Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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I move amendment No. 1:

In page 5, line 29, after "Part" to insert the following:

""Minister" means the Minister for Social Protection and".

This amendment was linked to a number of other amendments which I tabled, some of which have subsequently been ruled out of order for the usual, bizarre reason that they are a charge on the Exchequer. It is very difficult for Opposition Members to be positive and constructive on any Bill dealing with social welfare or finance only to be ruled out of order when our suggestions are likely to incur a charge on the State. The benefit of Committee Stage is that we can still raise various issues. In the normal course of events there would be a Report Stage in which those issues raised on Committee Stage could be reconsidered but to my knowledge no Report Stage has been signalled for tomorrow. The intention is to continue with Committee Stage and to take Report Stage without further debate. I will return to the subject of Report Stage later.

Given that the Bill has only recently been published it is difficult to deal with it. I thank the departmental officials for the informative briefing we received which helped clarify one or two issues. Many aspects of social welfare are difficult to understand. There is much legislation relating to the area and it is not in an easy, readable format. I suggest that in the context of Dáil reform we devise a mechanism to provide continuous consolidated Bills so that when we propose changes what is being deleted or inserted is evident on the same page with an explanation. Such a system would be more easy to follow than is the case at present. The first time I saw such an approach to legislative change was in the Nice treaty. Someone published the entire Treaty of Rome with the proposed insertions and exactly what they meant. I found such an approach much easier than skipping back and forth through various pieces of legislation just to find out what was intended.

The amendment in question relates to the Minister's new title. It ensures that she or he is the person responsible rather than any other Minister. My intention is that the amendment would give effect to the other amendments ensuring that she or he would produce the various reports to which I referred in amendments Nos. 4, 5 and 6. Two of those amendments have been ruled out of order so I will not deal with them in detail now. My intention is to ensure that the onus would be on the Minister for Social Protection rather than the Department or a committee to produce reports and that she or he would then be answerable to the Dáil.

The amendments involve certain responsibilities. Even though we accepted section 1, which explains the various Acts - we will come to the Title at the end - the Bill does much more than just amend social welfare legislation and pensions. For that reason we will return to the Title. The Minister is selling herself short in the Title and explanatory memorandum.

As there is not an opportunity later I wish to refer to citizens information legislation and citizens information centres which are mentioned in section 1. There should be an increase in funding for such centres. One mechanism for doing that is by allocating the fines to which we will refer later to that purpose. I will return to the point when we discuss fines. It is almost a moot point if we do not have a Report Stage debate on the Bill. I will leave it at that.

Joan Burton (Dublin West, Labour)
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I thank the Deputy for the amendment. However, for reasons I will explain, the definition being proposed is not required in the Bill and, therefore, I do not propose to accept it.

While previous Social Welfare Acts have contained a definition of "the Minister" for the purposes of those Acts, it has not been considered necessary by the Office of the Parliamentary Counsel to include such a definition in this Bill, as the term "the Minister" is used only once in the text of the Bill. That reference is contained in section 1(3), which enables particular provisions of the Bill to come into operation by way of commencement order, and the Minister for Social Protection is referred to in full in that subsection.

The other references to the term "the Minister" in the Bill all relate to provisions that are being directly inserted into various enactments, all of which already contain definitions of "the Minister" for the purposes of these Acts. For example, the term is used in a number of places in Part 2 of this Bill; however, all these references are contained in provisions that are being inserted into the Social Welfare Consolidation Act 2005. As this Act already contains a definition of "the Minister" for the purposes of that Act, there is no need to define this term again in this Bill for the purpose of any provision that is being inserted into that Act. Similarly, Part 4 of this Bill also contains the term "the Minister" in a number of places. All of these references are being inserted into the Pensions Act 1990, which already contains a definition of "the Minister" for the purposes of that Act. As a result, there is no need to define the term again in this Bill.

