Wednesday, 27 May 2015
National Minimum Wage (Low Pay Commission) Bill 2015: Second Stage
I am pleased to introduce the National Minimum Wage (Low Pay Commission) Bill 2015.
Before I give the details of the Bill it is also worth taking stock of the progress we are making more generally in terms of our economic recovery. More than 100,000 extra jobs have been created since the start of 2012 when the Government's Action Plan for Jobs was launched. The latest figures released last week from the Central Statistics Office show that in the first quarter of 2015, the unemployment rate had dropped below 10%, to 9.9%, for the first time since 2008. In the 12-month period to quarter one of 2015, unemployment decreased by 45,000 and there was an annual net increase in employment of more than 40,000, bringing the total number in employment to 1,930,000. Most of the increase in employment was in full-time employment, which increased by 52,000, and part-time employment fell by 2.4%. The long-term unemployment rate fell from 7.3% to 5.9%. Tax revenue has increased, primarily as a result of the improving economy, while the social welfare bill has fallen in line with falling levels of unemployment.
What these figures illustrate is the success of the Government's twin-track approach of creating the conditions for job growth and helping people back to work. The Action Plan for Jobs is accelerating Ireland's transition to a sustainable jobs-rich economy, while the Pathways to Work programme is ensuring as many people as possible taking up work are doing so from the live register.
There are still too many people who are jobless, however, and we are working to build on the success to date and to create full employment within the next three years. It is important for the thousands of people still looking for work that their aspirations are not endangered by policies that will undermine or even row back on the progress made to date. Now that the recovery is beginning to be felt, workers quite naturally believe that it should be reflected in their wage packets, and a return to wage bargaining is visible in many sectors of the economy.
In this regard, IBEC's recent pay survey found that 57% of companies plan to increase basic pay this year. According to that survey the median pay increase is set to be 2%. Other surveys suggest that this figure may well be higher. So long as pay increases are commensurate with the performance of both the enterprise and the economy, and so long as they do not hamper the emergence of job opportunities or impact on competitiveness, locally or internationally, then such increases can only benefit the economy and strengthen domestic demand.
The national minimum wage in Ireland is relatively high by international standards. Bearing in mind that social transfers differ from country to country and also taking the cost of living into account, Ireland's rate is the sixth highest among the 22 EU member states that have a national minimum wage. The most recent figures from the Central Statistics Office show that in mid-2014, just over 4% of all employees were being paid the adult experienced national minimum wage of €8.65 per hour, or the sub-minima rate. As it stands, under the provisions of the National Minimum Wage Act 2000, the national minimum wage can be adjusted by ministerial order following a recommendation in a national agreement; in the absence of such a recommendation, following an examination and recommendation by the Labour Court on foot of a request by a substantially representative organisation of employees or employers; or unilaterally by the Minister regardless of whether a recommendation under section 12 or 13 has been made.
The legislation specifies a number of criteria that must be taken into account. The ESRI, in its 2006 analysis of the last Labour Court recommendation, concluded that adjusting the minimum wage by a substantial amount irregularly, with lengthy gaps between increases, is more likely to have a detrimental impact on employment and to contribute to uncertainty for employers and actual and potential employees than is more regular and, therefore, smaller and fairly predictable up-ratings. From an employer and worker perspective, a significant benefit of the new approach is that minimum wage rates will be assessed annually. Therefore, adjustments in future will be incremental and less disruptive for business than the step-changes used in the past.
Making work pay continues to be a cornerstone of this Government's agenda, and setting up the Low Pay Commission is one of the key commitments in the statement of Government priorities agreed in July last year. The commission was launched last February, chaired by Dr Donal de Buitléir, and it is currently operating on an interim, non-statutory basis. It has sought and received submissions which are currently being considered. I expect its first report by the middle of July.
The commission is a nine-member body comprising an independent chair, three members with an understanding of the interests of low-paid workers, three members with an understanding of the interests of employers, in particular, those operating in traditionally low-pay sectors, and two members with relevant academic backgrounds. The principal function of the Low Pay Commission will be to examine and make recommendations to the Minister annually on the national minimum wage with a view to securing that the minimum wage, where adjusted, is adjusted incrementally over time, having regard to changes in earnings, productivity, overall competitiveness and the likely impact any adjustment will have on employment and unemployment levels. Alongside examining the national minimum wage, the Low Pay Commission will also be tasked with examining matters related generally to its functions under the Act. This work programme will be agreed by Government and presented to the commission in February of each year. In addition, in the discharge of its function, the commission will be required to make recommendations that are evidence-based using a suite of agreed data sets or, where required, based on bespoke research undertaken at its own behest. This approach draws on that adopted in the UK where since 1997 the recommendations of the UK Low Pay Commission have brought about a progressive increase of the minimum wage that has had little detrimental effect on the functioning of the economy or labour market.
