Regina Doherty (Meath East, Fine Gael) | Oireachtas source

I move amendment No. 4:

To delete all words after “Dáil Éireann:” and substitute the following:

“recognises that:

— for 2020, the Low Pay Commission made its recommendations on the basis of current economic data and the assumption of an orderly transition for the exit of the United Kingdom from the European Union, and recommended that the rate of the national minimum wage for an experienced adult worker be fixed at a rate of €10.10 per hour;

— the Commission made its recommendations on the basis of an orderly Brexit and acknowledged that the Government may wish to review this recommendation in the event of a disorderly Brexit; and

— the Government has accepted the recommendations of the Commission in their entirety; however, given that the terms of Brexit are not yet finalised, the Government has decided that a decision on the date of implementation will be made when the outcome of the Brexit negotiations becomes clearer.”.

I am pleased to have the opportunity to respond to the motion on Sinn Féin's idea to introduce a living wage but first, and most important, it is essential to clarify that the concept of the living wage is a theoretical estimate made by a number of non-governmental organisations, NGOs, and academics who comprise a self-appointed living wage technical group. It is based on research identifying the income required for the minimum essential standard of living for a single-adult household in Ireland, conducted by the Vincentian Partnership for Social Justice.

It is important that Ireland's statutory national minimum wage and the living wage concept are not conflated or mixed up. The living wage is a voluntary societal initiative centred on the social, business and economic case to ensure that, wherever it can be afforded, employers will pay a rate of pay that provides an income sufficient to meet an individual's basic needs, such as housing, food, clothing, transport and healthcare. As a voluntary initiative, the living wage has no legislative basis and confers no statutory entitlements to anybody.

The national minimum wage, on the other hand, has a legislative basis and confers a statutory entitlement on employees, and a statutory obligation on employers. The national minimum wage is a legally-binding lowest average hourly rate that can be paid by an employer to an employee. The rate is set and governed by the National Minimum Wage Act 2000, which applies to all employees, including full-time, part-time, temporary and casual workers, with some minor exceptions.

When we add to the minimum wage the other social transfers available in the State that are paid to lower-paid workers, whether it is family income support, FIS, back to school allowances, fuel allowances, dependant child allowances and others, the amount provided to those many in need would meet, if not exceed, the living wage as suggested by the commission.

It is important to highlight that since the establishment of the Low Pay Commission, the Government has accepted all of the recommendations it has made on the national minimum wage. Since 2015, therefore, the national minimum wage has increased by 13.3%. The most recent figures published by EUROSTAT for January 2019 show that Ireland has the second highest national minimum wage of any country in the EU, currently at €1,656 per month, second only to Luxembourg, at €2,071 per month.

The national minimum wage approach seeks to find a balance between a fair and sustainable rate for low paid workers that will not have significant negative consequences for employers and competitiveness. It can be seen as an evidence-based approach providing a clearly defined minimum hourly rate for employers, giving them the freedom to pay higher rates while concurrently providing a measure of security for low-paid workers. As it is legally enforceable, it provides protection for those workers.

It can be seen as a pragmatic approach providing a clearly defined minimum hourly rate for employers, and giving them the freedom to pay higher rates, while also providing security for low-paid workers. More broadly, the setting of wages is a matter between employers and employees, which takes place in the context of the market, and the Government does not interfere unduly in the process, provided that the national minimum wage is respected and adhered to.

Widespread evidence demonstrates that the minimum wage is a blunt tool for reducing poverty, as many minimum wage earners are located in households higher in the income distribution range. This was found in the recent ESRI report on the impact of the minimum wage on household income distribution. The ESRI found that the national minimum wage has reduced wage inequality but it has done little to impact on the distribution of household incomes. It explained this is because minimum wage workers are often located in households at the higher end of the income distribution range and are typically not primary earners within households.

It is essential, therefore, that other in-work supports are in place for low income families. The Department of Employment Affairs and Social Protection has a number of in-work supports for low income families. The working family payment provides support for employees with families who have low earnings relating to their family size. It is currently paid to more than 54,000 families in respect of some 122,000 children. The average weekly payment made to families is estimated at €135 per week.

In budget 2020, the thresholds for the working family payment were increased by €10 for one to three-child families. The back to work family dividend is another in-work support. That scheme aims to help families move from social welfare into full-time sustainable employment. This helps to increase the incomes of families on low incomes. For example, for a two-child family, the working family payment increases after tax income by more than €137 per week, and this will increase to more than €147 under budget 2020 in January once we pass the social welfare Bill.

Another important in-work support for low income families delivered by my Department is the income disregard on the lone parent-related payments. The effect of this will be to increase the amount a lone parent will receive from employment without it reducing their social welfare payment. This enhances the incentive for a lone parent to take up employment. In budget 2020, for the third year in a row, the income disregards for the one-parent family payment and jobseeker's transitional payment increased by €15 to €165 per week. Building on the foundations of developments in these schemes that we have made in recent years, I will continue to provide for a better deal for families, particularly those on low and fixed incomes.

However, it is worth emphasising firmly that the Government has accepted the recommendations of the Low Pay Commission in their entirety and that the minimum wage will be increased by 30 cent to €10.10, as announced in budget 2020. It is important that people wishing to speak on the matter pay full attention to the Low Pay Commission's report and what it had to say. The commission made its recommendations on the basis of an orderly Brexit and acknowledged that the Government may wish to review this recommendation in the event of a disorderly Brexit. Given that the terms of Brexit are not yet finalised, all the Government decided to do last week was to defer the date of the implementation of the commission's recommendation, which it has accepted, and that decision will be made on the outcome of the Brexit negotiations and once that becomes clear. The increase is accepted but the timing at which it will commence has yet to be determined. There is a long way to go between now and 1 January, which is the normal date that it would commence.

The Government supports entirely an approach to the minimum wage that seeks to find a balance between fair and sustainable rate for low paid workers and one that will not have significant negative consequences for employers and competitiveness. It is the job of Government to find the balance between those two competing elements. The Government wishes to continue its approach of setting the national minimum wage through the Low Pay Commission structure. This ensures that the relevant social partners are involved in an evidence-based approach of incrementally increasing the rate.

The aim of the Low Pay Commission is to recommend a national minimum wage that provides an incentive to work. It is set at a rate that is both fair and sustainable and helps as many people as possible, without significantly adversely affecting competitiveness or having a significant negative effect on employment.

I remind Members that the Government committed in the programme for Government to incrementally increase the rate of the minimum wage to €10.50. We have raised it during the past number of years by 13.5% and when this recommendation is implemented, it will nearly be at our stated goal. We are the party that is committed to steadily increasing the minimum wage. I make no excuse for showing some prudence and caution. I genuinely believe the public will understand our decision to await the outcome of the current Brexit developments before setting an implementation date. I commend the Government's amendment to the House.

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