Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)

This is an important section and I wish to refer to it in the context of a number of the points the Minister made in respect of amendment No. 2. There is major concern with regard to the number of jobs being lost throughout the country. The authorities in other jurisdictions have used different mechanisms to ensure the retention of existing jobs. I do not think anyone would say we should not put such mechanisms into place. Germany is a case in point, where employers were grant-aided to retain existing workers. Sinn Féin has argued for a jobs stimulus package.

My concern is that if someone is working a 40 hour week on the minimum wage his or her employer will be liable for the lower rate of PRSI. Any employer worth their salt, from the employers' point of view, will aim at creating all new jobs at the minimum wage level because they can then benefit, for two and a half years, from the Government bonus of the lowered employer's PRSI rate. When we debate section 23 we will deal with the reduced training levy. There is no logic behind this measure. Because of the changes there is now an additional incentive to employers to lower wages because they could benefit, in the example I cited, to the tune of more than €3,000 per employee per year.

Furthermore, the State will lose substantial income because of the reduction in employers' PRSI, which goes into the social welfare pot to pay unemployment benefit and allowance. The State will also have to pay out more in family income supplement to the people who will be on a lower wage, given the incentives to employers. The Minister has said there is no particular evidence to suggest that a lower rate of PRSI encourages employers to reduce wages in order to come within the qualifying criteria. That might have been true when the higher and lower rates were close together. However, there is now a substantial difference between the higher rate and the proposed reduced rate. There is a greater incentive, if that is the proper term, for employers to reduce wages. The financial incentive is substantial. In the example I cited of a wage reduction from €390 to €356, an employer would save a substantial amount, given the stricken times some of them are experiencing. Other employers are not in stricken times but will jump on the bandwagon, as they have done repeatedly in the past, to try to drive down wages. This is particularly true in many of the sectors where joint labour committee agreements and employment regulation orders are in place. Is this part of a twin-track approach?

The Minister said parts of our economy are under-performing and she mentioned tourism. Tourism might be under-performing but there is a variety of reasons for that. One is that we are in a global recession. People are not travelling as much. We need to do as much as possible to capture those who are travelling but this should not be done at the expense of workers in the tourism industry. Surveys of the tourism industry did not identify labour costs as a key problem. Most of the factors that needed to be prioritised related to fuel, electricity and similar costs. Labour costs did not feature as prominently among the costs of running a business as has been claimed in recent days.

I have major concerns with this element of the Bill, especially as it is being tied with the minimum wage. Someone working a 40 hour week on the minimum wage will come within this measure. Workers' wages will be reduced to the minimum or their hours will be reduced so that their weekly wage is below the figure required for the benefit. Workers and the public purse will be the hardest hit by this. If the public purse is reduced, the numbers unemployed increase and the Government honours its commitment to the IMF and the ECB to reduce social spending, how can we square that circle? This problem will certainly exist for the near future, whatever about the long-term future when we hope there will be a reduction in unemployment.

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