Tommy Broughan (Dublin North East, Independent) | Oireachtas source

I am delighted to have the opportunity to speak on this very important Bill, which I strongly support. I know the Low Pay Commission has been operational since February of this year, and I understand that the first report will be due in the very near future.

I welcome the legislation, which provides the constitutional and legislative bulwark for the national minimum wage, and amends the National Minimum Wage Act 2000. It remains to be seen how it will protect the lives of hundreds of thousands of low paid workers in coming years and decades. Nearly 5% of all our workers, just over 73,000, are earning the national minimum wage of €8.65. This is, of course, the experienced adult rate; those who are starting out in employment or are in structured training are on reduced rates of about 70% to 90% of the national minimum wage. The lower paid workers in our economy are typically those in the restaurant and hospitality sectors; those working as carers, particularly carers for seniors; cleaners; security workers; retail workers; and of course younger people. Many of us in this House had experience of those professions when we were starting out in our careers or studying.

There is also a distinct gender bias, as Deputy Maloney said. It has been noted by the National Women's Council of Ireland that this is a gender issue, as 60% of workers on low pay are women. We know that 50% of women in Ireland are earning less than €20,000. Women, younger people, migrants and those working in lower-skilled jobs such as trainees and apprentices in areas such as hairdressing and clerical work - even in the public sector although less so there than in the private sector - are most affected by lower pay and zero-hour contracts.

I am aware that the Minister of State has had widespread consultations, and that employer organisations have argued that we have the fifth highest national minimum wage rate in the European Union. This argument, of course, falls on its face because it totally ignores the higher living costs of our country. Higher wage economies like ours come with very high costs of living. We only have to think of energy costs, which the Minister of State's colleague, the Minister for Communications, Energy and Natural Resources, Deputy Alex White, is doing nothing to address; mortgage and rental costs; extortionate child care costs; and transport costs. Our public transport system is totally lacking compared to many other countries.

Over the last decades, but especially since the economic crash, the ideal of social Europe seems to have been buried by fiscal and economic neoliberal conservatism. A feature of this new, harsh economic Europe is the steady fall in wages across many eurozone economies. An article in the Guardiannewspaper earlier this week discussed the failures of the eurozone and argued that, since the introduction of the single currency, wages across Europe have been driven down. Workers, along with their wage rates and conditions, have been used as the mechanism to make economies "more efficient", as our leaders in Frankfurt and Brussels would say. Those workers have borne the brunt of this.

The heaviest loss has been to the German workforce. In 14 years, German workers have seen hardly any wage rises. According to the article, the higher skilled, higher paid jobs are disappearing out of Germany and going to the much lower paid states in eastern and south-eastern Europe. Gerhard Bosch, a German expert on inequality, said that lower paid jobs and the numbers of the low-wage workforce are almost at US levels. There is a neoliberal economic movement to try to transform the European economy into an American-type one, which is a totally different constitutional, economic and political set-up. I do not think we should emulate it in Europe.

More recently, our focus has been on Greece. This is the first opportunity I have had to discuss the matter. I find the weasel words of the Taoiseach and the Minister for Finance on the Greek crisis disgraceful and an affront to the Irish people. We are naturally in solidarity with the Greek nation and recognise it as the home of European civilisation. The Greek people are valiant and hard working, and they have been absolutely traumatised by vicious austerity for seven and a half years. I hope that, tomorrow or Friday, the Government will be able to stand over some sort of a settlement which gives Greece reasonable prospects for the way ahead and does not bury them further under this crushing austerity.

The crisis and the phenomenon of austerity are not just limited to Greece. As I said to the Tánaiste and the Minister of State, Deputy Kevin Humphreys, this morning, the housing and homeless crisis is the legacy of their term in government and is of Greek proportions. Across Europe, we are seeing an increase in austerity and a concentration of low pay in many sectors. The media, often controlled by wealthy individuals, as we have seen, have the relentless mantra of constantly cutting back on rewards for workers. Their arguments often make no economic or political sense.

