Robert Troy (Longford-Westmeath, Fianna Fail) | Oireachtas source

We remember the pledges it made in 2011. The Deputy and the Labour Party leader have rightly acknowledged that there is a commitment in the programme for Government to progress to a living wage in the lifetime of this Government. This Bill is broadly in line with that objective. The Government agrees with the principle underpinning the Bill that an annual living wage paid to a single adult person living alone and in full-time employment should afford that person a standard of living that meets the physical, psychological and social needs of recipients at a minimum but socially acceptable level.

In January 2021, the Tánaiste and Minister for Enterprise, Trade and Employment asked the Low Pay Commission, LPC, to examine the programme for Government commitment to progress to a living wage. He asked the commission to make recommendations to him on how best Ireland can achieve this commitment. To aid this work, the LPC commissioned a team of researchers from Maynooth University to conduct supporting research on a living wage. This research was to consider the policy, social and economic implications of a move to a living wage and the process by which Ireland could progress towards it. It was also to examine international evidence of living wages, involving different calculation methods, consider the policy implications and outline the options for moving to a living wage in Ireland. The LPC received the final research report in January 2022. As part of its deliberations, the commission then met with a number of stakeholders and representative groups. The LPC submitted its living wage report to the Tánaiste at the end of March and not the end of January, as Deputy Bacik suggested. The LPC report is being reviewed and it is planned to publish it along with the supporting research report in the very near future. By honouring the programme for Government commitment, Ireland will be among the early movers in adopting a national mandatory living wage.

There are various methods available for calculating a living wage, most notably the basket of goods and services approach, whereby each year there is a decision on the amount needed to cover these items and achieve an agreed standard of living. Alternatively, a fixed threshold approach can be used, whereby the living wage would be set as a percentage of the median wage. While this Bill calls for a fixed threshold approach to be used, other groups in civil society favour the basket of goods and services approach. The LPC, aided by the research report, will have considered the merits of both approaches and that detail will be available when the LPC report is published.

On a timeline for the introduction of a living wage, it is worth noting that the UK low pay commission has charted a five-year path towards achieving a living wage set as a proportion of the median wage by 2024. A similar approach could also be followed in Ireland as it is important to give employers enough time to plan, prepare and adjust to any such changes in the rate of minimum pay. It is important that everything that this Government does in relation to low pay is done on a phased basis so that increased costs for employers can be managed.

The Government has spoken about how the pandemic has caused many of us to reconsider and re-evaluate what an essential worker is. We now understand that it is a much broader group of workers than some people would have originally described, many of whom are on low pay and in the private sector. The Government has been clear in its belief that the legacy of the pandemic must be a fairer society with better pay, terms and conditions for all workers, particularly those on low pay. In considering the progression to a living wage, however, we need to make sure the changes that are made are done in a way that does not affect adversely employment or inflation. We need to make sure we proceed in a way that does not cause jobs to be lost, in terms of the numbers of people employed, or see employees having their hours cut or being forced into precarious employment. To do so would be counterproductive. We need to recognise that many businesses are feeling the effects of the pandemic and are also starting to feel the pressure of rising costs.

The Government is aware that recent increases in the cost of living have resulted in a greater focus on low pay. Rising energy prices have been one factor driving the increase in the cost of living since mid-2021. In February 2022, the Government announced a package of policy measures worth €500 million designed to support households, including an energy credit of €200 and a fuel allowance lump-sum payment of €125. Russia's invasion of Ukraine has led to further energy price increases and brought unprecedented volatility to international energy markets. This is feeding through the retail price increases to all households and businesses. The Government has put in place targeted measures to reduce the burden of these cost pressures for businesses and households. Given the volatility of fuel prices, it is important that measures are sustainable and targeted.

With a broader view towards income and living standards for low pay over the longer term, what this Government has done and is doing to address the issues should be acknowledged. Central to this has been the increase in the national minimum wage. Since its establishment in 2015, the Low Pay Commission has been responsible for making annual recommendations to Government on the appropriate rate of national minimum wage. The national minimum wage seeks to balance between a fair and sustainable rate for low-paid workers and one that will not have significant negative consequences for employers and competitiveness. The Low Pay Commission is made up of an equal number of employer representatives, employee representatives and independent members, which helps to provide a balanced view when determining an appropriate rate for the national minimum wage.

The establishing legislation requires the Low Pay Commission to give consideration to a range of issues when arriving at recommendations for the appropriate national minimum wage rate. As already mentioned, these include the impact on competitiveness, the likely effect that any proposed recommendation will have on future levels of employment and also the impact any proposed recommendation will subsequently have on the cost of living. As the national minimum wage is legally enforceable, it provides protection for workers.

When considering the increases in the national minimum wage during a period of inflation, the Government must be conscious of the need to avoid second round effects. Pumping more money into the economy could lead to further inflation. The Low Pay Commission is legislatively required to provide recommendations to the Minister by the third week in July. The recommended increase in the minimum wage is then normally declared as part of the budget in October, coming into force the following January.

The Low Pay Commission has made six recommendations on the national minimum wage since it was established and the Government has accepted each of these recommendations. The national minimum wage has increased from €8.65 per hour to €10.50 per hour between 2016 and 2022 in line with the recommendations from the Low Pay Commission. The Government is supportive of the Low Pay Commission and the work it has carried out since its foundation and respects its independence.

Ireland has a well-established system to set the minimum wage based around the Low Pay Commission. This system works well. Since its establishment, the Low Pay Commission has delivered six consecutive annual increases in the minimum wage. The next recommendation on the national minimum wage is due to be received in July of this year. In tandem, the Government will be considering the recommendations of the Low Pay Commission with regard to the programme for Government commitment to progress to a living wage over the lifetime of this Government. The Government does not oppose this Bill and we will engage in detail in the subsequent Stages of the Bill.

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