The commission will be statutorily independent in the performance of its functions. While not provided for in the general scheme of the Bill, it is intended that it will adopt a consensus-based approach to its reports and recommendations. Work should always pay but I am also conscious of the need to balance a basic statutory minimum pay rate that is fair with one that is sustainable and which allows employers to continue to create quality jobs. In this context, a particular function of the commission will be to ensure any advice or set of recommendations it makes to Government is evidence-based, utilising agreed data, carrying out research and consultations with employers, workers and their representatives, and taking written and oral evidence from a wide range of organisations. Alongside these hard data, the commission will consult real people - workers and employers - who are directly affected by the national minimum wage. This real lived experience will be vital for the commissioners when deciding on the rate for the minimum wage. The changes proposed in establishing the Low Pay Commission on a statutory basis are essentially taking the politics out of setting the national minimum wage. This is very much in keeping with the dignity of work agenda I am pursuing and it complements work such as the University of Limerick study on zero-hour and low-hour contracts which is in train.
I will outline the provisions of the Bill. Section 1 defines the principal Act as meaning the National Minimum Wage Act 2000. Section 2 amends the principal Act to provide for insertion of a number of relevant definitions in that Act. Section 3 provides for the establishment of the Low Pay Commission and that the body will be independent in the performance of its functions. Section 4 outlines the duty of the commission and, in this regard, provides that the commission will be required to make such recommendations regarding the national minimum hourly rate of pay as are designed to set a minimum wage that is designed to assist as many low-paid workers as is reasonably practicable; is both fair and sustainable; where adjustment is appropriate, is adjusted incrementally; and over time is progressively increased, all without creating significant adverse consequences for employment or competitiveness.
Section 5 provides for the functions of the commission. In this context, the commission will be required to examine the national minimum hourly rate of pay and make a recommendation and a report on the issue by 15 July each year. This section also sets out the range of economic factors that the commission is required to take into account when making a recommendation, including changes in earnings, currency exchange rates and income distribution in the period since the previous minimum wage order; whether during that period unemployment, employment and productivity have been increasing or decreasing, both generally and in the sectors most affected by the making of an order; international comparisons, particularly with Great Britain and Northern Ireland; the need for job creation; and the likely effect that any proposed order will have on levels of employment and unemployment, the cost of living, and national competitiveness.
Section 5 also provides that the commission may be requested by the Minister to examine and report on such matters related generally to the functions of the commission under the Act. In addition, the commission will be required to report every three years on the general operation of the Act. The commission will be required to consult with employers and employees when preparing reports under section 5.
Section 6 provides that the Minister will, within three months of receiving a recommendation from the commission, make an order in the terms recommended, make an order in other terms, or decline to make an order. The Minister will be required to lay a statement before both Houses of the Oireachtas setting out the basis for any rejection or variation of a recommendation. If the commission fails to make a recommendation on the national minimum hourly rate, the Minister may, having had regard to the economic factors specified in the legislation, make an order in relation to the matter.
Section 7 provides that the Minister shall advance to the commission out of moneys provided by the Oireachtas such amount or amounts as the Minister may, with the consent of the Minister for Public Expenditure and Reform, determine for the purposes of expenditure by the commission in the performance of its functions. Section 7 also provides that the Minister shall make available to the commission such officers of the Minister and reasonable facilities and services as the Minister, after consultation with the commission, may determine.
Section 8 provides for a number of technical amendments to the principal Act. Section 9 provides for the repeal of sections 11, 12 and 13 of the principal Act. Section 10 provides for the Short Title, collective citation and construction provisions of the Bill.
The new Schedule provides that the commission will be a nine-member body, comprising an independent chairman, three members who will have an understanding of the interests of low-paid workers, three members who will have an understanding of the interests of employers, particularly small to medium-sized employers and those operating in traditionally low-pay sectors, and two members who will have relevant knowledge or expertise in relation to economics, labour market economics, statistics or employment law. The Schedule also provides that the Minister shall, in so far as is practicable, endeavour to ensure that among the members there is an equitable balance between men and women.
The term of office of its members will be three years. Members may serve two consecutive terms of office and will be eligible for reappointment after a break. The Schedule also includes standard provisions dealing with resignation and termination, disqualification, remuneration and other terms and conditions of office, appearance by the chairman before a committee of either House of the Oireachtas, and the regulation of its own procedures by the commission.
As I have said, throughout the crisis the Government has been committed to maintaining employment rights and protecting the most vulnerable workers. Where changes have been made or new legislation introduced, it has been to improve employment rights. On low pay alone, one of the first actions of this Government was to restore the minimum wage to the level it was at before the last Government cut it just before leaving office.
There is now general agreement that this year will be a good year for the economy, for employment, for those in low-paid jobs and for industrial relations reform. In the coming days, I am introducing in the Dáil a companion piece of legislation that makes significant reforms to industrial relations machinery in the fields of registered employment agreements and collective bargaining. We are determined to ensure that the economic recovery continues to strengthen, that employers hire more and more full-time workers and that the low paid in particular will share in the economic recovery.
That is what this Bill is about - fixing a minimum wage that assists as many low-paid workers as possible without threatening jobs or the economy. I believe setting up the Low Pay Commission is one of the most important policy initiatives taken by any Government in recent years. It is evidence of this Government's commitment to making dignity at work a reality.
In conclusion, during the crisis we remained committed to maintaining employment rights and protecting the most vulnerable. Our aim in Government now is to continue towards a balanced economic recovery. That means jobs growth in the regions as well as Dublin. It means spreading the recovery to all socio-economic groups, because there is no future for this economy and for our society unless we remain committed to these twin objectives - to sustain the recovery and to share the benefits.
