Alan Farrell (Dublin Fingal, Fine Gael)
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66. To ask the Minister for Enterprise, Trade and Employment if he will report on the forthcoming increase to the national minimum wage; and if he will make a statement on the matter. [62068/22]

Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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This is to ask the Tánaiste and Minister for Enterprise, Trade and Employment if he would update the House on the forthcoming increase to the national minimum wage and make a statement on the matter.

Leo Varadkar (Dublin West, Fine Gael)
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We want to reward work and ensure that work pays more. Minimum wage workers are among the hardest working people in Ireland and deserve to paid appropriately, particularly at a time of rising prices. In September, the Government agreed to accept the Low Pay Commission’s recommendation to increase the national minimum wage by 80 cent to €11.30 from 1 January 2023. At least 164,000 people will benefit, but with think many hundreds of thousands more will benefit too, because of the knock-on increases that those on slightly higher pay will get. It works out at roughly €30 per week, €120 a month or €1,664 a year for a person in full-time employment.

Ireland has a well-established system for setting the minimum wage based on the Low Pay Commission and it is a system that works well. As the Deputy is aware, I want to move from a national minimum wage to a national living wage. Following Government approval in November, I announced the introduction of a national living wage for employees. This will be benchmarked at 60% of hourly median wages in line with the recommendations of the Low Pay Commission. It will be phased in over a four-year period running to 2026. The new agreed national minimum wage of €11.30 per hour from 1 January 2023 is in line with this transition and therefore next year can be considered the first year of a proposed four-year path towards reaching a living wage of 60% of median wages. The introduction of the living wage is the latest in a series of improvements to workers' rights over the last five years, including statutory sick pay, protection of tips and service charges and a new public holiday and the work-life balance legislation currently going through the Dáil.

Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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I congratulate the Tánaiste on his period in the office he is holding at the moment and on the substantial increases he has made to the rights and conditions of workers. We have all been informed so much by Covid and the opportunities to work differently and in better ways. This is a really significant part of that. As the Tánaiste says, it is essential that work does pay and that we are incentivising work at every turn for everybody in the labour market, irrespective of what they are earning.

I visited Dublin Chamber recently. We have unemployment at historically low figures, but the single biggest issue for them is labour market shortages and trying to encourage more people to work in this market. I also spoke with representatives the Family Business Network in Kilkenny. They informed me that approximately 173,000 businesses employ more than 1 million people in the State, which is more than the State and foreign businesses put together. They are uniquely focused on the cost of jobs and the cost of creating jobs. I might come back to that issue in a supplementary question.

Leo Varadkar (Dublin West, Fine Gael)
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I thank the Deputy for her remarks. I hope that in times to come people will look back on this Government as one that has made a lot of strides forward in improving terms and conditions for workers. At a time when employers find it hard to recruit and retain staff, I believe that better terms and conditions and better pay must be part of the solution. We are moving towards a living wage. Auto-enrolment, which has been spoken about for a very long time, will become a reality in 2024. People in the private sector in particular will now have an occupational pension to top up their State pension in the way those in the public sector and the big companies do. Sick pay is a reality from 1 January. There is a new public holiday in February and the legislation that is being brought through on work-life balance and remote working is a good step forward, too. This builds on reforms like paternity benefit, enhanced maternity benefit, and the restoration of treatment benefit which we have seen in previous years. It is all about making work pay and rewarding people for the work they do, which we believe will help to build a better society.

Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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I thank the Tánaiste. A key part of that better society is continued low unemployment, continued employment opportunities and the opportunity to derive Exchequer returns from PAYE and people paying tax. One of the key parts around incentivising people into the labour market and addressing the cost of creating jobs is looking at taxation. I would reject any attempt to increase employer's PRSI by any political party in this House. We should look at measures around temporary reductions in PRSI if that were suitable, to support businesses as they try to continue to create jobs to support the Irish economy and people in it. We should also look again at the marginal rates of personal taxation. The OECD said recently that high marginal rates of personal taxation may continue to constrain entrepreneurship as well as attracting entrepreneurial labour from abroad. We have very high personal tax rates and marginal tax rates relative to other jurisdictions. The Family Business Network, whose members employ so many people in this State and who contribute €19 billion to the Exchequer has asked that we look again at marginal tax rates and try to push out the point at which people hit the marginal rate to €50,000.

Leo Varadkar (Dublin West, Fine Gael)
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I thank the Deputy. I think the fact that people pay the highest marginal tax rate at such modest incomes is very unfair. That improves next year when people will be able to earn up to €40,000 without paying that highest rate of income tax and will only pay the highest rate on income earned above €40,000. If we look across the OECD and across Europe, Irish workers pay much the same amount of income tax as other workers do but the distribution is different. People on relatively modest incomes pay the highest rate and that is very unfair. One would have to earn £120,000 in Britain before paying the highest rate of 45% there. Somebody on €40,000 would pay that here. I know it is not an exact comparison but I think the House will get the point. We want to increase that threshold. Like the Deputy, I would be reluctant to increase employer's PRSI but there are circumstances under which we would consider it, particularly if it meant the introduction of new benefits.

One of the things the Minister, Deputy Humphreys, is working on at the moment is the possibility of pay-related benefits, which may include things like subsidised childcare and healthcare. I would not like to see it happen unless it was linked to real benefits for workers and even benefits for employers as well.