Wednesday, 20 July 2016
Low Pay Commission Report
32. To ask the Minister for Jobs, Enterprise and Innovation if she accepts that the section on page three of the summer economic statement that the Government will support an increase in the minimum wage to €10.50 per hour over the next five years and will put in place mechanisms that mitigate the impact on employers in order to protect lower paid jobs, pre-empts and undermines the work of the Low Pay Commission; the specific mechanisms planned to mitigate the impact on employers; and if she will make a statement on the matter. [22914/16]
In light of yesterday's publication from the Low Pay Commission, will the Minister of State indicate if he will be advising the Government to accept its recommendations and what is his view of the report?
I thank Deputy Quinlivan for raising this question. The Low Pay Commission was established last year through the National Minimum Wage (Low Pay Commission) Act 2015. Its principal function is, once a year, to examine the national minimum hourly rate of pay and to make recommendations to the Minister in respect of the rate, ensuring that all decisions are evidence-based, fair, sustainable and do not create significant adverse consequences for employment or competitiveness.
The commission submitted its first report in July 2015. Its recommendation to increase the minimum wage from €8.65 to €9.15 per hour was accepted by Government and the increase came into effect on 1 January this year.
In its first report, the commission recommended that anomalies in regard to PRSI which could adversely affect employer costs should be addressed. To that end, adjustments were made to PRSI in budget 2016, which have been provided for by my colleague, the Minister for Finance. These changes will assist employers in reducing costs, thus ensuring a continuing positive climate for job creation. Measures were also introduced to ensure that the benefit of the increase was not lost to taxation for the employee.
The Deputy will be aware that the commission’s second report on the national minimum wage was submitted to Government yesterday and the recommendation made by the commission that the national minimum hourly rate be increased by ten cent to €9.25 will be considered by Government in the context of budget 2017.
I reiterate that the independence of the Low Pay Commission is firmly established in the National Minimum Wage (Low Pay Commission) Act 2015. The commission can only operate in accordance with that statutory remit and make recommendations to the Minister in accordance with the criteria that are clearly and explicitly set out in the Act. I want to make it very clear that I cannot speak for the commission and I stress the value of its independence. Clearly, the commission has to look at the matter across all the criteria of the Act. We will look at the report over the next three months and the Minister will make a decision on it in respect of budget 2017.
I thank the Minister of State. In the summer economic statement, the Government has given a commitment to increase the minium wage to €10.50 per hour over a five-year period. How does one get from the current minimum wage rate of €9.15 per hour to €10.50 over five years with a ten cent increase? The answer is that it is impossible to do that. On the other hand, if the Government is making statements about the projected increase in the minimum wage over a five-year period, then what is the function of the Low Pay Commission? If the Government is going to set the rate, there is no need for a commission. Therefore, what is the role of the commission?
Yesterday's recommendation is an insult to workers. It is a disgrace that a commission which costs the taxpayer almost €0.5 million would propose a ten cent increase to minimum wage for low paid workers. More than 70,000 people in the State depend on the minimum wage. The living wage is €11.50 per hour. At this rate, it will take 23 years for a minimum wage worker to achieve a basic living standard. Combined with the Government's deferral of addressing the situation of zero-hour and low-hour contracts this month, this recommendation tells us two things, namely, that the Low Pay Commission is not fit for purpose and that the Government has no interest in tackling low pay, poverty and inequality.
It is clear from the Deputy's question that he does not think it would be appropriate for anyone to undermine or pre-empt the work of the Low Pay Commission. That is exactly what is laid out in the rules in the National Minimum Wage (Low Pay Commission) Act 2015, as passed in the Dáil last year. The independence of the commission must be respected and observed by all, including the Government. Obviously, all the criteria must be taken into account in the legislation but the commission is independent. It has met on 18 occasions since February 2015. It has examined the available data and the 33 responses it received. There was public consultation and it held meetings in Monaghan, Galway and Dublin and it met with a wide range of groups.
Under the Act, the Minister must, within three months of receiving the recommendation in the report, make a decision and make the necessary order. If the Minister departs from the recommendation or declines to make an order, the Minister must prepare to lay this before both Houses of the Oireachtas and state the reasons for his or her doing so. I stress once again that the commission is independent. I cannot speak for the commission nor can the Minister, Deputy Mitchell O'Connor, and that is extremely important.
The Deputy asked what considerations the commission takes on board. It takes on board a wide range of considerations when it makes decisions, which are not made lightly. The commission has looked at all the areas of concern for the employers and employees. The commission's role is to ensure the wage is appropriate and is one employers and employees can sustain, which is extremely important.
The Minister of State said the Low Pay Commission met on 18 occasions. However, I received a reply to a parliamentary question yesterday which stated that there were 22 meetings, so there is a slight difference there. Is the Minister of State aware that the chairman of the commission earned €22,493 from 2015 to the first quarter of this year? In that period, according to the response we received, the chairman attended 22 meetings, which works out at approximately €1,000 per meeting. This is the person who is chairing the Low Pay Commission which yesterday recommended a ten cent increase for workers on the minimum wage. Surely to God, if there was ever an example of gross hypocrisy, this is it.
-----and I have to respect Dr. Donal de Buitléir, an eminent academic, who has done great work down through the years. The aim of the minimum wage is to have an incentive to work, which is extremely important. A rate has to be set that is fair and sustainable to help as many people as possible without having a significant effect on the economy or a negative effect on employment. That is where the commission is coming from. It is made up of nine people, three representing the unions, three from the employers sector and three academics with expertise in the area. We must support their independence. They have made this decision based on what is fair and sustainable. It is now up to the Government.
I am sure the Deputy has seen the report. They have three months to read it and decide one way or another. It is not up to me or anyone in the Department to make a decision on that at this stage.