I commend the Bill to the House.
I welcome the Minister of State and thank him for providing a copy of his paper. I endorse what he says. The changes he is proposing, such as the establishment of the Low Pay Commission on a statutory basis, essentially take the politics out of setting the national minimum wage. It is very much in keeping with the dignity at work agenda which he is pursuing and complements work such as the study on zero-hour and low-hour contracts by the University of Limerick, a study which has just come out and on which I have already spoken in the House.
As an employer I like to see myself as someone who speaks both on behalf of employers and of employees. I co-founded Lir Chocolates with Connie Doody in 1987 and my sole reason was to create employment. If I may detract from my skills in this instance, I never had a profit. We had a very serious crisis in Ireland with unemployment at the time - the economy was black in the 1980s. In some areas of the country and in this city we had 40% unemployment. I saw the transformation in a person when they got a job. I saw their self-confidence grow when they realised they were able for a job. Their social interaction improved and it was not just about the money. It was about meeting with other human beings every day and being able to get up out of bed and have somewhere to go every day.
I am different from colleagues in that I will not commit myself to saying what the increase in the minimum wage should be. I do not think the Minister of State referred to this in his speech. He said Fianna Fáil made a mistake in reducing the minimum wage when it did and that the current Government had put it back up. However, one cannot do that with companies as they make their financial plans a year in advance so companies have not allowed for an introduction of the minimum wage now. They have already done their deals with the people to whom they are selling their products. I am all for an increase in the minimum wage but I am not at all sure what it should be. I totally believe it has to be increased but it has to be timed for when it suits those people who employ other people.
Fianna Fáil's introduction of the minimum wage in 2000, which gave all employees a legal entitlement to the wage, was positive and I went to Mary Harney to congratulate her on that achievement as I am convinced there has to be a legal minimum wage. However, because of the lack of businesspeople in Government we increased it every year. In 2000, Germany and Ireland were parallel in terms of wages but over the next seven years ours went up so much relative to Germany that we lost our competitiveness. The reason I speak on behalf of employers as well is that once one decides to increase a minimum wage it has to be done in a planned way.If it is increased by €1, the person above the minimum wage will also want an increase. I heard no reference in the Minister of State's speech to this. I am not criticising him, as he is on the right track and his heart is in the right place, but he must allow for other employees who want an increase in their wages. This was not mentioned in his speech.
Although I complimented Ms Mary Harney at the time, the then Government increased the minimum wage every year, so everyone else wanted a wage increase. One cannot do that to businesses. I am supportive of a minimum wage, but we must do this in a planned way so that companies can plan their business. They cannot just do this or that willy-nilly. This will change their pricing structures. I spoke to a business person this morning who told me that she would have to increase her prices. So what? Increase them if necessary.
This must be done thoughtfully. The Minister of State's sentiments are good and he mentioned that this would be assessed every year, but that assessment must be done carefully. Our economy's ethos must be to provide sustainable jobs. The dignity of workers is No. 1 in terms of people's self-confidence and reaching their full potential.
I laud the appointment of Dr. Donal de Buitléir as chairperson of the low pay commission. He is a man of integrity and practical common sense. However, I would have liked to have seen more business people involved. There is Mr. Vincent Jennings and the CEO of the Maxol Group, who is quite a big shot and does not quite represent the small and medium-sized enterprises, SMEs, that we are discussing and that are creating employment. I do not know what employment the Maxol Group has created. He is president of IBEC and so on, but I would have liked to have seen a group that was more representative of the SMEs that are attempting to grow, increase their sales and, thereby, create employment. They are at the coalface of job creation. More jobs are created in new businesses than anywhere else, which the Minister of State knows as well as I do. I am speaking from the point of view of human dignity. Having a job is the most important factor for any human being. Anyone who can get up and go to work everyday will survive the trials and tribulations of life.
My hero in all of this is Seán Lemass. He had the guts to turn from protectionism and change his mind. This was because he was a businessman and was not afraid. Governments introduce policies, carve them in stone and are terrified to change them in case they seem like mistakes. If one is in business, one must adapt plans as one goes. It is about changing and not carving any policy in stone.
I commend the Minister of State, of whom I am a fan. I will put a couple of further points on the record that can help.
Fianna Fáil believes that the Government should examine employer PRSI for those on low pay and consider giving businesses compliant with the national minimum wage increased incentives such as temporary PRSI reductions. In the UK, employers have been given a reduction in their social security contributions through the recent increases in the apprentice national minimum wage rate. The National Competitiveness Council, NCC, of which I am a fan, made a number of recommendations on labour cost competitiveness in its 2014 annual report. It stated that the Irish low pay commission should consider enhancing "labour cost competitiveness through reform of income taxes, changes to the PRSI structure for lower paid workers..." These are the other ways of increasing the standard of living for low-paid workers.
