Wednesday, 16 October 2019
Nithe i dtosach suíonna - Commencement Matters
National Minimum Wage
Last week we learned through the media that the Government planned to defer the planned 30 cent an hour increase to the minimum wage. The Government has not just postponed the planned increase to the national minimum wage, it has, in fact, cancelled it for at least another year. Under the National Minimum Wage (Low Pay Commission) Act 2015, the Government can either accept the recommendation made by the Low Pay Commission and make an order giving effect to the commission's recommendation within three months of receiving the report, or the Government can decline to make an order.
It turns out that the Minister, Deputy Regina Doherty, declined to make an order. On that basis she lodged what is known as a statement of reasons before these Houses, literally in the dark of night on 9 October, the day after the budget when the Government was furiously spinning that the 30 cent an hour increase to the minimum wage due in January 2020 was merely being delayed. It has not been deferred, postponed or put off until another day; it has been cancelled. I appreciate this is not the brief of the Minister of State, Deputy Phelan, I ask him not to insult the intelligence of Members of this House by stating otherwise. This increase has not been deferred; it has been cancelled.
The Minister's functions under the Act have now been exhausted for another year. The statement lodged on 9 October states "the Minister for Employment Affairs and Social Protection has declined to make an order declaring the national minimum hourly rate of pay until the situation with respect to Brexit becomes clearer." In real terms this means there will be no change to the national minimum wage until at least the next Low Pay Commission report which in law is not due to be delivered until next July. The Act does not permit the Minister to postpone an increase as she has described. By declining to make an order to effect the increase, the Government has actually binned the planned rise. There is now no opportunity in law for the rate to be increased between now and 1 January 2021, more than a year away.
As a result of the Government's actions, the lowest-paid workers will forgo an increase in their wages for 2020 and will see no change in their pay packets until at least 1 January 2021. This is dreadful sleight of hand and a massive kick in the teeth for the lowest-paid workers.The reality is that Brexit has been used as an excuse to hammer the very people who are most exposed to high food prices, energy bills and so on as inflation climbs, regardless of the effects of a possible crash-out Brexit. These people will be at the rough end of a no-deal Brexit and the Government has not accepted, as the Government amendment to the motion on a living wage in the Dáil stated, the recommendations of the Low Pay Commission report in full. That is manifestly untrue. The Government did anything but that. The Government accepted a minority view, expressed by three business members of the commission to in effect reject any increase at all. The Government has taken the extraordinary step of dumping the official recommendations of the commission. I hope I do not need to remind the Minister of State that this is a statutory body set up to advise Government on issues to do with low pay. The Government is in very dangerous territory when it goes about its business in that way and sets the precedent of accepting minority reports rather than the expert and formal view of the full commission. Let me remind the Minister of State before he responds. The Government spinning about cancelling and or deferring the commission's proposed increase is outrageous. It is not a deferral; it is a cancellation because the Minister does not have a capacity in law to defer or postpone an increase. The reality is that it will be 1 January 2021 at the earliest when the lowest paid workers in Ireland can expect an increase in their modest pay packets.
I thank the Senator for raising this matter. The national minimum wage is the legally binding, lowest average hourly rate that can be paid by an employer to an employee. This 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, which makes recommendations each year regarding the national minimum wage to the Minister for Employment Affairs and Social Protection. Since the establishment of the commission, the Government has accepted all the recommendations it has made for the national minimum wage. Since 2015, therefore, the national minimum wage has increased by 13.3%. The most recent figures published by EUROSTAT for January 2019 show that Ireland has the second highest national minimum wage of any country in the EU at €1,656.2 cent per month, behind only Luxembourg whose minimum wage is €2,071 per month. Allowing for technical adjustments to reflect purchasing power standards, Ireland drops to sixth place, but still remains in the group with the highest minimum wage rates in the EU.
The Department of Employment Affairs and Social Protection has a number of in-work supports for low income families. The working family payment provides support for employees with families who have low earnings in relation to their family size. It is currently paid to more than 54,000 families in respect of more then 122,000 children. In the Budget Statement 2020, the thresholds for the working family payment were increased by €10 for one to three-child families. The back to work family dividend is another in-work support. This scheme aims to help families to move from social welfare into employment. This helps to increase the incomes of families on low incomes. For example, for a two-child family, the working family payment increases after tax income by more than €137 per week, and this will increase to €147 per week under budget 2020 in January 2020. Another important in-work support for low income families delivered by the Department of Employment Affairs and Social Protection is the income disregard on the lone parent-related payments. In budget 2020, the income disregards on one-parent family payment and jobseeker's transitional payment increased by €15 to €165 per week.
