Thursday, 16 June 2022
Ceisteanna Eile - Other Questions
Public Sector Pay
The Economic and Social Research Institute, ESRI, report makes for very stark reading today. It says that the number of people living in energy poverty is now nearly one third of all households and that is set increase to as high as 43%. Are the pay increases the Government is going to consider going to be in line with this absolutely shocking increase the cost of living?
The Irish Congress of Trade Unions, ICTU, estimates that the average worker has lost €2,500 in income in real terms. It is obviously necessary for workers to have that returned to them in pay increases. I think that should be pay increases in the order of what we have seen in terms of Dunnes and Tesco workers with 10% to compensate for that level of loss. It is also in the interest of the economy, however, because that is purchasing power those workers no longer have, and if they do not get compensated with significant pay increases and increases in things like the living wage, it will actually lead to a significant hit on the wider economy.
We are not going to agree a new public service pay deal here; it will only be done at the WRC. Those very issues the Deputy legitimately raised are the subject of discussions at this very moment. We need to allow that process to take its course and conclude and, hopefully, it will reach a successful conclusion. I want a deal. It is in everyone's interests to have industrial peace and reach a settlement that is fair to public service workers and that takes account of the level of pressure people are experiencing in respect of cost of living.
The Government and I must also take into account wider considerations, however. We are seeing the cost of borrowing rise for all of us. It is now up at approximately 2.5% for the Irish State. Not too long ago, it was essentially zero. Therefore, there are changes in the wider economic outlook here which, unfortunately, has deteriorated globally. We must make sure whatever we do is affordable.
We have levers other than pay, some of which we have used so far. We acknowledge that we will need to do more in the budget to address the cost of living. It will not solely be addressed through pay mechanisms and we must watch the competitiveness issue. It is important for the future of our country. We have seen the employment growth we have experienced in recent months. We want that to continue but we must also make sure that work pays for people.
Returning to the question about the overall tax position and the idea of having people working and making sure they get their due reward, it is important that all the social welfare thresholds are also increased in line to ensure people do not lose entitlements whereby they have gone over a threshold due to a pay increase, are taxed on that and end up being a lot worse off. A great deal of synchronisation has to happen between Departments to make sure that if there is a pay rise, the effect of that is in the pocket of the worker and is not eroded by other services being taken away from the worker, such as a medical card. I encounter many situations where young people who work for the summer do not qualify for a Student Universal Support Ireland, SUSI, grant as a result. In these times when people are crying out for workers, we are penalising people who want to work for the summer to earn a few euro because that is being taken into account when they are being assessed for the SUSI grant.
The Deputy raises an important point about the secondary effects of a pay rise. We will have to pay close attention to the issue of ensuring that work pays because we are seeing job vacancies and labour shortages throughout the economy. We have to examine all aspects of the system and how they interact with each other to make sure that any disincentives to work currently embedded in the system are weeded out so we can enable, encourage and facilitate people to work and we do not punish them in that way. The Deputy makes an important point, but it is complex when getting down to the nitty-gritty of how individual schemes interact with each other and their entitlements. It is an important point that we are awake to and are examining.
This Saturday, the Cost of Living Coalition will see thousands of workers, students, pensioners and people on low incomes coming out to protest the cost-of-living crisis. One of the messages they are seeking to convey to the Minister is that this is not an either-or issue. There must be pay increases for workers and income increases for those on pensions and social welfare to match the level of inflation. Otherwise, in real terms, people are taking income and pay cuts. That is the reality. There is no justification for that.
In addition, we have to reduce the basic cost of living with regard to accommodation by introducing measures such as rent controls, actually deliver affordable housing and reduce the cost of childcare, public transport, education and so forth. It is not an either-or matter. The Minister says we cannot borrow too much. Yes, we cannot borrow too much, but the elephant in the room in all this is that there are some people making a lot of profits at present. There have been some winners in the inflation crisis, and perhaps they can contribute to ensuring that ordinary people do not see their incomes fall and that they get the pay increases they deserve.
As we approach budget 2023 there will be many demands, and we will not be able to meet all of them. The Government will have to prioritise and make choices as to what the priorities are. At a time when people are under considerable pressure, the priority will have to be to address cost-of-living issues, particularly for low-income and middle-income households, to ensure we assist them at this time. There will be many ambitions across the government to implement the programme for Government in full and to expand and improve public services. This is a Government that has prioritised investment in public services. Public expenditure has been increasing significantly, and we have a very ambitious national development plan. We must ensure that the basics people need in their lives are looked after. I understand that point. That will have to be the focus of the forthcoming budget and I will be determined, working with colleagues across the Government, that this is where the focus will lie.
I have two brief questions. First, I commend the Minister on his efforts to get a deal. How does he estimate the impact in percentage terms on pay of the existing concessions he has provided - VAT, excise, transport, fuel scheme and medication - to give us an idea of how that is relieving pressure on families? Second, how does he factor in the fact that we all cannot be compensated for external cost increases that arise from world energy and commodity prices? We do not produce them so we have to pay for them. In net terms, somebody in Ireland has to pay. How will the Minister factor that in as well into the discussions on the future of pay trends?
The talks under way are focused on public service pay. There have been wider discussions at the Labour Employer Economic Forum, LEEF, on other issues that the Government can assist with in respect of the cost of living and public policy on a range of key issues for employers and employees. We have implemented a range of measures so far. The Deputy will be well aware of them. If one goes back to the most recent budget and what we have done since, it was in the order of €2.4 billion. That is why I have made the point that we cannot solely address inflation and the cost of living through pay. If we were to do that, it would put at risk the competitiveness of the economy as well as creating and sustaining further jobs into the future. That is a consideration. We have to make sure that we remain competitive, so it is about ensuring that through pay, tax and other levers the Government has we are, insofar as possible, providing sufficient support to people at this time.
All the advice has been to do it in a targeted way and to take account of the impact of one-off measures, some of which have been implemented so far, and of temporary measures. The Government is working on that. However, public service pay is approximately one third of current expenditure. It is approximately €24 billion so securing certainty about that bill for the remainder of this year and all of next year is an important ingredient in the overall budgetary mix.
May I raise a point of order? Not for the first time, although it is the first time in respect of the Minister's Department, my question has been grouped with Deputy Haughey's question, which is identical to the previous two questions, which were also grouped, and which is identical to the priority question the Minister has already answered. That means the Minister is now going to revisit the question for a third time. It is a dreadful waste of the Minister's time and absolutely a waste of mine. I know it is not in the gift of the Chair, but I respectfully ask the officials to note it and to do better.