Gerald Nash (Louth, Labour) | Oireachtas source

I thank the Deputy for raising this important issue. I note that he referred to the recent OECD paper entitled "Minimum wages after the crisis: Making them pay". This is a very interesting cross-OECD report which clearly illustrates that adjustments to the national minimum wage take place within the context of tax and social transfer policies as well as the broader earnings, employment and economic impacts of such adjustments.

It should be borne in mind that the national minimum wage in Ireland is relatively high by international standards, and the House will recall that this Government restored the national minimum wage to €8.65 per hour with effect from 1 July 2011. The most recent figures published by EUROSTAT show that Ireland's rate is the fifth highest among the 22 member states that have a national minimum wage. When the cost of living is taken into account, Ireland's rate is the sixth highest.

Approximately 70,000 employees are on the national minimum wage. I assure Deputy Maloney that if an employer is found to be in breach of the National Minimum Wage Act and is not paying at least €8.65 per hour, that is an offence and will be investigated by the National Employment Rights Agency.

In reviewing the paper, it is important to bear in mind that the conclusions are based on data from 2013. As the House is aware, there have been significant positive developments in the performance of the economy overall and in tax and social policy protections for the most vulnerable in our society since then. In this context, 410,000 low-paid workers have been removed from the USC charge over successive budgets, and the Government will continue this policy of tax reductions for such workers in the next budget and subsequent budgets if we are given a mandate to do so. At the same time, the Government has introduced targeted welfare supports for people returning to work, and particularly for the low paid. I know those are measures that the Deputy supports. The Government will pay €30 a week to mothers or fathers returning to work from long-term unemployment in respect of each child for the first year, and €15 per week per child for the second year. This is a very important back-to-work dividend for families to ensure that work always pays.

For those trapped on rent supplement who cannot go back to work because they will lose their housing support, a new housing assistance payment is being rolled out. The assistance from the State will be based on how much one earns and not on one's employment status. The Department of Social Protection also supports low-income families in work through the family income supplement. These initiatives address issues identified in the paper, such as the fact that even at the bottom of the income ladder, taxes and social levies can strongly reduce take-home pay, and the size of the overall tax burden has implications for how well the national minimum wage supports low-wage workers and low-income families. In this regard, it is worth noting that Ireland ranks very favourably against other OECD countries in terms of the level of employee taxes and social contributions for those on the minimum wage. It also finds that when social benefits are included, the minimum wage in Ireland is particularly effective at moving minimum wage workers above the poverty line.

In many ways, the report confirms the utility of the Government's twin-track approach in assisting those on low pay through reviews of the national minimum wage and pay restoration while also tackling the increased burden of taxation that resulted from managing ourselves out of the economic crisis. It identifies a potential issue for Ireland with regard to the net benefit to Irish workers on the minimum wage of any increase in the minimum wage. As I stated earlier, the data utilised are out of date, given the recent budgetary and social policy initiatives introduced by the Government. None the less, I have no doubt that this issue will be considered and fully explored by the Low Pay Commission in the coming months.

As Deputy Maloney will be aware, the commission has been operating on an interim administrative basis since last February, and the Government yesterday approved the Bill to give it statutory effect. This will be published in the coming days. I look forward to the debate in the coming weeks in the House on the Low Pay Commission Bill, which will give statutory effect to that body.

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