Billy Kelleher (Cork North Central, Fianna Fail)

I advise Senator O'Toole that I can only go by the official statistics. The number of people on the minimum wage is 52,000 according to the CSO's last quarterly household survey. This equates to 3.4% of the working population being paid at or below the minimum wage. Two reports have been published on this area. One is a Forfás report and the other is an OECD report which recommends that the minimum wage should be readjusted in line with falling wages. Those are two reports that address this issue for fear the Senator might think we make things up on the hoof.

I clearly said that this legislation had nothing to do with those who are paid by collective agreement in context of joint labour committees or joint industrial council agreements. That is exactly what I said. I went on to elaborate that in terms of these issues there is pressure because C2 certificates are undermining the position. For fear the Senator thought I was interpreting that this legislation would impact on the others, as it were, clearly it will not. In the context of joint labour committees and employment regulation orders rather than registered employment, at the lower rates of pay in the hospitality sector and other areas where the rate of pay is a few cent above the minimum wage, the minimum wage has an impact on those areas. There is talk of the effect being 1.5 times the number who are on the minimum wage. We accept this will have no impact on registered employment agreements and other areas that are at the higher end of collective agreements in the context of hourly rates of pay.

There is a definite issue in terms of wage adjustments in economies where jobs are being shed at a high rate. There are two ways of addressing that issue. We could take a simplistic view, which has been propagated, that rather than taking the difficult decision of reducing wages to try to introduce competitiveness, by continuing to increase wages, we would trade our way out of our difficulties. That is not a credible argument for anyone to put forward. It was said that people on the minimum wage will spend their money, that because they have very little disposable income, they spend it on the essentials such as food and heat that people need to live. That is an accepted fact. The argument that were we to increase the minimum wage, people would spend more of it is not credible. Any economist from any ideological background would say that if one continually inflates wages, one will run into difficulties at some stage.

I want to clarify the position regarding a reference to the views of the Minster for Finance on social partnership. First and foremost we operate a collective Cabinet responsibility in government. Decisions are made in that context and collective Cabinet responsibility pertains on that matter. If the State did not make the adjustments in the context of pension levies and other revenue raising measures to fund services, we would have a very unsustainable position. As of now, we probably would not even be able to deliver on the rates of pay currently provided for public servants and civil servants or to provide services.

I do not want to go into the broader debate on the IMF-EU support mechanism which took place in the Dáil today and on which there was a vote that was passed. Bandying about the figure of €85 billion as being the amount we are being forced to take from the IMF and EU is not the case. This funding is available in overdraft form. If the State can go back as a sovereign entity to the capital markets and borrow at a lower interest rate than that which has been provided of 5.8%, there is no obligation on us to draw down the €85 billion. It is a contingency fund to allow the State to plan its way out of its current difficulties and in the meantime for it to be able to pay public servants, civil servants and provide services the public needs. The EU-IMF fund does not mean we are being forced to borrow €85 billion. It allows us the facility to do so in the event of our needing it. More importantly, if we can get back into the capital markets at an earlier stage than we anticipate, it is up to any government to decide to do that.

It is not cast in stone that any government must follow the diktat laid out in the four year plan. Any government can decide to draw up its own four year plan and fund it accordingly. People will have to be conscious, however, that if they decide to tear up the four year plan, they had better ensure they can access the international markets somewhere else before they do so. People must be honest about this. We have to pay our public servants and provide services and no other avenue is available to the State at this time other than the EU-IMF support fund. I could argue this forever and a day. I know there are ideological views on this also and no matter what statistics I provide, some people will not support the emergency legislation to reduce the minimum wage. We cannot see the minimum wage in isolation as there are social welfare supports available for people on the minimum wage with larger families, including family income supplement. People are also forgetting that we had to make a very difficult decision recently in reducing the jobseeker's allowance for people under 25, which has been dramatically decreased. People who were previously on jobseeker's allowance at a high rate have seen payments reduced also.

The minimum wage is being reduced by €1 per hour from €8.65 to €7.65 and there is still quite a deficit between what a person would receive on jobseeker's allowance and what people get with the minimum wage while single and living at home. People should consider the whole social welfare code, labour activation measures and the minimum wage. I accept that no Government would want to reduce the minimum wage but there are some reports supporting our views. Considering the issue rationally, we are hoping that people bring to the National Employment Rights Authority or other agencies evidence of exploitation from the reduction in minimum wage or breach of contracts.

There is a cohort of people who cannot take on extra employees because they cannot afford the present rate of €8.65 per hour. If there is a shift of a number of people from social welfare, where they cannot achieve any form of temporary work, to being able to enter the labour market, it will be positive. I have heard the comments of Members and I know they may not listen to what I have said because there are strong views on the matter. The Government has taken a decision, based on evidence and reports, in order to try to shift a number of people currently on social welfare. Businesses will be able to retain or take on extra staff because of this measure.

This will primarily affect the services area, including the hospitality and retail sectors. Some of these areas are also governed by employment regulation orders established under joint labour committees. I am not confusing the two of these and understand the differences but I did make the point that other areas of the labour market have collective agreements at the higher end; they are also under pressure because of the way the C2 cert system is operating.