Mark Dearey (Green Party)

In regard to the national minimum wage, I believe in the concept of creating a social floor below which people's incomes should not drop. However, that view is not shared in the labour market throughout Europe. It is surprising to note the countries in which a national minimum wage does not apply. Sweden which has a reputation of being socially progressive has not introduced a national minimum wage. It is not that it does not believe in the protection of workers, but it uses other mechanisms. It has a range of sectoral wage agreements, some of which we have, in addition to the national minimum wage, which mean many workers who would otherwise be on the national minimum wage earn well above it, sometimes by in excess of 50% because of the registered employment agreements under which they operate. We have a strange mix in terms of how wage rates are set. In an analysis of labour costs in a recent report Forfás estimates that the national minimum wage has a direct impact on all those earning up to 50% above it. Somebody earning up to €13 per hour is directly affected by the most recent rise in the national minimum wage which occurred on 1 July 2008. The national minimum wage affects not only those on it but also small companies operating in the hospitality sector, the retail sector etc. The question is not whether there should be a social floor but at what level it should be set.

Irish wage rates are the fifth highest in the OECD. We ceded much of our competitiveness through a range of agreements, in particular sectoral agreements, the benchmarking process and the partnership process which has been in the limelight in the past day or two because of comments made by the Minister for Finance, with which I broadly agree. As a result, we must together take a step down to regain the competitiveness we have lost and align rates once again with those of our competitors. In a small trading economy we simply cannot afford to lose the symmetry we formerly enjoyed and which has become asymmetry that has seriously affected our ability to trade with the rest of the world. This will be critical to our recovery.

On the proposed reduction of €1 in the national minimum wage, many models could have been used. I would liked to have seen a more subtle approach being adopted - for instance, limiting it to a certain age group among whom unemployment is a particular problem. Up to 40% of male school leavers are unemployed, a particular cohort which is very vulnerable to unemployment. It would have been good, therefore, if it had been more targeted. Nonetheless, this kind of measure is important in order to sustain current employment levels. Forfás acknowledges that it will lead to job growth in the medium term. We will not see any growth in the short term because of the measure, but Forfás confidently predicts there will be job creation as a result. There will also be job retention, a point I have made previously. Companies are struggling to pay staff and taking the option of cutting their hours, numbers or the days they work. This will allow them to retain staff currently protected by fixed contracts, the terms of which cannot be breached. It is important to stress the fact that current contracts cannot be breached and that the new rate will apply to new entrants who are finding it extremely difficult to find their way into the labour market. If this change can assist in the medium term, as Forfás predicts, it must be welcomed.