Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

4. To ask the Tánaiste and Minister for Social Protection why she has not increased the contribution to the community services programme in line with the increase in the national minimum wage, given that this increase will put community groups under considerable financial strain; and if she will make a statement on the matter. [1253/16]

Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

This relates to not-for-profit groups who will have to meet increased wage bills as a result of the increase in the minimum wage. What provision has been made to enable them to absorb the extra expense?

Kevin Humphreys (Dublin South East, Labour)
Link to this: Individually | In context | Oireachtas source

I thank the Deputy for raising this. I have visited a number of community services programme, CSP, schemes over the last number of years and I have seen the positive impact of the programme on local communities. We have worked very closely with the community groups that operate it.

The community services programme is one of a number of programmes and schemes operated by the Department. It provides financial support to community companies that provide revenue generating services of a social inclusion nature. Many of these companies are also funded from other sources and generate revenue from the public use of their facilities and services. The CSP provides a contribution to the wage costs of the companies on the basis that the services are not fully self-financing or the cost of provision would be prohibitive on users. The Department does not set the wage rate but requires the payment of appropriate wage rates, consistent with local norms.

At December 2015, some 398 companies employing some 2,800 employees were directly supported by the CSP. The Department estimates that, at the end of 2015, some 60% of these employees were being paid above the level of the minimum wage, in keeping with the social inclusion and social benefit objectives of the programme. The Department is committed to working with the remaining companies to achieve the objective of paying a reasonable wage. The Deputy should note that the CSP accounts for less than a third of the resources generated by these companies.

Contracts of up to three years duration are provided for under the CSP. Arrangements whereby individual companies will be able to access additional financial resources to compensate for the welcome increase in the minimum wage are being put in place, and notices were issued last week. Submissions will be assessed on a case-by-case basis with the annual funding commitment being adjusted accordingly, where it is found to be warranted. An advance of 25% of the contract value for 2016 has been, or is in the course of being, paid to companies currently in the programme. This ensures that immediate cash flow requirements are supported.

Overall, I am satisfied at the level of resources available to the CSP in 2016 of just over €45 million, which will be adequate to meet the ongoing funding required for these programmes.

Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State for his reply. The position is that those are not-for-profit companies. The Minister of State is correct that only 40% of their employees are on the minimum wage while the other 60% receive wages above that level. If one increases the minimum wage, that increases a company's costs. If the company is not-for-profit, one is not talking about reducing its profits but about a reduction in services due to less money being available. I would be grateful if the Minister of State could clarify it, but I understood him to say that he will look at the different organisations one by one to study the impact on each and make the appropriate adjustment. In the interests of fairness, I note that this matter has been brought to our attention. We have been contacted by a number of the groups involved and raised their concerns with the Minister of State. I am very glad that he has listened to us. How long does he think the process will take?

Kevin Humphreys (Dublin South East, Labour)
Link to this: Individually | In context | Oireachtas source

It is not good practice simply to allocate funds without an underlying rationale. Hence, the facility is being provided for those companies which need to make a case for additional supports. That process is being put in place. The schemes operating under that are being identified. The level of grant is not related to the value of the minimum wage. I have visited and spoken to those involved in CSP schemes and I am anxious that they should not always look at paying the minimum wage. We want to see fair wages paid in regard to the grant. The managers in most schemes are currently earning approximately €32,000. That is funded there. Most of the schemes I have visited generate additional income. Unfortunately, a lot of them have split positions. They have split whole-time equivalents. As I have met them I have said that we want to assist them and co-operate in lifting the salary base of their employees where that has not been done. However, 60% of the schemes are paying more, some of them substantially more, than the minimum wage. In some instances well €11 per hour is being paid.

Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I fully understand what the Minister of State is saying but some are paying the minimum wage and if one increases costs by way of wage costs or otherwise, one will reduce the capacity of the companies to provide the same level of service. One of the companies sent me a communication in the last week it had received from the Department. It stated that the Department had requested Pobal to develop a mechanism and process to enable companies to apply for additional funding on the one-to-one basis to which the Minister of State referred. Has the process been put in place? This is an ongoing situation. How long is the process likely to take?

The Tánaiste has already announced that when she is returned as Tánaiste next year, she will increase the minimum wage again. Good luck to her. How will this be dealt with? Will an advance be provided? Now that the problem that can arise has been identified will it be dealt with before it arises in the event of another increase in the minimum wage next year?

Kevin Humphreys (Dublin South East, Labour)
Link to this: Individually | In context | Oireachtas source

I hope to have the mechanism in place by the end of the month. That is what we are working towards and that is why we have been communicating with groups on the putting in place of the process. I want to return to the key point. The grant will be paid by the Department, regardless of whether I am here after the election. It is not related to the minimum wage.

We want a social enterprise mechanism that pays a good salary to people so they can have a strong role in society.

If I am returned, I will work with these groups to help put a business plan in place whereby they can pay all of their employees a reasonable wage while meeting local criteria. This may not necessarily involve an increase in the grant, but an examination of what the groups are doing and how we can assist them and build on their strengths. This work has been carried out over the past year and I have had positive interactions with many community services programme, CSP, schemes that have considered how to enhance their employees' salary rates.