Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Senators for their contributions, which are very welcome. Senator Dolan asked whether we could review the impact of this in a few years' time. This would be good practice. We had intended to do so anyway. The first or second year might be too soon but perhaps it could be done in the third or fourth year. I am happy to make that commitment.

I thank Senator Craughwell for his kind remarks. The issue of class K contributions is not fully resolved. It has been resolved for councillors but not yet for officeholders or Oireachtas Members who still pay class K contributions but receive no benefits. I hope we will be able to resolve it at some point in the future.

The Senator made a very valid point on pension abatement for public servants. It is something we introduced at a time of high unemployment and we did not want teachers, doctors and nurses who took early retirement and got pensions then going back to work and continuing to get the pension while being paid to do a job that a young teacher, nurse or doctor could be doing. We are in a very different position now. We have a labour shortage and we would like more retired people to go back to do a bit of part-time work. The time has come to look at this again.

Senator Crowe asked about tax. The cost of paying sick pay is deductible as a business expense. Where it results in reduced profit there will be a reduced tax liability.

I take the points made by Senators on the cost involved in seeing a GP. It is true that approximately 40% of people in Ireland do not have to pay their GP, but there are still many people on low pay who do not qualify for a medical card or a doctor visit card. The solution lies in improving eligibility in line with the Sláintecare plan. I hear what people said about a rebate being a good idea as an alternative. It is a good idea. We have a rebate system for dental expenses and optical expenses through the treatment benefit scheme. Perhaps we could do something similar and allow people to get one or two doctor visits a year refunded through treatment benefit. It would be a good idea. It would have to be negotiated with GPs and they are not the easiest people to negotiate with as people know. The current negotiations are focusing on extending free GP care to children aged six and seven. I would be happy to have this negotiation include extending treatment benefit to allow working people who pay PRSI to have some or part of their doctor visits refunded. It is a good idea.

I want to clarify that the proposal the living wage should be €12.17 an hour this year was not calculated by me or any politician. It was calculated by the Low Pay Commission, which is a statutory body made up of workers' representatives, business representatives and independent experts. They are the ones who suggested 60% of medium income earnings. The Low Pay Commission sets out why in its report, which includes research carried out by Maynooth University. It is all there for Senators to familiarise themselves with. The living wage technical group is a different body full of very fine people who all come from union, NGO or academic backgrounds. Nobody in the group represents employers or runs a significant business. I do not think it is an appropriate body to make such a determination. It does not have a democratic mandate or a statutory basis. It excludes business people and employers. The Low Pay Commission is the best body to do this.

I am sure there will always be people who can set up a group and say the living wage should be something else. They might say it should be something lower and they might call that the realistic living wage. They might say it should be something higher and call it the real living wage, the true living wage or the decent living wage. There will always be people who believe the living wage should be a different figure. The Low Pay Commission is the statutory body. It is tripartite. It has set out the research basis for why it recommended 60% of median earnings at least initially.

With regard to the four year plan to get to ten days or two weeks' sick leave I do not want to hardwire it into the legislation. I am asking the House to trust me on this. We have to consider the possibility that something could go horribly wrong with our economy. We are almost at full employment, with 2.5 million people in employment. This is more than ever before. What if something did go terribly wrong? We know how quickly things changed ten or 12 years ago. Overnight we went from a booming economy to a major crisis. I want to be prepared if something goes wrong, even though I do not think that will be the case.

Why did we go for a 70% replacement rate? It is because we want to share the cost, with 30% from the employee and 70% from the employer and the State kicking in with illness benefit on day four. I acknowledge that for the employer, as some Senators have been mentioned, there can be a double cost because it is not just the cost of sick pay but also the cost of a replacement employee who may then have to be paid a premium. There is not always a need a replacement employee but in some cases there is and there is a real cost involved.

I am open to the idea of a rebate scheme for employers. I do not think we will have it for year one. A this is phased in and the costs for employers rise, I would be open to the idea of a rebate scheme. It would work as a rebate from the Social Insurance Fund. This is funded by employers' PRSI. Many other countries do it. We are bringing ourselves into line with other countries by introducing sick pay. It would make sense to bring in a rebate scheme as other countries also have. I would point out to Senators that everything must be paid for, as they have said to me. The average social insurance paid by employers in the average European country is 20%. It is roughly double employers' PRSI here. If we were to do it and provide more rebates to employers there would have to be a quid pro quoin terms of the contributions they make through employers' PRSI, bringing them more in line with the norm in other European countries.

I will repeat the figure I used earlier. If everyone did take the full three days, and I do not think everyone will, the increase in the cost of labour for employers next year would be 0.8%. In the real economy we live in now employers are giving pay increases that are many multiples of 0.8% just to get staff. We need to see it in perspective. I acknowledge it is an additional cost and not an irrelevant additional cost. Senator Conway made a very valid point that when the national minimum wage was established in 2000, it was at 60% of the median wage. There were many more people on it, though, as a result, but it was slightly above 60% of median wage. While the national minimum wage kept up with inflation and increased ahead of inflation since 2000, it did not keep up with average or median earnings. That is what I want to put right over the next couple of years.

Section 9 is there to ensure that nothing prevents an employer from offering a better sick pay scheme, whether it is by decision or collective agreement. To put it on the record of this House again, as Members will know, illness benefit will work by a person getting three days of statutory leave from his or her employer and on day 4 illness benefit from the State kicks in. From 2024 onwards, there will be savings for the State as illness benefit kicks in later. We intend to recycle those savings to improve illness benefit and make it more linked to people's earnings because at the moment illness benefit is very low. I cannot remember the exact figure but it is something like €200 per week and can be even less than that. We would like to use the savings that arise from this scheme to the social insurance fund to improve illness benefit and make it a bit more linked to previous earnings than it is now.