I thank the Deputy for his courteous remarks about the officials of my Department. The period in which we can work on this Bill is short because it arises from the jobs initiative and other financial measures which were brought before the Dáil by my colleague, the Minister for Finance. As the Deputy said with regard to the explanatory memorandum, the Bill has a number of quite important provisions which are not purely related to social welfare. I and the Government were particularly anxious that the restoration of the national minimum wage would come into effect on 1 July. It is important for low-paid people that the national minimum wage is restored. It was a mistake by the previous Government to cut €1 off the minimum wage, as acknowledged by a number of Deputies from Fianna Fáil in their contributions on Second Stage. I was anxious to see this change introduced as early as possible.

The Bill also provides that the changes to the social welfare code with regard to reductions in employers' PRSI will commence at the same time. There are other changes, some of which arise as a result of commitments entered into by the previous Government in the IMF-EU troika programme. As Deputy Ó Snodaigh said, there are changes with regard to appointments to the board of the Citizens' Information Board. The later part of the Bill also contains provisions implementing European Directive 2003/41/EC on the Activities and Supervision of Institutions for Occupational Retirement Provision, the IORPS directive. I agree with Deputy Ó Snodaigh that it is quite a wide-ranging social welfare Bill, and the officials have worked hard to get this broad and complex Bill ready to meet the 1 July date for the restoration of the national minimum wage.

Michael Kitt (Galway East, Fianna Fail)
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Amendments Nos. 2 and 12 are related and may be discussed together.

Joan Burton (Dublin West, Labour)
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I move amendment No. 2:

In page 6, line 36, to delete "1 July 2011" and substitute "2 July 2011".

These are minor amendments to sections 3 and 23 of the Bill to align the commencement dates applying to the overall provisions of each of these sections with the date given in the table accompanying each section. The main provisions contained in section 3 provide for a halving of the lower rate of employers' social insurance contributions from 7.8% to 3.9% with effect from 2 July 2011. Section 23 provides for a similar halving of the national training fund levy from 0.7% to 0.35% in cases in which the lower rate of employers' social insurance contributions applies. The provisions of sections 2 and 23, when combined, provide for an overall halving of the lower 8.5% rate of employers' PRSI to 4.25% where a worker's earnings do not exceed €356 in any week.

The date of 2 July 2011 has been chosen as the commencement date for the halving of the lower rate of employers' PRSI in order to align the start date with the start of a tax week. I commend the amendment to the House.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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I must ask about a technical point even though I have been here a while. If we accept this amendment at this Stage, does it require the Bill to be published again before Report Stage, which is tomorrow afternoon? I asked the people in the Bills Office if they would consider amendments from me for Report Stage, and they said there was no Report Stage scheduled and that it would require the Whips to alter the timetable for tomorrow. In some ways they were discouraging, without being interfering. I was asking with the intention of tabling an amendment on Report Stage with regard to the Citizens' Information Board because I missed the deadline for Committee Stage amendments due to the timeframe involved. It is only a technical point.

Section 3 provides for a reduction in employers' PRSI. This is the bargain that was made with employers in exchange for the increase in the national minimum wage. It was mentioned that the provision in the Bill is a temporary one. There is no guarantee that this will be stuck to, because we could come here in two years' time with another social welfare Bill which provides that the reduction for employers will be extended.

The effect of section 3 will be to reduce substantially the amount of money paid by employers in PRSI for low-paid workers and therefore substantially reduce the money received by the Exchequer. This is happening at a time of increasing costs to the Exchequer due to unemployment. There is no benefit that I can see in giving this concession to employers rather than employees.

I can see no advantage for employers rather than employees getting the benefit.

Until recently, the difference between the two employer PRSI rates have been quite close and, subsequently, there was no major move by employers to reduce wages. This new measure might end up being an incentive for employers to reduce wages just to gain a saving on their PRSI contributions. For example, an employer paying €390 a week to an employee could reduce it by €34 to comply with the €356 threshold. The employer could save €27 on PRSI contributions, on top of saving €34 gained through the wage reduction, a total of €61 a week. Over a year, this saving on one employee would amount to €3,172. There is, accordingly, an incentive for employers of the low paid to drop wages by hook or by crook.

My amendment No. 3 proposes that the provisions of section 3 would only apply to new jobs. A new job would be defined by the employer applying to a panel comprising officials from the Department of Jobs, Enterprise and Innovation and representatives from trade unions and employer organisations.

