already well under the average. Even employers in the United States pay more social insurance on behalf of their employees than do their Irish counterparts. Reducing the level of employer PRSI further does not make any sense. I am of the view that what is proposed represents a hugely retrograde step which will further skew the wealth imbalance that exists in Ireland.

Another problem with the section is that it targets the lowest paid by making provision to halve employer PRSI in respect of wages under €365 per week. The Minister is de facto creating a disincentive for employers to pay people wages above this rate because there will be a marginal benefit to them if they keep wages below that level in order to avail of the 50% cut in PRSI. That is the real purpose of the section, which essentially legitimises the driving down of wages and taking income away from social services in order to benefit employers. We can demonstrate that the manner in which this is being done will ensure that there will be no impact whatsoever on employment. As already stated, this is a massively retrograde step. We were opposed to it before and we will continue to be opposed to it.

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