I welcome the Minister of State. I am representing Senator Naughton in this debate. This legislation is welcome. Under the National Minimum Wage Act 2000, there are three ways in which the minimum wage can be set: following a recommendation in a national agreement under section 12; in the absence of such a recommendation, following an examination and recommendation by the Labour Court on foot of a request by a substantially representative organisation of employees or employers under section 13; or unilaterally by the Minister under section 11 regardless of whether a recommendation under section 12 or 13 has been made. This methodology was, and is, not a proper mechanism for the adjustment of the national minimum wage. As the ESRI some time ago concluded, adjusting the minimum wage by a substantial amount on an irregular basis, with lengthy gaps between increases as happened in the past, is more likely to have a detrimental impact on employment and to contribute to uncertainty for employers and actual and potential employees than regular, smaller and fairly predictable upratings.
Given this finding, the proposed legislation and the consequential establishment of the commission is the way forward. In this way, we can have reasoned analysis of the costs of employment, its trends and the pros and cons of any proposed increase.
While I am supportive of the legislation, I wish to raise a few related issues with the Minister of State. The UN's recent global wage report revealed Ireland's high wage rate in comparison with the rest of the world. Ireland came fourth behind Australia, Switzerland and Denmark for hourly rates in the manufacturing industry, for instance. While this might not directly relate to the minimum wage, it is a cause for concern. We are not as competitive as we might be, which has led to some of our problems. Senator White referred to how losing our competitiveness posed a major challenge prior to the recession.
According to a recent report from the NCC, while the country's cost base had "improved significantly" since 2009, much of the recent change had come from factors outside our control. It cited the weak euro, record low ECB interest rates and cheap oil prices as driving down business costs across the eurozone. However, the Costs of Doing Business in Ireland 2015 report stated that new pressures were emerging, for example, rising property prices and calls for wage increases, that could jeopardise the ability of companies to compete internationally and create jobs.
Despite improvements, Ireland remains a high-cost location - the third highest in the EU - for consumer goods and services. With a net minimum wage of €7.49 after tax, the statutory rate being €8.65, Ireland is the fourth highest in the table of OECD countries behind Australia, Luxembourg and Belgium, whose rates range from €8.44 to €7.58. In these circumstances, we must be prudent when raising expectations. Through the public's perseverance and the hard work of business owners, our economy is on the up. We cannot jeopardise that with the "something for everyone" economic policies favoured by previous Governments. All evidence suggests that any immediate sharp jump in the minimum wage would be counterproductive. Careful consideration and small, regular increases are required so as to maintain competitiveness and ensure that employers know what to expect and are able to plan accordingly.
I am not against an increase in the minimum wage, as it is warranted. However, it cannot be an increase in large percentage terms, as that would effectively make employing our young people in particular prohibitively expensive. The Government has proposed a way forward, namely, an expert body that will conduct a review of the employment situation, consider the positives and negatives and make rational proposals. This legislation needs to be implemented by a Government that is fiscally responsible and will not bow to every pressure group, concede to demands and contribute to wrecking the economy.
I should put on the record the fact that I am an employer. I am concerned that SMEs have taken extra hits over and above what everyone else has endured in recent years. Speaking as an employer, family income supports and supplements may need to be examined as part of the minimum wage concept and how we support families. I know people working in factories who are in receipt of substantial incomes and people working in the public service who are in receipt of family income supplement, FIS. This is how the Government can help with the minimum wage situation. We need to take a balanced approach.Above all, we have to ensure that working individuals and families are given a fair and decent wage for the work they do. It must be a wage they can survive on, because they have been faced with a lot of extra costs over the past couple of years.
In general, I welcome the initiative and I will support the legislation. However, let us have a good and comprehensive look at it. While Senator White may go on a little, as an employer, I feel that what she says makes a lot of sense. We had a company that fell over in 2011; we had one or two employees then, and we now have seven. At the end of the day, we cannot get an increase for the product we sell at the far end, so we have to be very careful. At €8.65, a €1 increase is effectively a 10% increase in the wage base. If companies were to face that kind of cost without having supports coming from the other side, a lot of companies could be very easily tipped over the cliff.
I welcome the Minister of State to the House. I give a cautious welcome to this Bill, although I have some concerns and reservations about it and about the establishment of the commission itself, which I will articulate. Obviously, however, any measure that will hopefully put money into the pockets of low-paid workers is something I would wholeheartedly support.
We heard from the first speakers about the plight of businesses. I fully accept that we have to be conscious of the impact of any decisions we take on businesses, particularly small and medium-sized businesses. While I am not an employer, some people in my family are, and I know the pressures that many small and medium-sized businesses are under. In fact, I know many small entrepreneurs who themselves work for less than the minimum wage simply to keep the door open. That is the reality. Obviously, we have to be conscious of where business is at. However, I have listened very closely to many of the employer organisations over recent months on this issue, and they have been critical of anybody who has called for an increase in the minimum wage. They do not seem to be in favour of any increase in wages, except for middle and higher income earners. When it comes to low-paid workers, they do not seem to want to face up to the reality at all. For me, that is a problem.
The prevalence of low-paid, insecure work is a serious societal problem that is hindering economic growth and exacerbating inequality. Ireland has one of the highest rates of low pay in the OECD and of under-employment in the 28 members of the eurozone. The number of people in part-time work has increased by 13% since 2007, and the increasing use of zero-hour and low-hour contracts by employers, particularly in the areas of health, retail and the services sectors, has become a real problem.
