Marc MacSharry (Fianna Fail)

The proposed salary cap of €250,000 in semi-State companies is just, but, equally, there should be no sacred cows in existing companies. I accept these companies have a commercial mandate and it has often been argued that we will not attract the talent if we are not prepared to pay the appropriate salaries, but I doubt that is the case in this day and age. In a country with an excellent education system that produces fantastic graduates who work throughout the world €250,000 remains a great deal of money for which many Irish people with ability would be delighted to work.

On the Order of Business this morning I spoke about the good work being done by the Minister for Finance to reverse the proposed bonus payments to AIB workers. That bank's staff are effectively public sector workers at this stage because the State is the company's largest shareholder. The pay of senior executives has been capped at €500,000, while bonuses are not being paid for 2009, 2010 and, as a result of the Minister's actions, 2008. The banks as a whole have taken no pay cut whatsoever. While none of us wants to contemplate pay cuts, the reality is that the pay levels of staff in the banks were struck at a time when these banks were making profits for their shareholders and backed up by a great amount of commercial activity. That is no longer the case and a large amount of taxpayers' money - borrowed money - is now propping them up and ensuring they continue into the future.

We need to examine the pay grades throughout all the banks with a view to making savings on behalf of the taxpayer. This is not about punishing many of the hard-working people in the banks who bear no liability, such as the tellers one meets when one goes into the bank and the various other staff in junior, middle level and supervisory roles. It is an area where Government can legitimately ask those questions.

I have no difficulty whatsoever with the minimum wage reduction. As the Minister of State said, we have the second highest minimum wage in the European Union area. Senator John Paul Phelan referred to registered employment agreements and employment regulation orders which were all set at levels appropriate to a different time. They were there to give workers protection, and the work of the National Employment Rights Agency, NERA, and other organisations ensured this. The reality, however, is that circumstances have changed and these rates have become an impediment to the maintenance of jobs and a deterrent to the creation of new jobs.

For those labour intensive sectors such as the retail and hospitality sectors, while the reduction in the minimum wage is a good political football to kick around, all the employment organisations have welcomed it as a positive step. At a minimum, it will stop further jobs being lost and, to consider it optimistically, there is a tangible possibility we will have job creation as a result. Again, one does not expect accolades for such moves from the Opposition when it comes to budget time nor from the trade union movement, but on balance it is an appropriate step. These levels were struck when the world was a very different place and when the outlook for Ireland was very different. Circumstances have changed and, with that, it is important and appropriate we change our policy outlook and adjust downwards.

In the relevant period, the minimum wage increased by 55% while inflation increased by 28%. While we have moved to 2007 rates for social welfare, those rates are still 117% higher than in 1997. In fact, although consumer prices are back to 2007 levels, social welfare recipients will still earn close to €2.20 more now than they were paid in 2007.

These are not measures for which one expects accolades, and they are very difficult. If one takes them individually in isolation, they are painful and difficult to justify and appear unfair. Overall, however, I believe the balance was struck correctly. There is no doubt that if the 60 Senators were given the opportunity to frame a budget, we would all come up with different versions. I commend the Bill to the House, difficult as it may be. I am afraid little choice was open to us.