Jimmy Deenihan (Kerry North-West Limerick, Fine Gael) | Oireachtas source

I thank Senator Mooney for raising this matter. I am taking this Commencement matter on behalf of my colleague, the Minister of State at the Department of Social Protection, Deputy Kevin Humphreys.

Senators will be aware of the many community companies that provide services across the country. The Department of Social Protection supports service provision through a number of programmes and schemes. The community services programme, CSP, only supports community companies that operate on a community business or social enterprise model. Companies supported by the CSP generate and use income from the services they provide to pay staff, meet overhead costs and to contribute to future development. The CSP provides a contribution to the wage cost on the basis that the services are not fully self-financing or the cost of provision would be prohibitive on users.

Today there are 398 active contracts in place with community companies, representing commitments from the Department of Social Protection of €42 million per annum. The programme directly supports 2,110 full-time positions. Of these positions, a financial contribution of €32,000 per annum is made to support the employment of managers - 312 at last count. Funds are also provided as a contribution to employing people in some 1,800 full-time equivalent positions. The Department estimates that some 2,800 people are employed across these companies with direct CSP support. Another 1,100 people are employed in these companies without public funding support. Additionally, the companies provide some 1,500 work placements under CE, the rural social scheme and Tús. These companies are valuable to the social fabric of the country and provide very good quality services, particularly in poorer urban areas and rural villages where services are few and far between.

In recent days, a number of service providers on contract to the community services programme raised queries about the value of grants in 2016. Since the CSP became operational in 2006, it has helped companies to move from a situation where the minimum wage was paid to a position today where 60% of employees are paid above this level. The Department of Social Protection is committed to working with the remaining companies to work towards paying a reasonable wage. The resurgent economy will support this move. A core requirement of the programme is that service providers generate non-public revenue from their operations by the sale of goods, charging fees for services delivered or fundraising. Companies in contract with CSP must be a not-for-profit, social enterprise or community business in nature. That does not mean that they should not aspire to make reasonable returns from their activities that allow for a good wage to be paid. I recognise that this is a challenge, but there is a commitment to work towards achieving it. CSP funding is expressed as a fixed annual contribution towards the costs of employing a specified number of full-time equivalent positions and, in the case of 312 contracts, a manager position. The current value of contribution is €19,033 per full-time equivalent and €32,000 per management position annually. The CSP operates very clearly on the basis that it provides "a contribution only” to offset the wage costs of service provision. It is entirely a matter for each service provider to set its own wage levels.

An analysis of the June 2015 returns from the companies indicated that 45% of full-time equivalents were paid the minimum wage, contrary to the requirements of the programme to pay the local pay rate; 10% were paid above the proposed living wage of €11.50 per hour; and the remaining 45% were paid between these ranges. The development of the programme and the companies in recent years has ensured that the majority of companies do not continue to operate with a low-pay model. I commend that commitment and achievement. The Department of Social Protection is working with Pobal to put in place arrangements that will allow companies to apply in a structured manner to access short-term financial support if that is needed to deal with the issues identified in recent days. Companies will be advised of the arrangements which are being prepared early in the new year.