The bottom line is that the legislation underpinning the work of the Low Pay Commission as presented renders it not fit for purpose. It appears that the Labour Party has learned none of the lessons of its sister organisation in Britain, which supports important reforms of the Low Pay Commission in Britain. I ask the Minister of State to take a serious look at that. I am a member of the Oireachtas Joint Committee on Jobs, Enterprise and Innovation, in which I am the rapporteur for a report on low pay, which, by the way, goes beyond the minimum wage. Some 5% of workers in this State are on the minimum wage, but 20% of all workers in this State are on low pay, according to reports from EUROSTAT, the OECD, the CSO, TASC and many others. That is one in five workers. The Low Pay Commission, or the low pay and minimum wage commission, which is what it is, only looks at the minimum wage and does not deal with low pay in its entirety.
The Labour Party tells us it wants to take politics out of setting the minimum wage. This is precisely the problem. The party's election manifesto from 2011 states that wage competitiveness should not be confused with a low wage agenda, yet this is the very agenda it is now pursuing in government. The Minister of State tells us that he can take no action on zero-hour contracts until he has gathered sufficient evidence of their existence. The truth is that the Government could and should have used the CSO to collect the data as part of the quarterly national household survey, which is what is now done in Britain. That is what could have been done, and the Government would then have had the data, rather than saying it does not have it.
The Tánaiste, Deputy Joan Burton, has said: “The Low Pay Commission represents the next step in the Government prioritising work and fairness as the economic recovery takes hold." We heard some of that from the Minister of State today as well. Yet the work of the commission is limited to the national minimum wage, which affects just under 5% of workers. We know the prevalence of low-paid work is much higher than that. The establishment of the national minimum wage commission is a political decision in that the Bill itself provides that the Minister can accept, reject or vary the recommendations of the commission.
The Government's use of State-sponsored bodies as a mechanism by which it can wash its hands of responsibility for policy and political decisions is completely disingenuous and fools no one. I very much hope the Low Pay Commission does not become the HSE of low pay. We have seen over and over again that Ministers for Health from today and previous days have washed their hands of responsibility. Any criticisms or questions about health service delivery were referred to the HSE. Only last week, we tabled questions in regard to how much it will cost for the State to become a living wage employer, but the Government was not in a position to provide that data. What did it say in the parliamentary response? It said it was now a matter for the Low Pay Commission. Already we can see the passing of the buck in this regard, and we are going to see more. It will be said that we cannot do anything about low pay, and we cannot do this that or the other, because that is a matter for the Low Pay Commission. That is taking politics out of it. It means the Government is not taking the decisions that should be taken. In reality, all of the data and evidence is there - I have mentioned the EUROSTAT report, the OECD report, the CSO report and the TASC report on economic inequality in this State. What has been lacking is the political will from this Government to do anything to support low-paid workers. Here it is, at the 11th hour, in its last year in government, establishing the Low Pay Commission, in reality to give the Labour Party cover going into an election in that it can say it has done something or is doing something for low pay. It is not going to save one Labour neck in the next election - that is for sure - but hopefully it might do something in regard to the national minium wage, which is essentially what it is confined to.
I have a lot more to say about the Bill itself. Unfortunately, we do not have the same time to scrutinise Bills here in the Seanad as Members do in the Dáil. However, we will have Committee Stage, during which my party will be tabling several amendments to the Bill. We will try to make the Low Pay Commission a commission that can genuinely deal with low pay in its entirety and actually learn the lessons of other models and other commissions which are working more effectively because they have changed the nature of their work in order that they can examine not just the minimum wage but also low pay in its entirety.
I give the Bill a cautious welcome, despite the fact that I have reservations. I accept that it is a step in the right direction. However, I also have genuine concerns, which I will articulate on Committee Stage.
I welcome the Minister of State and compliment him on this initiative. The Low Pay Commission will prioritise work and fairness as the economy improves. Employment is rising rapidly and unemployment is falling. As the Minister of State pointed out, more than 100,000 jobs have been created since the crisis, which is 3,300 jobs every month, and unemployment is now below 10%, at 9.9%. Long-term unemployment is also falling and is down to 9%.
Having a job is the best protector against poverty, but key to that are fair wages and conditions. The Low Pay Commission represents an excellent example of how we can achieve both. We have done a lot to get job seekers back to employment, education and training. It is important that we now get our people to work and get them work that pays fairly.
The State supports many families on low pay through the family income supplement, on which we spend €280 million a year supporting 50,000 families. We also have the back to work family dividend, which is a new initiative by the Labour Party whereby the child dependent allowance of approximately €30 per child can now be made payable to somebody who takes up work for the first time. With a family of three, that amounts to €7,000 per year for that family.
However, social welfare is not the answer to our problems, and we must aim higher. If we are interested in long-term solutions, it is crucial that we start looking at why there are jobs that simply do not pay enough to cover the basic cost of living, as it is essential that working families can stay ahead of the basic cost of living.It is essential that working families can stay ahead of basic cost of living expenses. Let us remember that we increased the minimum wage when we were in government. The purpose of the Low Pay Commission, comprising those who represent the views of employers and employees, is to take on board the views of the working people. I certainly believe that it will work.