A person who earns more than €356 a week but comes under pressure to take a pay cut to come below this threshold or loses their job to be replaced by someone on the lower wage rate should be allowed to take their case to the Employment Appeals Tribunal. We need to have mechanisms in place to protect the low paid. Given that the Government is reviewing joint labour committee wage agreements and employment regulations orders, a substantial number of workers will be affected by the pressures for a reduction in their wages.

Michael Kitt (Galway East, Fianna Fail)
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I must remind the Deputy that we are on amendments Nos. 2 and 12 and not section 3 in general.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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These measures will come in shortly. The Oireachtas has been put under pressure to satisfy the diktats of the International Monetary Fund. It says very little for Irish sovereignty if our legislative process is dictated by a deal entered into by the former Government and re-endorsed by this Government. The Dáil is sitting until 21 July. The introduction date for these measures is 2 July, a time which I accept may suit employers and payroll organisation. However, it could easily be introduced at a later date such as 2 September. We cannot allow our social welfare policy to be decided on by some arbitrary figure picked out by the troika or this or the former Government to satisfy a crisis in the euro. This Parliament should be sovereign enough to decide when it will apply such measures in its time. It is madness that when this legislation is passed by the Seanad, it will be enacted three days later.

Joan Burton (Dublin West, Labour)
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The reduction of employer's PRSI on those earning €356 or less a week was a commitment in the programme for Government. While it is important to create new jobs, it is also important to maintain existing jobs. This reduction in employer's PRSI, which will last until the end of 2013, applies to existing and new jobs. Everyone knows from the economic collapse the difficulties in getting new jobs and maintaining long-standing jobs and businesses. This measure will help achieve both.

The underperformance in the tourism sector over the past several years highlights the need to improve the sector's cost competitiveness. One set of costs important to this sector and other employment-rich sectors are labour costs. This measure will give an incentive to employers to take on new workers and maintain existing jobs. The halving of the lower rate of PRSI until the end of 2013 will improve labour and competitiveness, assist job creation and maintain existing employment in labour-intensive industries. The measure is in line with the commitment given in the programme for Government which was to halve the lower rate of PRSI.

Given the current unemployment situation, I am satisfied the lower rate should apply until the end of 2013. A lower rate of employer's PRSI for workers earning below €356 per week has been in operation for several years. There is no evidence to suggest the existence of this rate encouraged employers to reduce wages to come within the qualifying criteria to attract the lower rate. I understand and respect the Deputy's concern about this matter. He should, however, bear in mind that the Bill also provides for the restoration of the minimum wage to €8.65 per hour. This will be extremely important for employees who are on the minimum wage and who work a 40-hour week. The change will be worth €40 per week to these individuals. It is, therefore, quite an important measure.

This is one of the issues which the Government has sought to address in a way that differs from that pursued by the previous Administration in the context of the agreements into which it entered with the IMF, the EU and the ECB. I hope the Deputy will accept that the Bill is balanced, that it restores the minimum wage and that it provides an important incentive to employers in respect of not just taking on new staff, but also with regard to retaining existing employees.

Clare Daly (Dublin North, Socialist Party)
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It is clear that most Deputies in the Chamber support the reversal of the cut in the minimum wage. However, in section 3 the State is assuming responsibility for the burden of the associated cost by letting employers off the hook by means of tying into the reversal the idea that employer PRSI will be halved. The State will, therefore forfeit revenues which could be accrued.

Section 3 is extremely flawed in that it contributes to the myth that wages and the cost of employment act as a deterrent and have given rise to unemployment and that if we reduce the level of employer PRSI, this will give rise to an increase in the number of jobs being created. That simply does not add up. Wages in Ireland are below the EU average. Those who work in the areas targeted by this provision, namely, the lower paid sectors of the economy, including catering, cleaning and other types of minimum wage employments, have already endured reductions in their wage rates. As a result, wage rates have fallen further behind the EU average. I do not believe there is any evidence to support the idea that what is proposed would give rise to job creation.

