Vol. 474 No. 3
18 Miss Harney asked the Minister for Enterprise and Employment the Government's definition, if any, of what constitutes low paid employment in the context of Irish industrial policy; and if he will make a statement on the matter. [3163/97]
There is no definition of what constitutes low paid employment in the context of Irish industrial policy. I am conscious of the interaction between the attractiveness of lower paid employment and the relative level of social welfare entitlements, the existence of both poverty traps and the tax wedge having been the subject of much analysis and debate in recent times.
Concerted and determined Government action has been taken to address those problems in successive budgets and in a variety of ways with a view to making it easier to create a job and more attractive to take one up. Such initiatives have included improvements in income tax and employers' and employees' PRSI, the family income supplement and the retention of social welfare benefits in the context of the back to work scheme and the local employment service.
In ensuring that those seeking work will be willing to take up employment at wage levels employers can afford, these initiatives also help businesses to face the competitive challenge from lower cost locations. Having said that, however, the overall success of Government policy in raising living standards to European levels means we cannot hope to compete in the long-term on cost alone, and a variety of programmes are in place to facilitate industry to cope with this problem by moving up the value chain.
Does the Minister agree with his colleague, the Minister for Social Welfare, that small and medium sized Irish enterprises are paying what he described as slave wages?
I would not generalise in that way. A variety of wage levels are being paid in our economy and we must be conscious of that. We must ensure that the interaction of the tax and welfare codes does not unwittingly create situations where it is impossible to find employment. That has been a consistent theme in what the Ministers for Social Welfare and Finance have done in reforming the social welfare and tax codes. The Minister for Social Welfare has introduced major improvements in the family income supplement which makes it more attractive to take up employment. He developed the back to work scheme which has facilitated the long-term unemployed taking up employment in addition to a number of other measures we are supporting. On the other side of the equation, the Government has reduced employers' and employees' PRSI as part of a process of making it easier to create employment. A balance must be taken in ensuring that job opportunities can be filled and employers can be competitive in respect of the wages those jobs secure.
Will the Minister accept — I am sure some of the representative organisations such as SFA and ISME have made this point to him already — that many employers believe the Department of Social Welfare is their greatest competitor; they cannot afford to compete with the levels of remuneration given to people, particularly those with dependants? Will the Minister accept also that £200 per week is low pay, yet we take almost £50 per week from a single person earning that salary?
I accept that the Small Firms Association has complained about the interaction of tax and social welfare. Addressing that problem has been a recurring theme in this Government's previous budgets, and significant progress has been made in that area. For example, employers' PRSI has been significantly reduced to a point where two-thirds of all employees are on the 8.5 per cent rate of social insurance. Equally, we have reduced the employees' share with the £80 allowance and the reduction in the rate from 5.5 per cent to 4.5 per cent. Those specific measures make it more rewarding for individuals who take up work paying the salary to which the Deputy referred. I am conscious also that this year's budget has been targeted specifically at low levels of pay and rewarding people on low levels of pay. For example, a married couple with four children and one earner in the household, taxed at the rate referred to by the Deputy, gets a net gain from the budget of £754 or a 6 per cent increase in net income. A conscious effort was made when introducing the social welfare and tax reforms to specifically target the groups to which the Deputy referred and I have no doubt further progress can be made in this area.
