Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)

I move amendment No. 2:

In page 6, between lines 43 and 44, to insert the following:

"4.—The provisions of section 3 shall apply to new jobs only.".

As discussed on Committee Stage, this amendment attempts to change the provisions of section 3 to ensure, despite my opposition to the reduction in PRSI for two and a half years, that a caveat is inserted to the effect that this will only happen in the case of new jobs. This measure means there is encouragement for employers to create new jobs and that, given the current climate, there is some benefit to them in doing so. That there is a trade-off between the minimum wage increase proposed in this Bill and the decrease in employers PRSI sets a dangerous precedent for trading off workers' pay against existing contributions to a State social welfare fund. I expressed my concern on Committee Stage that there will be a reduction in the pot available to pay for the unemployed people in our society, who number nearly 500,000 on the live register. They are dependent on social welfare payments and this instrument reduces the employers' contribution to the fund.

Part of my reasoning for the new jobs provision is to discourage employers from what unscrupulous employers will do, namely, reduce the wages and working hours of employees to ensure the employers receive a benefit. The change is substantial in comparison to what existed in the past. There are two rates of employers PRSI, 10.5% and 7.8%. The differences are minor at the moment so there is no major incentive for employers to reduce the wages of employees. In this instance, reducing the rate to 3.9% means there is an incentive for employers to do so not only because there is less PRSI to pay, but because they have lower wages to pay.

The sum of €356 is above the minimum wage. Those working 40 hours on the minimum wage come out with €346 so this is encouragement for employers to create new jobs below this figure. Even with the amendment I propose, there is a concern that any new jobs will be created at the lowest level. That is not what we should encourage people to do. We should be trying to create sustainable jobs of value that pay well to ensure people are taken out of poverty. In this instance, the encouragement shown to employers to reduce wages will end up costing the taxpayer more money. If an employer reduces wages from €390 to €356, some families will avail of the family income supplement, which is an additional charge on the Exchequer that has not been taken into account. I welcome the change to the minimum wage but it should be a stand-alone measure rather than a trade-off. Changes to the PRSI system should be dealt with in a separate Bill.

The Minister said this was one of the mechanisms to enhance job creation opportunities and to retain jobs, but the Government could have done much more to retain jobs. Employees wages were not the key problem in retaining jobs; most of it concerns the cost of utilities such as electricity and transport and rent costs. In most surveys of low-pay industries, these elements are further up the list. I urge the Minister not proceed with this or to ensure, at the very least, that these provisions apply only to new jobs. The other amendments, which were ruled out of order, were related to this and suggested reports to the Dáil on the number of jobs created and that this section would lapse if the target was not reached. They were reasonable amendments but were ruled out of order because they represent a charge on the Exchequer.

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