Dáil debates

Tuesday, 4 October 2022

Ceisteanna Eile - Other Questions

Living Wage

11:20 pm

Photo of Gerald NashGerald Nash (Louth, Labour)
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86. To ask the Minister for Public Expenditure and Reform if he plans to ensure that all contractors that are awarded State public procurement contracts pay all staff a living wage given the cost-of-living crisis; and if he will make a statement on the matter. [48279/22]

Photo of Gerald NashGerald Nash (Louth, Labour)
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I will be brief. This question relates to the Government's plans, if any, to ensure that all contractors who are awarded State public procurement contracts pay all staff a living wage. I will clarify this question somewhat by acknowledging that the Government is in some ways powerless, given that there is no formal living wage in place. The National Minimum Wage Act governs this area. We have a national minimum wage and we are moving towards a living wage. I would appreciate the Minister of State's views on the living wage in the context of public procurement policy.

Photo of Ossian SmythOssian Smyth (Dún Laoghaire, Green Party)
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Public procurement procedures require applicants to meet certain standards when applying for public contracts, including declaring whether they have breached aspects of employment law. All public works projects that are delivered under the Exchequer-funded element of the Government's capital plan must be procured in accordance with the provisions laid down in the capital works management framework, CWMF. The suite of public works contracts, which is a key component of the CWMF, contains a detailed set of provisions on rates of pay and conditions of employment for all those engaged in the construction phase regardless of whether they are employed by the contractor or its subcontractors. Where these detailed provisions are not met, the contracting authority may withhold payment, make deductions from payments due and, ultimately, terminate the contract where evidence of a serious breach exists that cannot be remedied by the other means provided.

A sectoral employment order, SEO, fixes the statutory minimum rates of pay and other conditions, for example, sick pay and pension entitlements, for persons employed in a given economic sector. An employer in that sector has a legal duty to comply, at a minimum, with those terms. The 2021 SEO for the construction sector came into effect on 1 February of this year. It sets the statutory minimum rates of pay and other conditions, for example, sick pay and pension entitlements, for people employed in the construction sector. The lowest hourly rate of pay in the SEO stands at €14.93 per hour for new entrant general operatives. Apprentices' rates of pay are expressed as percentages of the craftsperson's rate, commencing at €6.84 per hour in their first year and rising to €18.47 per hour in their fourth year.

While the public works contract provides immediate remedies to evidenced breaches of employment law, the enforcement of employment law is ultimately a matter for the Workplace Relations Commission, WRC.

Regarding the inclusion of a living wage on public contracts, there is no current legal basis in Irish law or national agreements to make this a requirement on suppliers wishing to engage in public tendering. Wage rates which have a legal underpinning of course apply to all contracts, public and private. Additionally, at EU level, any attempt to try to set wage rates through public procurement is likely to be viewed as discriminatory and in breach of the EU treaty principles and the procurement directive.

I note, however, that my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Varadkar, outlined in June 2022 proposals to introduce a living wage for every employee in Ireland, starting from next year and to be fully phased in by 2026, when it will be mandatory for all workers.

11:30 pm

Photo of Gerald NashGerald Nash (Louth, Labour)
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I thank the Minister of State for his response. I am very familiar indeed with the SEO system and the employment regulation order, ERO, system that gives effect to the decisions of joint labour committees and ministerial sign offs regarding statutory minimum rates of pay higher than the national minimum wage, which would apply, for example, to contract cleaners and security workers. There are, of course, ongoing attempts to undermine the security ERO, and there may be implications for State contracts in that regard.

Regarding the living wage, it is now a voluntary matter, while the statutory minimum wage is the statutory minimum wage. We would all prefer, certainly those of us on this side of the House, for there to be greater movement towards the living wage and a central focus from the Government in respect of improving people's pay and terms and conditions through the public procurement process. The Government has signed up to the idea of a living wage and it would be a good idea, notwithstanding the fact it does not have legal status now, for the Government to promote the idea of a living wage with those benefiting from the largesse of the State in the context of the procurement process.

Photo of Ossian SmythOssian Smyth (Dún Laoghaire, Green Party)
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It is Government policy that there should be a living wage for all Irish employees. I would like to see it too and we have a programme working towards that goal. The Deputy's question, though, asks if we can implement this through our public procurement policies and my understanding is that it is not legal to do that. It can be imagined that if we set a certain wage for a public procurement contract that we could then have people in another country, in a different jurisdiction with a completely different economic system, claiming they are being discriminated against and taking a legal challenge.

The plan for the living wage is that it would be set at 60% of the median wage in any given year. In 2022, that would be €12.17 per hour, and this contrasts with the minimum wage now of just €10.50 per hour. It will, however, increase to €11.30 on 1 January 2023. The idea, therefore, is to phase this in over four years, so that by 2026 everybody in Ireland will be earning a living wage. This will be a floor and it will be mandatory for all employers.

Photo of Gerald NashGerald Nash (Louth, Labour)
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Accepting that the Government is powerless and is governed by the National Minimum Wage Act 2000 and that the national minimum wage is not yet at €12.17 per hour, which is the current rate but which will, undoubtedly, go up, given the rise in the cost of living, when the living wage working group report is published later this year, one thing the Government could do concerns the small number of public sector workers who do not receive a living wage. For a cost of approximately €1.5 million to €2 million it would be possible for the Government to bring up the hourly rate of pay of all public sector workers to reach a living wage. A small number of public sector workers do not have a living wage now and the Government could try to do something about this group. It is a small minority of workers and it would be an initiative that would be very positive.

Photo of Ossian SmythOssian Smyth (Dún Laoghaire, Green Party)
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I think what the Deputy is saying is that a small minority of current public sector workers are earning the minimum wage but not the living wage.

Photo of Gerald NashGerald Nash (Louth, Labour)
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They are earning under €12.17 per hour.

Photo of Ossian SmythOssian Smyth (Dún Laoghaire, Green Party)
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Yes, they are earning a rate below the living wage. The Deputy would like us to address this issue and I will discuss this with the Minister, Deputy Michael McGrath, and see what progress we can make on it.

Questions No. 87 taken with Written Answers.