Dáil debates

Thursday, 15 September 2022

Ceisteanna Eile - Other Questions

Cost of Living Issues

10:10 am

Photo of Aodhán Ó RíordáinAodhán Ó Ríordáin (Dublin Bay North, Labour)
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12. To ask the Minister for Enterprise, Trade and Employment the action that he will take to ensure that wages for workers increase to meet the rise in the cost of living. [45081/22]

Photo of Aodhán Ó RíordáinAodhán Ó Ríordáin (Dublin Bay North, Labour)
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The Labour Party has been saying for some time that Ireland needs a pay rise. What actions will the Tánaiste and his Department take to ensure workers across the board will get a pay rise? Not least of which the reason would be to tackle the cost-of-living crisis and energy bills they are facing in their households.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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The latest numbers, as the Deputy is aware, indicate that wages are rising in Ireland but not rising as fast as inflation. The Government does not centrally control wages but there are different mechanisms by which we can influence how much people are paid. In the public sector, for example, we have negotiated a new pay agreement, which will go out to a ballot. That agreement has been made by the Government and recommended by various unions. I hope it will get through. That would see people receive pay increases this year and next year to help them with the cost of living.

In some sectors, the Government also has a role to play. The Deputy will be familiar with the childcare sector. The Minister of State, Deputy English, has just signed off on a new employment order, which involves significant and well-deserved pay increases for that sector. I recently signed off on an increase to the national minimum wage, which mainly covers people in the private sector, but in some public sector agencies as well. That was an increase of 7.6%, just below inflation. In other parts of the private sector, it is negotiated at individual level. I am not telling the Deputy anything he does not know but they are the kinds of measures we are taking: a public sector pay deal to increase the pay of our own staff, increases in the national minimum wage, and wages in the sectors that are covered by employment regulation orders, EROs, and sectoral employment orders, SEOs. What is happening in the private sector depends on the enterprise.

Maintaining standards of living is not just about pay rises. Pay rises have to be part of it. At a time of high inflation, people need a pay rise to help them with the rising cost of living but it is not the only thing. The Government can also help by reducing income taxes, which is something I am very much in favour of.

The Government can help by increasing welfare payments. For example, the working family payment can help some people. It is also helping to reduce costs, such as the cost of childcare. It is not just about how much people get paid, it is about how much people get to take home after taxes and government levies and about how much it costs to get by on the money people have. It requires these three approaches of pay increases, tax reductions and reducing some costs of living such as childcare.

10:20 am

Photo of Aodhán Ó RíordáinAodhán Ó Ríordáin (Dublin Bay North, Labour)
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Herein lies the debate. What we have had for a very long time in Ireland is a disproportionate number of people on low pay. We also have a disproportionate number of people in insecure work. Perhaps the more we say this the more people will notice. A statistic I always tell the Tánaiste, and I know that he knows it, is that 23% of Irish workers are on low pay. He does not have to accept the recommendation of the Low Wage Commission. He could just decide to go immediately to a living wage of €12.90. It would have a knock-on effect throughout the economy. Many employers do not want to be accused of being a minimum wage employer. It would also increase wages all the while. There are also other issues. As the Minister knows, workers here are expected to pay for services for which other European countries do not expect their citizens to pay, such as GP care and childcare. Back to school costs are a classic example. We are in a bind as we have a disproportionate number of low-paid workers and families have disproportionate costs. On top of this will be an extra layer of expense during the winter. The pay rates of those on the lowest level are within the Minister's remit.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I thank the Deputy. We both know how statistics work and it depends on how they are measured. I appreciate the figure the Deputy has used on the proportion of Irish people on low pay but it is skewed by the fact we have such a high number of people on very high pay. This brings up the median. It is equally true that average pay in Ireland is 30% to 40% higher than in the average European country. Of course the cost of living is also higher. Our national minimum wage is in the top three or five in cash terms. Even when we adjust for purchasing power parity the cost of living is still in the top five or six of European countries. These are other facts. What the Deputy said is true but what I have said is equally true.

When it comes to the national minimum wage governments, including governments the Deputy's party was involved in, have always accepted the recommendations of the Low Pay Commission. It is true that we do not have to and we could reject it. We could say it did not matter that there was a very clear majority in favour of a recommendation and that we were rejecting it. I have to have regard to small businesses also. Many of them say they will struggle to pay the increase in the minimum wage. I think I have made the right call. If the number of people in work in Ireland this time next year has not fallen then I have made the right call but if it does fall I have to have regard to it.

Photo of Aodhán Ó RíordáinAodhán Ó Ríordáin (Dublin Bay North, Labour)
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The Minister mentioned again that he does not have to accept the recommendation. My point is that he could take it as the minimal rate by which he could increase it. He could increase it by more. He has to recognise the number of people on low pay and the costs they already have. We have had a cost-of-living issue in Ireland for as long as I can remember. There are various costs I have listed that people in Ireland are expected to pay that those in other countries do not. Those who come down from the North to live here are stunned by the fact they have to pay for school books and GP visits. These are very real things in the cost of living in Ireland. I have not mentioned housing or accommodation. I did mention childcare.

The point on the minimum wage increase is that the Minister could take the recommendation as 80 cent at a minimum. He has already made a commitment to move to a living wage so let us do it. We recognise now that all of these elements in the Irish economy are building up on families who are not able to afford them. Those at the lowest level will need extra support from the Government. The living wage would be a realistic measure to take to address it and give comfort to those workers at the lowest level in our economy. Most of them are women and they are disproportionately migrants.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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The Tánaiste referenced in his remarks the public sector pay deal and the increase in the minimum wage. There is a cohort of workers not covered by either of these who are being creased by inflation. They desperately need a pay rise. The Minister and I both know, whether we say it publicly or not, that the best way for a worker to achieve a pay rise is not to wait around for the Government to grant it but to join a trade union, get active in that trade union and bargain at local level. In this regard I ask the Tánaiste for an update on the transposition of the directive on collective bargaining. When can we see legislation for the right to collective bargaining before the House?

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I thank the Deputies. The directive is still under negotiation at European level as far as I am aware. It has to be agreed at European level before it can be transposed. I cannot give the Deputy a timeline on it unfortunately but we will transpose it once it is agreed. We are supportive of its general principles.

With regard to the increase in the national minimum wage, it is an 80 cent increase. It is the biggest single increase that has ever occurred other than the reversal of the €1 cut but I do not consider that to have been an increase. It is worth approximately €1,600 a year to somebody on the minimum wage who is working full-time. It brings us closer to the target of a living wage, which is recommended to be set at 60% of median wages. That would be €13.10. We are indicating to employers that this is where we would be if we had a living wage today if they could afford to pay it. It is an increase of 7.6%. It is not at the rate of inflation but it is not that far behind it. Other help is on the way, and Deputy Ó Ríordáin will see that the other help on the way in the budget will be of particular benefit to people on low incomes. When we add this help to the 7.6% it will fully protect people on the minimum wage from inflation. I agree with the Deputy's fundamental point that it is not just about pay but about how much of it people get to take home. It is also about how far that money goes. This is why we need pay rises, income tax reductions and a reduction in the cost of living in areas such as childcare and education.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
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We are almost out of time but with the co-operation of Deputies we will squeeze in one more question.