Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Deputy for raising this important issue. I know many Deputies have done so, in Government parties and Opposition parties alike. We are a Government that supports enterprise and wants to make work pay. We believe it is possible to reward enterprise and reward work. However, there are interplays and balances that have to be struck, and we have to strike them right.

I acknowledge that the cost of doing business is very high and is rising. Some of that is down to pay. Much of it is down to energy. Some of it is down to the cost of supplies and materials. Some of it is Government-influenced, but the Government has no influence over much of it. We are helping businesses. More than a quarter of a billion euro will be injected into small businesses in the form of grants by the end of March. That is designed to help businesses with cash flow, particularly at this very difficult time.

We are now seeing energy prices falling, which is very encouraging. I hope we will see interest rates falling throughout the course of this year as well. The increase in the minimum wage was recommended by the Low Pay Commission, and our plan is to bring the minimum wage up to the level of the living wage, which is approximately 60% of median earnings. We want to do that as soon as we possibly can. We acknowledge, however, that we have to monitor how this works out on the ground, because we have seen very big increases in the minimum wage in recent years. While it is not double, it is much higher than it was ten or 11 years ago. Despite a very big increase in the minimum wage, we have not seen unemployment rising. In fact, the reverse has happened. There are more people at work than ever before.

While businesses are opening and closing all the time, the number of closures at the moment is below the long-term average of 50 per 10,000. However, this is something we will have to monitor very closely, because there is no point in putting up somebody’s wages if they then lose their job or have their hours cut. This is something we will have to monitor over the next couple of months and take account of when the Low Pay Commission makes its recommendation for next year, because there are other employment-related costs that are going to rise, such as pension contributions under auto-enrolment and the 0.1% increase in PRSI.

I take very seriously what businesses are saying. We acknowledge that the cost of doing business is high. We are helping, particularly with the quarter of a billion euro we will inject into small businesses over the next couple of months. The key thing we need to monitor is whether there is a fall-off in employment as a consequence of this increase and whether we will see businesses closing at a faster rate than they would on the long-term average. We are not seeing that yet, but we do need to look out for it.

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