David Cullinane (Sinn Fein) | Oireachtas source

I move amendment No. 1:

In page 3, line 8, to delete “related matters” and substitute “matters related to low pay”.

I welcome the Minister of State to the House. I missed his response to my Second Stage contribution, when I understand he robustly defended his position and that of the Bill, and that is to put it mildly.I would hope, in the spirit of the amendments that are tabled, that the Minister of State will accept we can have political differences. We believe the proposed Low Pay Commission narrowly focuses on the minimum wage. The Minister of State disagrees with that. Our amendments seek to amend that. There is no doubt that the big focus of the Bill is the minimum wage. It does not deal with the low pay in the way it should. The amendments in this group - Nos. 1, 2 and 19 - seek to remedy that.

It might be helpful for the purposes of the debate on this Bill if I were to refer to some of the recommendations that were made after the British Low Pay Commission was reviewed. It is important for the Minister of State to be familiar and acquainted with the mistakes the British authorities believe they made. We want to see a Low Pay Commission that actually deals with the totality of low pay, including the relationships between low pay and welfare, public services, taxation and all the other issues. In reality, we need a living wage commission that actually moves us to a situation where people are not on poverty wages but are getting decent work for decent pay and a living wage. Rather than focusing on people's differing views on whether the minimum wage should be increased or decreased, surely we should be moving towards a space in which people in the public and private sectors are paid proper wages and a living wage.

As I said on Second Stage, a comprehensive review of the national minimum wage and the Low Pay Commission in the UK was undertaken in 2014 by the Resolution Foundation under the chairmanship of Sir George Bain, who was the founding chair of the UK commission. This review offers some vital insights on the national minimum wage, the living wage and the proposed Low Pay Commission in Ireland. The question of whether the minimum wage and its supporting architecture could do more to tackle Britain’s pervasive problem of low pay was investigated. The review found:

Research we have commissioned to inform our decisions – now totalling around 140 projects – has generally shown that the NMW has led to higher than average wage increases for the lowest paid, with little evidence of adverse effects on employment or the economy. Firms appeared to have responded by: adjusting pay structures; reducing nonwage costs; making small reductions in hours;... increasing some prices; and some squeezing of profits (although insufficient to lead to an increase in business failure).

have published a meta-analysis of minimum wage studies that have been conducted since 2000. It concludes:

Moderate increases in the minimum wage have the effect that was intended by the original supporters of such action: raising the minimum wage substantially increases the earnings of those at the bottom of the income distribution and reduces wage inequality. Negative effects on employment resulting from increases in the minimum wage were too small to be statistically detectable in the meta-analysis. Such effects would be too modest to have meaningful consequences in a dynamically changing labour market.

I suppose they looked at the reality of the impact that the increase in the minimum wage had in Britain. The Minister of State will have heard from some of the employers' organisations over the past 24 hours about their concerns regarding an increase in the minimum wage and a move towards a living wage. The experience in Britain and the studies across Europe show that such measures do not have any real or significant impact on employment. Contrary to what is being suggested, these approaches do not drive up wage demands across the economy. They do what they say on the tin that they should do, which is to bring about greater income equality. This is something to which we would all aspire.

I would like to mention another weakness that was found in the UK Low Pay Commission. The report from which I have quoted refers to a "narrow settlement" and "the lack of attention it gives to the persistence of low pay". It highlights:

The NMW was intended to act as the wage-floor from which employees should move up with experience and skills. There was even hope that the NMW might encourage employers to invest in their staff to allow for progression. Findings from the Resolution Foundation suggest that all too often, the NMW is failing to act as a springboard to higher earnings. In 2012, just under a fifth (17 per cent) of minimum wage workers, around 320,000 people, had only held minimum wage jobs in the last five years. The problem is not limited to the NMW. Almost three-quarters of low paid workers in 2002 had not fully escaped low pay ten years later in 2012.

It continues:

More fundamentally, the minimum wage as a whole lacks direction. In its effort to keep politics out of the NMW, the government has fallen into a strange neutrality about the minimum wage: there is no official preference over whether it rises or falls. This leaves the policy rudderless.

These recommendations and findings came from a review of the operation of the British Low Pay Commission.

I suppose the point we are making to the Minister of State is that it is obvious that the minimum wage needs to be examined and that there needs to be a mechanism which allows policy makers and politicians to look at all of the data when making decisions. In my view, ultimately it has to be a political decision. All of the information from EUROSTAT, the OECD, the CSO and TASC shows that 5% of the workforce is on the national minimum wage, but up to 20% of the workforce is in low-paid employment and 16% of those workers are deemed to be suffering from multiple deprivation. I know the Minister of State will join me in saying that is wrong and needs to be tackled. We need to have strategies in place to enable us to lift people out of in-work poverty and ensure people have decent and proper wages and decent work. In establishing this commission, we should not put in place a structure that could look at varying - increasing or possibly decreasing - the national minimum wage without moving us closer to lifting people out of poverty or being in a position to make policy recommendations to a range of Ministers on how we can have a living wage and decent wages for people.

As I said at the outset, if the Minister of State wants to have decent wages and a living wage for people, he should move beyond looking solely at the hourly rate of pay and saying "that is what we need to do". This point needs to be transmitted to employers as well. I know the technical group on low pay came up with a figure of €11.45. We would support that because it was done on the basis of an analysis. There needs to be a strategy of investing in public services. If low-paid workers had access to universal health care, universal child care and decent housing, if there was proper investment in public services, if the tax system was reformed to favour low-paid workers and if there were proper employment rights and protections for workers, the totality of that package would reduce the hourly rate. In my view, that would be a much more holistic way of calculating and making sure people get a living wage. Maybe this is something the Minister of State might respond to. I have explained the concerns we have. We do not have a difficulty with the minimum wage element of it. We want the commission to have far more powers in looking at the relationship between low pay and all the other factors I have just mentioned and in making clear recommendations to the Government on those matters. We are concerned that the commission will not have the power or authority to do that. While there are some vague references in the Bill to related matters, if we are honest with each other we will admit the reality that the primary focus of the commission will be on looking at the minimum wage. I will leave it at that because we discussed this on Second and Committee Stages. I welcome the Minister to the House.