It is important to highlight that the 2019 Low Pay Commission report was considered by Government on 7 October 2019. The commission recommended an increase in the national minimum wage of 30 cent to €10.10 an hour on the assumption of an orderly Brexit. The commission made its recommendations on the basis of an orderly Brexit. Since the commission made its recommendation, the political and economic climate surrounding Brexit has changed. The likelihood of a disorderly Brexit is present and, therefore, the economic circumstances have altered and will continue to be uncertain until we get clarity on that matter. In developing its recommendation on the national minimum wage, the commission assesses various economic indicators such as changes in earnings, exchange rates, employment, unemployment, productivity, international minimum wage comparisons, the need for job creation and the likely impact of the national minimum wage changes on levels of employment, cost of living, and national competitiveness. Various economic commentators, both in Ireland and overseas, have highlighted that any form of Brexit has the potential to impact negatively on the economy. This is the controversial line. The Government has accepted the recommendations of the commission; however, given that the terms of Brexit are yet to be finalised, the Government has decided that a decision on the date of implementation will be made when the outcome of the Brexit negotiations becomes clearer.
I am not an expert on employment law, unlike Senator Nash. I am not sure that the Low Pay Commission is specifically precluded from re-entering its proposals once there is clarity on Brexit. I know there is an annual report, but it is written into the Low Pay Commission legislation that it cannot re-enter if circumstances materially change. I understand the point the Senator is making about the report, which is drawn up annually. The Government's position in the Budget Statement was clear that there were going to be no significant tax or expenditure changes in the context of the more likely circumstances of a disorderly Brexit. I bow to the Senator's expertise in the area. I will ask the Minister to revert directly to him to see if the findings of that report can be re-entered to Government, as I am not sure that the commission is strictly prohibited from doing so.
The National Minimum Wage (Low Pay Commission) Act 2015 makes it clear that there is essentially one annual opportunity to do this. The reason that we set up the commission in the first place was to take the politics out of setting of the national minimum wage and to make sure that work always pays. The reality is - and 150,000 of the lowest paid workers in Ireland know this from the harsh experience - that when the latest recession hit, the first victims of Fianna Fáil were those on the national minimum wage. By reducing the national minimum wage by €1 an hour, it did not create one single job or save one single business. Under the legislation, the Low Pay Commission gets one opportunity a year and the Minister gets one opportunity a year to make an order in respect of the setting of the rate of the national minimum wage. The commission report this year made no reference whatsoever to deferral; it understood and accepted that the Government may need to review. A review is different from a deferral. The Minister does not have the capacity in law to make a deferral. In essence this is a postponement of any increase to the national minimum wage during the next 13 months or so. The lowest paid workers in Ireland, who are in the firing line should there be a crash-out Brexit, will be most adversely affected because they are on low incomes and they will be impacted by high energy prices, food prices. They will bear the brunt of a crash-out Brexit because the Minister will not allow for an increase in the national minimum wage until at least the time she receives the next annual report from the commission, which will be mid-July 2020 and, therefore, no increase can be expected until 2021. This is not mere semantics. It is very clear in law. The Minister failed to answer the questions put to her last night by my colleague, Deputy Willie Penrose, and did not use the opportunity to respond to his questions. It is disgraceful that a statement would be laid before the Houses, essentially in the dark of night, just a day after the Budget Statement laying out the reason the Minister would, as she said "defer" an increase in the minimum wage. In reality, this is a postponement. It is time that the Minister fronted up and was honest with low paid workers in this country. It is extraordinary that massive packages can be provided to farmers - and I can understand their difficulty in facing the potential of a no-deal Brexit - but it does not seem that the Fine Gael Party cares a jot about the lowest paid workers in this country as evidenced by the sleight of hand relating to the national minimum wage.
I will endeavour to get the Minister to respond directly on the issue of deferral or otherwise.Senator Nash was part of a Government of which I was a member that reversed the decision of the previous Government to reduce the national minimum wage by €1. The Low Pay Commission was established and has resulted in a 13% increase of the minimum wage in the past four years. The Senator's final comments do not stand up to any scrutiny but I agree that there is an issue and I will endeavour to get the Minister to address it directly with him.