Wednesday, 17 December 2014
Ceisteanna - Questions - Priority Questions
5. To ask the Minister for Jobs, Enterprise and Innovation in view of the OECD Employment Outlook 2014 which found that Ireland has the second highest percentage of low paid jobs of those countries; his views in favour of raising the minimum wage; and if he will make a statement on the matter. [48249/14]
I want to ask the Minister of State about the recent OECD Employment Outlook 2014 which found, among other things, that Ireland had the second highest percentage of low paid jobs among the countries of the OECD, second only to the United States. Is that the model of recovery of which the Government is in favour, namely, low wage, precarious, short-term contracts, or, in other words, recovery for the rich and corporations at the expense of working people? Is the Minister of State in favour of wage rises generally across the economy, in particular a rise in the minimum wage?
The OECD Employment Outlook 2014 contains data on the incidence of low and high pay in OECD countries. In this context, the report defines the incidence of low pay as referring to the share of workers earning less than two thirds of median earnings. It ranks Ireland in fourth position, not second, with a figure of 21.8%, behind the United States, Korea and Israel, with figures of 25.3%, 25.1% and 22.1%, respectively, followed closely by Canada, at 21.7%, and Poland, at 21.6%. Significantly, it also shows that Irish average earnings in 2013 were the sixth highest among the 34 countries compared in terms of purchasing power parity.
The national minimum wage in Ireland is relatively high by international standards. The most recent figures published by EUROSTAT show that Ireland’s rate is the fourth highest among the 21 EU member states that have a national minimum wage. When the cost of living is taken into account, Ireland’s rate is the fifth highest. The most recent figures from the Central Statistics Office’s quarterly earnings hours and employment costs survey show that 4.7% of all employees, or just over 73,000 workers, were being paid the adult experienced national minimum wage of €8.65 per hour, or less, in the second quarter of 2014.
In the first instance, the decision to restore the national minimum wage to €8.65 per hour with effect from 1 July 2011, together with the decision to put the joint labour committee system on a more secure legal and constitutional footing and reinstate a robust system of protection for workers, represented a significant commitment by the Government to protect the lowest paid and most vulnerable workers. Second, as the Deputy will be aware, there is a commitment in the statement of Government priorities to establish the low pay commission on a statutory basis as an independent body to make annual recommendations to the Government about the appropriate level of the minimum wage and related matters. With a view to ensuring it is in a position to carry out its functions as soon as possible, I am in the process of establishing the commission on an administrative basis. Legislation to provide for its establishment will be brought forward early next year to place it on a statutory footing.
It is difficult to dispute the fact that the problem of low pay is rife in Ireland. It can be compared in many ways, but let us compare it across the European Union, in which, compared to EU-15 countries, the level of Irish wage compensation in the private sector is 14% below average; compared to other EU countries not in a bailout programme, the level in Ireland is 21% below average, and compared to economies which are small and open such as some of the Nordic countries, in particular, the level in Ireland is 30% below average. Ireland, therefore, has a problem with low pay. One result is that one in four families with at least one person in work suffers from multiple deprivation experiences, while 16% of employees live below the poverty line. We have the creation of a sector of the workforce that is incredibly low paid, work that is subsidised by the State, given that low pay employers are being subsidised by the State through the likes of family income supplement. Surely the Government has to do something about this. I argue that wage rises are a much more effective way of targeting the issue than tax cuts.
I certainly support wage rises in profitable companies and where circumstances allow. To answer the Deputy's question concisely about where I stand on the national minimum wage, clearly, we are in the process of setting up the low pay commission. I am in favour of ensuring changes to the national minimum wage on a progressive basis where circumstances allow. While clearly we are creating jobs across the economy, recovery should not be allowed to be characterised by any class of a race to the bottom. It is very important that people's pay and terms and conditions are protected and secured and we are taking measures to ensure this is the case. That is why we have re-established the joint labour committee system, why we are working to reinstate registered employment agreements and why we are making significant progress in dealing with Ireland's collective bargaining laws. We need to do this. We need to make sure the jobs we are creating are decent and sustainable and that people are well paid.
The problem is that the Government is not a neutral bystander. It has and implements policies that encourage the creation of a very low wage sector in the economy, many of which represent subsidies to employers. One example which I have raised repeatedly is JobBridge which directly costs the State approximately €60 million a year in payments to those participating in the scheme but which costs the State multiples of that amount in lost employers' PRSI payments and employee income taxes by allowing companies to benefit from free labour. What has happened in this country, under the guise of the crisis and the need to improve competitiveness, is that the share of wages relative to profit has continued to plummet. The IMF found that Ireland had witnessed the largest decline in the share of labour among the industrialised countries between 1970 and 2012. That process has continued and it can only be reversed by a strong trade union movement but also by legislation introduced by the Government on the minimum wage.
The last thing I can be accused of is shying away from my responsibilities to protect the interests of low paid workers by ensuring the jobs we create pay well. We are revising and reframing the legislative framework to ensure we can do this. Since Deputy Paul Murphy arrived in the House a few weeks ago, I have not found him engaging on these issues to ensure we can develop the framework that those on the left and everybody else in society want to see in protecting people's incomes, promoting employment growth and ensuring the jobs we create are decent and sustainable. I encourage Deputy Paul Murphy and others who profess to be of the left in this House to engage with the Government. They should not be immune from actually supporting a Government initiative to deal with matters such as the national minimum wage, joint labour committees, registered employment agreements and collective bargaining. I look forward to the Deputy's positive engagement on that front.