Seanad debates

Thursday, 4 July 2019

Nithe i dtosach suíonna - Commencement Matters

Living Wage Implementation

10:30 am

Photo of Fintan WarfieldFintan Warfield (Sinn Fein)
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Yesterday the living wage rose to €12.30 an hour because of the cost of living and the housing crisis. It is a measure designed to ensure people can afford the essentials in life. Those earning below the living wage are forced to do without certain essentials, which affects their nutrition in providing an appropriate diet for their families. That is one of the most important consequences. Companies such as Aldi, Lidl and Ikea, the majority of non-governmental organisations, NGOs, to which I speak and many small and medium-sized enterprises, SMEs, are paying the living wage but the State does not. In budget 2019 it could have brought childcare workers from a minimum entry wage to the living wage at a cost of approximately €15 million. It could have moved public sector and Civil Service workers to the living wage at a cost of €34 million. They are hard-working individuals employed by the State. We learned today, for example, that 1,400 members of the Defence Forces quit last year. In the private sector there are hospitality workers and shop assistants. We could make a real difference to their lives. However, the State, continues to pay workers poverty wages and maintains the status quowhen it comes to low pay. Rather than cutting taxes at a cost of €350 million to the Exchequer and squandering money, the State could have moved to increase wages to the living wage. Workers deserve to be paid fairly. It is not acceptable that tens of thousands of workers have to endure poverty and a low standard of living as a result of low pay. Will the Government reassess its approach to this issue? Will it start to live in the real world by taking steps to put the living wage on a legislative footing?

Photo of Helen McEnteeHelen McEntee (Meath East, Fine Gael)
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We should not confuse the living wage with the national minimum wage. They are very different. The living wage is an estimate made by a number of NGOs and academics who make up the self-appointed living wage technical group. It does not engage with business or many other groups. Its work is based on research to identify the income required to have the minimum essential standard of living by a single adult household in Ireland conducted by the Vincentian Partnership for Social Justice. Achieving the 2019 minimum essential standard of living, as calculated by the group, would require gross earnings of €25,198 for a single person, implying a living wage hourly rate of €12.30 based on a 39 hour week over 52 weeks. This represents an increase of 40 cent on the 2018 living wage of €11.90. The main drivers of the increase are cited as changes in the cost of living and the tax system; however, the main driver of the increase in the living wage is understood to be the current housing market pressures and associated increases in rent levels.It is important that Ireland’s statutory national minimum wage and the living wage concept are not conflated. As a voluntary initiative, the living wage has no legislative basis and confers no statutory entitlement. The national minimum wage, on the other hand, has a legislative basis and confers a statutory entitlement on employees and a statutory obligation on employers. It is the legally binding lowest average hourly rate that can be paid by an employer to an employee. The rate is set and governed by the National Minimum Wage Act 2000 which applies to all employees, including full-time, part-time, temporary and casual employees, with some exceptions.

The National Minimum Wage (Low Pay Commission) Act 2015 established the Low Pay Commission, an independent body which makes recommendations on the national minimum wage to the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty. Since its establishment, the recommendations submitted by the commission have all been accepted by the Government and represent an increase in the national minimum wage of 13.3% since 2015. The national minimum wage has increased every year since the commission was established by Fine Gael and the Labour Party.

With effect from 1 January 2019, the current rate for the national minimum wage is €9.80 per hour. The national minimum wage approach seeks to find a balance between a fair and sustainable rate for low paid workers and one that will not have significant negative consequences for employers and competitiveness. It can be seen as a pragmatic approach, providing a clearly defined minimum hourly rate for employers, giving them the freedom to pay higher rates, while concurrently providing a measure of security for low paid workers. As it is legally enforceable, it provides that protection for workers.

More broadly, the setting of wages is a matter between employers and employees. It takes place in the context of the market. The Government does not and cannot interfere unduly in that process. In the past three years the number of workers earning the national minimum wage has ranged anywhere between 6% and 9% of all employees. On average, over the four quarters of 2018, national minimum wage employees accounted for 7% of all employees. The average number of individuals earning the national minimum wage or less in 2018 as a percentage of the total labour force was 8.5%.

The Government has accepted and implemented the recommendations of the Low Pay Commission in respect of the national minimum wage since the commission was established in 2015 by a Fine Gael and Labour Party Government. A Programme for a Partnership Government provides that the Government will rely on the annual recommendations of the commission. Relying on an independent body such as the Low Pay Commission is the most appropriate approach to take to achieve the right balance and a yearly adjustment to national minimum wage levels. The commission is working on its recommendations for this year and will report to the Minister for Employment Affairs and Social Protection in the coming weeks. Any recommendation the commission makes will be considered by the Government in the context of the upcoming budget.

Photo of Fintan WarfieldFintan Warfield (Sinn Fein)
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The Government can interfere in the market, as that is exactly what the national minimum wage does. Sinn Féin is suggesting the legally binding lowest average hourly rate become the living wage of €12.30 an hour. Whom would it affect the most? The majority on the national minimum wage are women, half of whom are young people, while 25% were born abroad. We can interfere in the market, but in response to a question about the issue yesterday the Taoiseach said it would result in job losses and affect the number of hours of work available. In 2016 the national minimum wage was increased from €8.65 to €9.15 an hour, a 50 cent increase. The Economic and Social Research Institute, ESRI, found that there was no evidence that the increase had led to job losses. It found that there had been no adverse affects on low paid workers and that it had not led to job losses. They are the facts. We need to increase the national minimum wage to the living wage in order that people will be able to afford to live in this city and across the State.

Photo of Helen McEnteeHelen McEntee (Meath East, Fine Gael)
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There is a need to strike a balance. The living wage technical group comprises representatives of NGOs and academics. It does not engage with the business sector. To strike the right balance, that engagement needs to take place. On the basis of engagement, we have made sure the national minimum wage has been increased in the past four years. It has been increased by 13.3%. If a recommendation is made that it be increased this year, I am sure it will be taken on board by the Minister, but we would need to make sure there would be no unintended consequences, as the Taoiseach said yesterday. The Senator rightly pointed to what the Taoiseach had said. If we interfere with the market unduly - in my earlier contribution I spoke about interfering in the market unduly - and increase the national minimum wage above and beyond what has been recommended, we may see people's hours being cut and jobs being lost because it may not be possible for employers to keep them on. We need to be sure we will strike that balance. We need to make sure the lowest paid workers will be given the highest possible wages. It will then be up to employers whether they want to go above and beyond the set national minimum wage. We need to do this within the existing statutory framework which was established in 2015. We will continue to engage with the Low Pay Commission to make sure any recommendation it makes in consultation with all sectors and bodies involved is taken on board.