There is, however, evidence which shows that this country already has one of the lowest levels of employer PRSI in the world. This has been a contributory factor with regard to the poor state of social services in this country. We are already well under the average. Even employers in the United States pay more social insurance on behalf of their employees than do their Irish counterparts. Reducing the level of employer PRSI further does not make any sense. I am of the view that what is proposed represents a hugely retrograde step which will further skew the wealth imbalance that exists in Ireland.

Another problem with the section is that it targets the lowest paid by making provision to halve employer PRSI in respect of wages under €365 per week. The Minister is de facto creating a disincentive for employers to pay people wages above this rate because there will be a marginal benefit to them if they keep wages below that level in order to avail of the 50% cut in PRSI. That is the real purpose of the section, which essentially legitimises the driving down of wages and taking income away from social services in order to benefit employers. We can demonstrate that the manner in which this is being done will ensure that there will be no impact whatsoever on employment. As already stated, this is a massively retrograde step. We were opposed to it before and we will continue to be opposed to it.

Séamus Healy (Tipperary South, Workers and Unemployed Action Group)
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The Minister referred earlier to the maintenance of jobs and she obviously believes that this section is vitally important in that context. She is correct in one sense. If one walks down the high street in any town throughout the country, one will see that a significant number of long-standing businesses are either reducing their operations or are closing down.

The difficulty of matter does not relate to either the amount of PRSI or the wage rates which employers are obliged to pay. The real problem, which the section does not address, is the fact that this Government is continuing the process of job destruction begun by the previous Administration. This is being done by way of the removal of huge amounts of money from the economy. If someone walking down the high street in Clonmel or any other town does not have money in his or her pocket, then he or she cannot go into nearby shops to make purchases. That is the real reason long-standing businesses are closing down.

Approximately €14 billion has been removed from the economy in recent years. The policy in this regard is directly responsible for the destruction of jobs, the massive increase in the number of people who are unemployed and the high level of business closures. As long as the Government continues to remove money from the economy, to cut social welfare and reduce people's take home pay, what I have outlined will continue.

We all welcome the reversal in the cut to the minimum wage. However, the other side of the coin in this regard is the fact that there are proposals for huge cuts in respect of the 250,000 people who are employed in the sectors covered by joint labour committees, JLCs, and employment regulation orders, EROs. Again, what is proposed in this regard will remove further significant amounts of money from the economy and out of the pockets of individuals. As a result, there will be further job losses. Neither section 3 nor the programme for Government addresses that problem. Effectively, the current Administration is continuing with the policies pursued by the previous Fianna Fáil-Green Party Government.

Joan Collins (Dublin South Central, People Before Profit Alliance)
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Deputy Clare Daly made the point that there is no evidence that what is proposed in this section will lead to the creation of jobs. That is what the section is supposed to be about in the first instance. I would like to address this issue and also that which relates to pay. Earlier, the Minister referred to the fact that the section reverses the cut to the minimum wage. That is a welcome and important development, particularly in the context of the fact that some people might have €40 extra in their pockets each week. If, however, a person is paid €390 per week and if his or her employer wants to benefit from the 50% reduction in PRSI proposed in the section, then the latter will be obliged to reduce the his or her wages by €34 per week in order to bring them down to the €356 threshold. I am of the view that the section leaves it open to employers to do this and does not provide any protection to workers.

The Davenport Hotel made the first move in respect of the minimum wage. When the reduction in the latter was introduced, it was only supposed to apply to new rather than to existing contracts. However, the company which runs the Davenport Hotel insisted that all of the employees should sign new contracts under which they would be paid the new rate of €7.65 per hour. This section leaves it open to other employers to do the same in respect of their employees. All they need do is gather their workers together and inform them that their weekly wages are going to be reduced to €356 per week. It is for this reason in particular that I am opposed to the section. However, I also oppose it on the basis that there is no evidence that it will give rise to job creation and in the context of certain people's general acceptance of the EU-IMF deal.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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This is an important section and I wish to refer to it in the context of a number of the points the Minister made in respect of amendment No. 2. There is major concern with regard to the number of jobs being lost throughout the country. The authorities in other jurisdictions have used different mechanisms to ensure the retention of existing jobs. I do not think anyone would say we should not put such mechanisms into place. Germany is a case in point, where employers were grant-aided to retain existing workers. Sinn Féin has argued for a jobs stimulus package.