I welcome the Minister of State with responsibility for business and employment, Deputy Gerald Nash, to the House. I am happy to see the Bill come before the House.
Income poverty is a term I had never heard until after the financial collapse. We live in a country where people who are working still cannot cover their costs. Will the National Minimum Wage (Low Pay Commission) Bill 2015 be able to address that? I fear it will not. When we discuss fair wages and conditions, we hear Members speak about their concerns for employers. I hope they will forgive me if I show little concern for employers, particularly those employers who cut the hours of their workers as they rise up the incremental scale in order to ensure that the net amount paid to the worker does not change. I totally agree that some small businesses have struggled to meet the salaries of their staff, but it is not true to say that all employers suffered that.
The issue of income poverty will not be dealt with by this Bill, which is a matter of concern. There is a section that talks about progressive increases. These progressive increases cannot be associated with some form of reduction in working hours. The zero-hour contract still exists and something must be done about it. I appreciate that it will not be dealt with in this Bill.
I am concerned about section 10C(3)(e), which refers to job creation and levels of employment and unemployment. This provides a gateway for the commission or the Minister to seek to reduce the minimum wage because the level of unemployment is rising or the numbers at work are falling, as the case may be, or in order to generate jobs. I reject Senator White's suggestion that if people at the bottom of the scale get a euro, everybody else will want a euro. If there is a proper incremental scale, then everybody knows that when he or she is entitled to the increment it will be paid.
There is no doubt that the issue of PRSI must be dealt with. I do not believe the Bill we are discussing can deal with the issue. I have great sympathy for the self-employed whose businesses are going to the wall for one reason or another but who find they do not qualify for any benefit, having paid massive sums into the PRSI fund. That is an issue that we will have to consider. We also have to consider the dreaded class K PRSI rate, which is nothing but a tax. Who would buy insurance if they were not to receive any benefit from it? It is a nonsense and it must be dealt with.
I am delighted to see that the trade union movement is represented on the board. I am also delighted to see that we have immigrants represented on the board, but I would love if we picked some poor unfortunate who is on the scratcher and is living on social welfare, or is at the bottom of the scale in one of the retail outlets, and put them on the board. They would bring the true story of what it is like to live on the scratcher or on the minimum wage. The trade union movement will do a good job. The economists will be ethically neutral, but I would have some concern that employers will not practise ethical neutrality.
I congratulate the Minister of State on the introduction of the Bill, but I do not want to see the Government trying to sell it as some form of revolution in looking after the low-paid in this country. It will not solve that problem. I will table amendments to the Bill.
I welcome the Minister of State, Deputy Gerald Nash, to the House. His commitment to lower paid workers is acknowledged. We of course welcome the establishment of the Low Pay Commission. In a recent submission, we recommended increasing the national minimum wage by 55% to bring it up to €9.20 per hour, representing an increase of more than €1,000 per annum. The reduction in the minimum wage at a time of severe national and international crisis was obviously a mistake in retrospect, and not only because of the impact it had on those who were relying on the minimum wage, for whom an extra euro per hour would have been a life saver. Of course we acknowledge that was a mistake, but hindsight is wonderful. However, it was the Fianna Fáil Party that introduced legislation back in 2000 and that, in its period of office, progressively increased the national minimum wage six times between 2000 and 2007, from €5.58 to €8.65 per hour. Our credibility in this area should not be questioned because of one decision taken at a time of major national emergency.
We have made several recommendations in our submission, including a recommendation that the rise in the national minimum wage should be greater than inflation since 2007. Our suggested increase has been carefully balanced against any adverse effect on national employment and competitiveness. We believe the priority is to focus on the pay and job security of those who are in low-paid employment. Priority must be given to supporting those on low and middle incomes who are finding it hard to meet their weekly financial commitments. We believe there is no unanimity in Government on this. Although, as I stated at the outset, the Minister of State, Deputy Nash, and his colleagues in the Labour Party cannot be faulted on their commitment to the increase in the hourly rate, I am not sure that their opposite numbers in the Fine Gael Party share the same enthusiasm. The Minister for Finance, Deputy Noonan, and the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, have warned of the risks if the rate is increased, while the Tánaiste has talked about the introduction of a living wage. The Minister of State is on record as saying he favours increasing the minimum wage.
I take the point made by Senator Craughwell that, looking at the composition of the board of the Low Pay Commission, it seems to follow the pattern of appointments to commissions whereby the board members come from the worlds of academia, business and trade unions, which is right and proper in its own way because they all bring a certain level of expertise to the table. However, in the context of the Low Pay Commission, which is considering those who are most vulnerable in our workforce, it would seem that the inclusion of a person to represent those who have gone through the rigours of the economic crisis for the past six or seven years would be appropriate - for example, an employer who had to lay people off and had to struggle on a daily basis to make his or her business work, who now may not have that business and may be doing something else. Entrepreneurs tend to bounce back. In America the mark of success is how many bankruptcies one has had, whereas in Ireland, until recent years, bankruptcy was seen as a sign of failure and bankrupt people were written off. How many instances have there been of people who have bounced back? May I suggest that, if the occasion arises, we consider appointing to the board a person who has worked at the coalface?
