Vol. 420 No. 7
21 Mr. Finucane asked the Minister for Labour if he will outline his views on whether large scale unemployment has led to a regime of extremely low wages, particularly for young people who are being exploited by employers; and if he will make a statement on the matter.
Pay is an important element in the price of labour and will obviously be affected by demand and supply factors. Unemployment levels, therefore, affect pay but it is difficult to establish the exact relationship as many other factors are involved such as skill levels and the type of labour in demand. Low pay tends to be associated mainly with certain occupational categories, the characteristics of the individuals concerned and particular sectors of industry and services rather than with overall employment levels.
Research on low pay suggests that the bulk of low paid full-time workers are in the categories of unskilled and semi-skilled manual workers, the lower grades in clerical and office employment and general indoor sales staff. Age, length of service and work experience have a major influence on the level of earnings and the sectors referred to are normally associated with high levels of labour turnover. Research also suggests that there is a link between low pay and employment patterns, particularly part-time working, and that this in turn affects mainly women, school leavers and older workers.
It is fair to suggest that high unemployment has some effect on pay levels of young people. Increasing the level of job opportunities available is to the advantage of workers generally. The creation of additional employment and the maintenance of an environment conducive to job creation remain important priority areas of Government policy.
Would the Minister agree that it is not correct to allow the marketplace determine wages especially as surveys have shown it is the unskilled and semi-skilled who suffer from the low wage mentality? Do the Department intend to take steps to provide for a minimum wage so as to eliminate the problem of low wages?
The introduction of a statutory minimum wage is often cited as a solution to the problem of low pay. This tends to ignore the fact that the problem of low pay is much broader than industrial relations or the employment question. So far as the industrial relations aspect is concerned the Department of Labour consider that the best hope for progress in the area of low pay lies in our collective bargaining system operating in conjunction with the joint labour committees.
Will the Minister agree that it is precisely in the areas of greatest concentration of low pay and most vulnerable young workforce — often female — that the collective bargaining mechanism is least in evidence, that the majority of these workers tend not to be organised into trade unions hence the necessity for the measure suggested by Deputy T. Ahearn concerning the introduction of a statutory minimum wage?
I refer to the reply I have given but I would say that a research project seeking to establish the effects of minimum wages in other countries has been carried out for the Department. The research indicated, on the basis of analysis of US and European data, that a minimum wage has a negative employment effect, that the impact is most severe on young workers and on those with low levels of education attainment. It also concludes that two categories of workers benefit from minimum wages: first, workers who retain their jobs and who would otherwise receive a wage below the minimum and, second, those workers on or above minimum wages whose wages increase as a result of the minimum wage. Employment opportunities may also expand for the second type. There is a need to ensure greater social equity and this was specifically recognised in the Programme for National Recovery and the Programme for Economic and Social Progress. Both programmes were specifically weighted in favour of low paid workers.
The Programme for Economic and Social Progress gives special consideration to such workers by allowing for minimum increases of up to £15 per week over the three years. These minimum flat rate increases, when combined with significant improvements in the family income supplement and income tax deductions, will result in a substantial improvement in the position of the low paid. This is a matter on which there is not universal agreement as to how to tackle it. The joint labour committees have been active in some of the areas to which Deputy Rabbitte referred. The need is to ensure their recommendations are implemented. I have been seeking to increase the number of inspectors who would get out into the field to ensure these matters are being attended to.
Can the Minister give the House the reference of the report, to which he referred, which was prepared by his Department and whether it is available? Certainly, the experience of OECD countries where a national minimum wage has been introduced is not in accord with what the Minister said is the experience in the United States. Does the Minister accept that a national minimum wage has been introduced in some of the OECD countries with none of the negative implications he envisages or fears may happen if it were done here?
The Deputy will be aware of the study, "Low Pay — The Current Position on Policy Issues", produced by John Blackwell for ICTU. A 1990 report on low pay in Ireland prepared for the Department of Labour by Mr. Brian Nolan of the ESRI, using 1987 data, showed that 28 per cent of employees earn less than £130 per week compared with 17 per cent who earn less than £100 per week. The research project, to which I referred in reply to an earlier question, was carried out by Geary and McCarthy and was entitled: "1990 The Economic Effects of Minimum Wage Laws, a Survey of the Evidence". If the Deputy has difficulty in obtaining a copy I will arrange to have one sent to him.
How many inspectors are operating? By how many has the inspectorate been increased?
I do not have that information at my disposal. I am aware of a few appointments recently in terms of promotions within my Department which involved some people going to that area. I will try to get the details for the Deputy.
Is it not a fact that ten out of 12 of our EC partners operate minimum wage policies without the devastating effects on employment that the Minister anticipates? Was it not a substantial argument against giving equal pay to women that it would affect their employment prospects, a fear which never materialised?
The Employment Equality Agency are very active in regard to emloyment equality. There is not universal agreement on whether a minimum wage is the solution. Each economy has to be looked at in terms of its priorities and its ability to confront this issue. Quite apart from a minimum pay arrangement, we have been, through the collective bargaining process in the Programme for Economic and Social Progress and the taxation policies which the Government have been pursuing, seeking to address that issue by getting more people on the lower income scale out of the tax net.
That disposes of questions for today.