In Europe, the rich continue to grow their wealth while the poor and the ordinary are feeling the pinch the most. While the banks got bailed out, Europe's ordinary citizens were sold out. What happened to the social Europe of Jean Monnet and Jacques Delors, great visionaries in the foundation of Europe and in the Socialists and Democrats grouping in the European Parliament? They were the founding fathers of Europe and of the euro and we are now looking at a landscape of ferocious pressure on workers and a downward spiral of wages. In that context, I welcome the Bill.

Section 4 of the Bill outlines the duties of the Low Pay Commission, stating that it "is designed to assist as many low paid workers as is reasonably practicable" and that "over time, [the national minimum hourly rate] is progressively increased". I am aware of the contrast with the British system, which has applied incremental rate rises while we have had major stops and jumps. I commend the Minister of State on seeking to address that. A 2006 Economic and Social Research Institute, ESRI, study found that irregularly adjusting the minimum wage can have a detrimental impact on employment as it can create uncertainty for workers and indeed employers. The study noted that smaller, incremental increases, which might follow from this legislation, were preferable. I, therefore, welcome those provisions.

Why, though, has the Minister of State chosen to retain the power to accept or reject a recommendation by the commission as outlined in section 6? I hope that the recommendation would always be positive. Why did he decide to follow the UK's model of keeping the Low Pay Commission in an advisory role, as opposed to the German Mindestlohnkommission, minimum wage commission, founded in January, which has the same set-up as the Irish Low Pay Commission? I note that the structure of our Low Pay Commission is similar to that of its counterparts in other large European economies.

I agree with the Minister of State that a consensus-based approach is usually best for recommendations on public policy. However, a consensus may be difficult to reach with employers in sectors which are historically characterised by very low pay rates. It can be particularly difficult when we already have statements from organisations such as the Small Firms Association criticising the functioning of the commission as well a likely recommendation to increase the minimum wage this year. I completely disagree with the argument that increasing the minimum wage will automatically lead to those on higher pay scales demanding increases.

Schedule 2 of the Bill provides for the membership of the commission and seeks to strike a balance. There are three members representing low-paid workers and three representing employers. There are a further two experts with proven competence in economic research and statistical analysis. I asked a parliamentary question on the recruitment process for the commission earlier in the year and the Minister of State gave me a reasonable answer.

Earlier this year, the Think-tank for Action on Social Change, TASC, released a research paper entitled "Cherishing all equally: economic inequality in Ireland", which highlighted growing inequalities in our country. The research indicated that Ireland is currently the "most unequal country in the EU [...] before taxes and social welfare payments are included". This confirms the importance of progressive taxation and social protections such as this legislation. As I have previously stated, the TASC report cogently notes:

The two poles of economic inequality are the concentration of income and wealth on the one hand and the number of people unable to meet their material needs on the other.

Various IMF studies have shown that reducing income inequality through redistributive methods does not hurt economic growth and actually helps it. Indeed, at TASC's annual conference, which took place on Friday last in Croke Park, Professor Özlem Onaran, a leading international economist based at the University of Greenwich, suggested that a pay rise generally across Europe would stimulate growth. Professor Onaran argued that "wage moderation policies are counter-productive and lead to a stagnation of economic growth". She went on to explain that her research, which included Ireland, showed that "a fall in wages leads to lower consumption because workers spend more as a proportion of their income compared to those who earn income from profit".

The Pobal HP deprivation index involves studies of small areas of the Irish population and has been an ongoing process over the years. To what extent will the Low Pay Commission address the disparities in costs for workers in different parts of the country? The Minister of State and I are familiar with the urban costs, and the Minister of State also represents rural areas. This is an important issue which I hope the commission will look at.