Those who have been appointed to the Low Pay Commission include the chief executive officer of the Convenience Stores and Newsagents Association, a director from HR & Business Solutions, and the chief executive of the Maxol Group, who is also the president of IBEC. I do not see somebody who might be able to bring a particular expertise on the specific area of low pay. I hope the Minister of State will indicate that during the deliberations on the submissions, account will be taken of those who have gone through the most difficult period of our nation's economic history.
We welcome the establishment of the Low Pay Commission. I, too, hope the Low Pay Commission will take cognisance of the modalities and operational procedures of other low pay commissions, particularly the commission established in 1997 by our near neighbour, which has introduced reforms.I hope the Government takes that into account.
I thank Senators for their constructive contributions and welcome the general expression of support voiced for many objectives of the proposed legislation. Setting up the statutory Low Pay Commission is, as Senator White said, designed to take much of the politics out of the setting of the minimum wage. I was very pleased with the high calibre of people appointed to the commission on an interim basis. The commission was launched on 26 February and currently operates on an interim, non-statutory basis. The enactment of the Bill will underpin its first recommendation of a new minimum wage by the middle of July.
I wish to address the concerns of Senator Mooney and others. We decided, quite correctly, to engage the services of the Public Appointments Service to hold an open and transparent competition for members of the commission. We can say with great certainty that the members who have been selected and have gone through that process have a lot of experience-----
-----representing the SME sector and are SME owners. People in trade unions and civil society have spent their entire working lives and, in some cases in voluntary capacities, representing the interests of working people. In many cases, they represented the interests of working people at the margins and those working in sectors of the economy associated with low pay. I can assure the House that not only will the commission sit behind desks, assiduously analysing detailed economic and statistical data, but it will also be obliged to engage on a face-to-face level with employers and people working in low paid sectors of the economy across the country to understand the lived experience of managing a business in a low paid sector of the economy and those associated with sectors of the economy that may be synonymous with low pay or difficult sectors. It will engage at that level with people who are working, merely to exist on very low wages in those sectors. It is important that it also considers the lived experience, and not just hard statistical data. I have asked it to do so and it is clear from its modus operandithat is what it will do and what it has been doing over the past few weeks since the establishment of the commission on an interim basis.
The establishment of the commission is a very important Government commitment and is part of our dignity at work agenda. I thank Senator White for her comments. We are at one on that. As I said, it complements the work being undertaken in a number of other areas, including the study on zero-hour and low-hour contracts, and I expect that report to be completed in the third quarter and delivered to me. I look forward to considering its findings because in many ways it will be seen as a companion piece to this Bill.
Where the evidence points to adjustments being required in legislation and regulations to enhance the protections already in place in employment law, we will bring those recommendations forward for consideration by the Government. We will take action. We always have to be aware of the need to balance fair pay with sustainable pay.
I appreciate the concerns expressed by Members. The Low Pay Commission is designed in such a way so as to make sure that we approach this entire project on an objective and evidence-based basis and try to balance the needs of SMEs that want to create quality jobs with the need to make sure that work always pays. That is something that we can achieve and which has been achieved elsewhere, and I am confident that we can do that.
What we will not do is preside over an economic recovery which involves a ruthless race to the bottom. We will not engage in a situation where anybody is expected to sacrifice the hard-won economic and social rights that have been achieved by each and every party represented in this House since the foundation of the State. I make no apologies for saying that, as economic recovery takes hold and unemployment continues to fall, we expect to see the benefits of that recovery impacting on the lives of everyone across the country, regardless of the jobs people have or their aspirations.
We want to see better working conditions for people and improved pay, particularly for low-paid workers. The Low Pay Commission can assist in providing the institutional framework to ensure that happens. The reality is that we are all winners, and society in general wins, when we move people out of poverty by providing decent jobs. Of course, industry cannot prosper without consumers who are in a position to buy the products that industry produces and they have to be willing and able to pay for the goods and services that our business community provides.
I want to put on the record of the House something I have said publicly time and again. I want to see the national minimum wage increased progressively, where the economic circumstances and the demands of job creation and social conditions and requirements converge. As I have said throughout the crisis, the Government has been committed to maintaining employment rights and protecting the most vulnerable of workers. Where changes have been made they have been positive. In fact, we are one of the few democracies across the developed world which, during and after the great recession, took the opportunity to enhance employment rights, legislation and regulation. That is quite unique and stands to us as a society and State.
We re-established the joint labour committee system. I am now in the process of bringing forward legislation in a matter of days to introduce enhanced collective bargaining rights in this country and re-establish a constitutionally robust registered employment agreement system which, as we all know, is of particular interest to workers in certain sectors of the economy and companies that are quite topical.
We have clearly demonstrated our commitment to the well-being of lower paid workers, in terms of the suite of additional legislative protections we have or intend to introduce. Having returned the economy to sustainable economic growth through the Action Plan for Jobs and Pathways to Work, we want to make sure that the economic recovery is felt by everyone in our society. It is clear that the Government is succeeding in turning around the economy and improving the lives of citizens. I mentioned earlier that for the first time since 2008, unemployment is now less than 10%, at about 9.9%. It will fall further and I expect and hope to see that we could get the level of unemployment down to about 9% or lower by the end of this year. That would be a great credit to industry in the economy, society in general and some of the initiatives we have taken as a Government to make sure that we have a strong, sustainable and progressive economy.