My concern is that if someone is working a 40 hour week on the minimum wage his or her employer will be liable for the lower rate of PRSI. Any employer worth their salt, from the employers' point of view, will aim at creating all new jobs at the minimum wage level because they can then benefit, for two and a half years, from the Government bonus of the lowered employer's PRSI rate. When we debate section 23 we will deal with the reduced training levy. There is no logic behind this measure. Because of the changes there is now an additional incentive to employers to lower wages because they could benefit, in the example I cited, to the tune of more than €3,000 per employee per year.

Furthermore, the State will lose substantial income because of the reduction in employers' PRSI, which goes into the social welfare pot to pay unemployment benefit and allowance. The State will also have to pay out more in family income supplement to the people who will be on a lower wage, given the incentives to employers. The Minister has said there is no particular evidence to suggest that a lower rate of PRSI encourages employers to reduce wages in order to come within the qualifying criteria. That might have been true when the higher and lower rates were close together. However, there is now a substantial difference between the higher rate and the proposed reduced rate. There is a greater incentive, if that is the proper term, for employers to reduce wages. The financial incentive is substantial. In the example I cited of a wage reduction from €390 to €356, an employer would save a substantial amount, given the stricken times some of them are experiencing. Other employers are not in stricken times but will jump on the bandwagon, as they have done repeatedly in the past, to try to drive down wages. This is particularly true in many of the sectors where joint labour committee agreements and employment regulation orders are in place. Is this part of a twin-track approach?

The Minister said parts of our economy are under-performing and she mentioned tourism. Tourism might be under-performing but there is a variety of reasons for that. One is that we are in a global recession. People are not travelling as much. We need to do as much as possible to capture those who are travelling but this should not be done at the expense of workers in the tourism industry. Surveys of the tourism industry did not identify labour costs as a key problem. Most of the factors that needed to be prioritised related to fuel, electricity and similar costs. Labour costs did not feature as prominently among the costs of running a business as has been claimed in recent days.

I have major concerns with this element of the Bill, especially as it is being tied with the minimum wage. Someone working a 40 hour week on the minimum wage will come within this measure. Workers' wages will be reduced to the minimum or their hours will be reduced so that their weekly wage is below the figure required for the benefit. Workers and the public purse will be the hardest hit by this. If the public purse is reduced, the numbers unemployed increase and the Government honours its commitment to the IMF and the ECB to reduce social spending, how can we square that circle? This problem will certainly exist for the near future, whatever about the long-term future when we hope there will be a reduction in unemployment.

Joe Higgins (Dublin West, Socialist Party)
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Section 3 and the Bill in general deals, in part, with the implementation of the jobs initiative announced a few weeks ago by the Government. The initiative is pathetically inadequate against almost half a million people unemployed. This was recognised by the Government itself in the way it dampened down expectations leading up to the announcement of the initiative. It was downscaled from a major jobs budget.

The changes in PRSI made by the Ministers for Finance and Social Protection and proposed in the Bill would mean a reduced income for the Exchequer of the order of €190 million in 2012 and €183 million in 2013. The Minister averred that this will create jobs. She said there was evidence. Where is the evidence and what is it? Deputy Seamus Healy put his finger on the problem when he said that everything being attempted here is countermanded by the general policy of the Government continuing the disastrous policies of Fianna Fáil and the Green Party at the diktat of the EU, ECB and IMF. Slashing the ability of working and poor people to purchase goods and services slashes jobs. What evidence does the Minister have that employers, who would be relevant to this section, will not simply increase their profits rather than increase the number of people at work?

The Minister for Finance, when pressed on a number of occasions by me, resolutely refused to give us any targets for job creation, or even jobs maintenance, in respect of his jobs initiative. Can the Minister for Social Protection give us such figures today? What studies have been done to back up what she says, that this significant reduction in income to the State will result in jobs created? At least part of the raid on the pension funds is to pay for this reduction in PRSI. We have no problem with raiding the pension pots of millionaires and billionaires but we do have a problem with attacking the pension funds of ordinary working people and being a disincentive. We need to see the evidence and any projections the Minister may have.