Will the Low Pay Commission have a role in examining a living wage in further detail? The Tánaiste told me on a number of occasions in earlier debates that this was an idea of which she was very much in favour. I have long been a supporter of the idea of introducing a national living wage, which was first advocated in the UK by a community coalition known as "London Citizens". They began the campaign based on the principle of fairness and this has had a great impact on the adoption of a living wage in various areas of the UK, even to the point of agreeing a model for calculating the living wage, which is then reported each year. In Ireland, the living wage has been calculated by ICTU to currently be €11.45 per hour, significantly higher than the current national minimum wage.

The UN Declaration of Human Rights in Article 25 and the UN International Covenant on Economic and Cultural Rights in Article 11 both highlight the right to an adequate standard of living, and a living wage is defined as one which "makes possible a minimum acceptable standard of living". At the beginning of May, I asked a parliamentary question as to whether the Minister of State might consider introducing a living wage and continuing the tradition Deputy Maloney talked about earlier. I was told the Minister of State had a deep interest in the living wage initiative and that he was going to hold a forum on the issue at some stage this year. What was the outcome of that? Was the forum held and what input might it have in the discussions on the minimum wage?

Ms Nicola Sturgeon, the current and, we should say, great First Minister of Scotland, leader of the Scottish Nationalist Party and the other Taoiseach - as we know, there are two taoisigh in these islands - has been brave enough to ask businesses in Scotland to sign up to a nine-point Scottish business pledge whereby pay would be at least £7.85 per hour, which is over €11, instead of the current minimum wage of £6.50. The pledge is part of a campaign to promote fairness and economic growth. NERI's paper from March 2014, A Living Wage for Ireland: Some Considerations and Initial Estimates, also concluded that "the implementation of a living wage offers significant potential to enhance the living standards of low income workers and their families". This is something we could look at in the longer term as a core objective of social policy in this country. While I agree this Bill is a step in the right direction, there is certainly more that could and should be done to help lower-income workers.

Earlier this year, the Minister of State and 70 others voted against my High Pay and Wealth Commission Bill, which we lost by 71 votes to 26. That Bill provided for the establishment of a high pay and wealth commission on a permanent basis in the Central Statistics Office. The fact that I wanted to put it within the CSO was one of the Minister of State's main points of opposition to the Bill. However, I only did that because the Bill would have involved expenditure and I could not have a charge on the Exchequer when bringing legislation before the House. That commission was intended to carry out research on all levels of pay and wealth in the State and to inform public policy, which I believe is the way forward.

Coming up to October and the general election campaign, we will all be trying to put forward the best possible plan for the Irish people for the next four or five years. However, we sometimes do not know what we are talking about and we do not know the realities of the issues. It has often been said that people in Norway or Sweden can simply telephone their revenue organisation or the equivalent of the CSO and find out what a Minister, a parliamentarian or anyone else in the country was paid last year. This gives us an idea of how we could frame taxation policy most efficiently in this country. The Low Pay Commission and low pay idea is only part of what we need to do. We need to look at everything and we need to find out who is worth what. For example, there were obscene levels of pay in the banking and financial services industry before the crash. Pay of €500,000 might be regarded as chicken feed and only a minor salary, and some people wanted €3 million, €4 million and €5 million, and sometimes up to €70 million or €80 million, and that type of obscenity. At the same time, the political representatives of such people are calling for harsh measures to contain costs and wages at the lower end for the vast bulk of workers.

While the Bill before us today is creating a commission to look at the low income earners, my Bill was intended to take a top-down approach and to examine the levels of very high pay and wealth in the country and to look across the full parameters of the private sector and public sector, and then to inform public policy coming into the budgetary process. While today is a very important step, and I commend the Minister of State on getting us to this point, I would hope that, in future, we would know what we are talking about in terms of remuneration, or, as the famous AJF O'Reilly used to say, compensation. We should all know clearly what compensation we will get for doing our various tasks in the economy. I support the Bill. I look forward to hearing the Minister of State's response and to receiving the commission's first report.

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