I will turn to issues raised by Members. I thank Senator White for her well-informed remarks. She comes at this from the perspective of a business owner and somebody who is concerned about the situation in which low-paid workers often find themselves. I welcome her remarks.
I take on board the remarks of Senator Mulcahy on how we need to be responsible in terms of any adjustments that may be made to the national minimum wage and be acutely aware of the needs of business and its ability to create good, decent, quality and sustainable jobs. This is, fundamentally, what the Low Pay Commission is about, namely, having a balanced, evidence-based approach.
Senator Cullinane made some remarks, many of which I do not intend to address in his absence. However, I appreciate the concerns he raised about the SME sector. SME owners are often, as I know from my previous experience, the last people to get paid in any organisation, if they get paid at all. We need to be very conscious of that. The number of part-time workers in the country is reducing quite radically, which might be a picture the Senator and his party are not prepared to accept because it does not necessarily fit in with his particular narrative of how our economy operates and progresses, and how we are constantly adding good full-time jobs to the economy.
I will not take any lectures from the Sinn Féin Party about this Government's approach to the low-paid. Many trade union officials who are based in the Republic of Ireland, but have a mandate for Northern Ireland as well, have said in recent weeks that Northern Ireland is a low-pay economy.No action whatsoever has been taken by Senator Cullinane's party in recent times to protect or further the interests of the low paid. That compares very poorly with the record of this Government and many people in this House and in the other House in terms of their actual and real commitment to improving the lives of people who are merely existing on low pay. The Sinn Féin Party has done nothing whatsoever in Northern Ireland to protect the interests of the low paid, other than make cynical statements, and used them as cheap electoral fodder. In fact, the issue of low pay is quite pronounced in Northern Ireland and we have seen no action whatsoever from that Administration which has the Sinn Féin Party at its centre. I take Senator Cullinane’s words and those of his party with a very large pinch of salt.
Senator Craughwell contributed to the Bill. There is an ambition in the Bill to adjust the national minimum wage incrementally upwards over time, but it is correct that it needs to be grounded in economic reality, and taking into account the challenge we have in terms of creating jobs and ensuring that we remain competitive, among other factors. I am not someone who believes competitiveness is what it is all about. I object to those who use competitiveness as the primary reason not to increase wages. There is a very strong basis for those of us who believe that wages should be increased to continue to say it and to back it up with evidence in the future as we return to more normal economic activity and as the economic recovery beds down.
I have taken issue, and will continue to do so, with statements made by some representatives of business organisations who appear to be against the concept of a national minimum wage in the first place. That is not representative of all such organisations. People are entitled to their opinion. I recall a conversation I had recently with a senior figure in the Confederation of British Industry who told me that when the Low Pay Commission was established in the late 1990s in the UK, the view of some of his member organisations was that the sky would fall down, that it would be terrible and competitiveness would be adversely affected. In fact, one now finds that the business representative and the trade union representatives on the Low Pay Commission are extremely proprietorial about their membership of the commission and defend their independence from Government vehemently. They have seen the benefits in terms of economic planning and business planning of frequent adjustments to the national minimum wage. Such an approach allows businesses to plan properly and also allows the State to plan. What we have is a situation where we will enshrine in law a date each year by which the Low Pay Commission will have to return its recommendation to the Minister of the day. We specify 15 July and that will ensure the Department of Finance, the Department of Public Expenditure and Reform and the Department of Social Protection prepare their Estimates in advance of the budget that any adjustments made are done in such a way that they do not conflict with either the social welfare system or the tax system.
Senator Craughwell outlined his concern that the change might not impact in too positive a way in terms of people who are living in poverty and are surviving. He stated that it is not a revolution. It is not, but where we get strong, sustainable change is by reforming our institutions in this democracy. That is what we are doing. That is why I have said, time and again, that this is one of the most important initiatives taken by any Government in recent years. The Government is serious about trying to address the systemic issues concerning low pay in this country, including intergenerational issues with low pay and poverty. The best way to address the issue is by bringing the social partners and experts together to work with the Government to try to address all of the very complex issues involved in low pay.
It is wrong of Senator Cullinane to continue to trot out the nonsense that the Low Pay Commission is simply about revising, adjusting or examining the national minimum wage each year. It is about much more than that. We set up the Low Pay Commission on an interim basis in February and it takes time to address issues concerning a recommendation for the national minimum wage. The organisation is in its infancy at the moment. We are now setting it up on a statutory basis. To a large extent, that is what this Bill is about. It is certainly about much more than the national minimum wage. We will ask the Low Pay Commission to do other work in the future to address areas about which we are all concerned and to advise the Government in an expert and evidence-based way about the best approaches to take right across the Government to ensure that work always pays, that people have dignity at work and that those in work do not rely on continual State support from the taxpayer. Anybody who works hard for a living is entitled to a decent week’s pay for a decent week’s work. I welcome the contributions from colleagues in the Seanad. I look forward to their contributions at further stages of the legislative process. The Bill is very legislation that can have a transformational impact on people who are currently living on low pay. It will be an important institutional reform for vulnerable workers in society.