Vol. 493 No. 3
6 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment the position regarding a minimum wage; the implications, if any, the United Kingdom legislation on a minimum wage will have for small firms in the State; and the implications lower rates of pay which operate in Northern Ireland will also have in this regard. [15938/98]
12 Mr. Penrose asked the Tánaiste and Minister for Enterprise, Trade and Employment the reasons for the unacceptable lengthy delay in fulfilling a key priority in An Action Programme for the Millennium for the introduction of a national minimum wage; the proposals, if any, she has to introduce the necessary enabling legislation; and if she will make a statement on the matter. [15924/98]
49 Mr. McDowell asked the Tánaiste and Minister for Enterprise, Trade and Employment the terms of reference of the interdepartmental working group reviewing the economic implications of the report of the minimum wage commission; and if she will make a statement on the matter. [13704/98]
57 Proinsias De Rossa asked the Tánaiste and Minister for Enterprise, Trade and Employment the progress, if any, made to date by the interdepartmental group on implementing the report of the minimum wage commission; if it is the intention of the Government to introduce legislation providing for the introduction of a minimum wage at the level and within the timeframe recommended by the commission; and if she will make a statement on the matter. [15780/98]
I propose to take Questions Nos. 6, 12, 49 and 57 together.
The introduction of a national minimum hourly wage is a key commitment in the programme for Government — one which I support fully and intend to implement. This is the first Government to commit itself to the implementation of a national minimum wage and, in doing so, to protect otherwise vulnerable sections of our workforce. The importance which the Government and I attach to this commitment is indicated by the fact that, within weeks of coming into office, we established the National Minimum Wage Commission to make recommendations on the issue.
The report of the National Minimum Wage Commission, which was published on 5 April last, was an important stage in this process and one which charts the way towards achieving our objectives. I welcomed the commission's recommendation for the introduction of a single national minimum hourly wage and the Government intends to introduce legislation to this effect within the timeframe recommended by the commission. Our aim is to introduce the minimum wage in a manner which ensures that there will be no adverse impact on the economy or on employment and which ensures that Ireland can maintain its competitive position with the agreement of the Government.
I established an interdepartmental group of officials whose terms of reference are to assist in formulating proposals and a plan of action to ensure this can be achieved and to report to me and the Government as early as possible. The group commenced work in early April and has considered a broad range of issues, many of them very complex.
One the issues which will now have to be addressed by the group is the likely effects of the proposed UK minimum wage on employment and competitiveness including its impact on small firms. The UK Low Pay Commission report was published on 18 June and recommended a rate of Stg£3.70 an hour in June 2000, with an initial rate of Stg£3.60 an hour in April 1999. The National Minimum Wage Commission's report had itself recommended that the initial rate for a minimum wage should take into account employment, overall economic conditions and competitiveness and this must have regard to the impact of the proposed UK minimum wage rate.
The Government indicated that it is considering a rate of £4.40 which is higher than the proposed UK rate of Stg£3.60. I understand that the UK rate will be phased on an age basis. It is important for manufacturing companies that the Government indicates the rate exactly. The advice of the interdepartmental group will be very important. Employers are entitled to know what the rate will be. As we speak, employers——
I remind the Deputy we are not debating the issue. Have you a supplementary question?
Employers are having extreme difficulties at present due to uncertainty about the Irish rate, particularly given that the rate has been set in the UK. Will the Minister give an indication of the timeframe?
The commission recommended that the minimum wage should be introduced when Partnership 2000 reaches its end, which is about April 2000. It recommended different rates for people in training to the effect that someone in training for the first three years will get 70, 80 and 90 per cent of the minimum rate respectively. At current exchange rate values there is not a great difference between Stg£3.70 and £4.40. However, we cannot assume that the present exchange rates will continue.
The idea is to introduce a minimum wage to protect vulnerable workers. One of the employers' major complaints at present is that they cannot get workers, particularly for unskilled jobs at more than £5 per hour in certain parts of the country. We have to remain competitive if we are to attract investment, create employment and encourage growth and sustainability of the current level of jobs in this economy. The working group of civil servants cuts across a number of different departments. The idea is to put in place recommendations and proposals on how this could be implemented. My idea is that next year, or maybe during autumn this year if it is drafted, we will bring in enabling legislation which will be framework legislation. Then the wage will have to be introduced sector by sector by way of ministerial order. In the context of the forthcoming budget, the whole issue of tax and PRSI and how it impacts on employment will have to be considered. Of £4.40 an hour at the moment, the State takes about 40p an hour in either tax or PRSI. If we want to ensure we do not adversely affect competitiveness, we will have to look at the issue of tax and welfare as well in the context of a minimum wage.
The Minister has not really told us the answer to one of the questions in that group. What are the terms of reference of her interdepartmental group? Many people would be of the opinion that what the Minister is doing is kicking the ball as far as possible into touch on this issue for the duration of this Government and that we will see no action on a key promise the Minister made before June last year, on which she may now be effectively reneging.
The Minister mentioned the problem of wage inflation, but is it not true that the commission found various places of employment, shops, not too far from here, offering £1.20 or £1.50 an hour — a disgraceful, outrageous wage.
The intention is to ensure that a minimum wage is also a competitive wage, and it can be. That depends on how it is implemented. I brought a memorandum to Government suggesting that we establish a working group consisting of people from the Department of Finance, the Department of Health — because many of the people who will be affected by this are employees of the Department of Health — my own Department and a number of other Departments. Their task is to advise the Government on how to introduce a minimum wage to ensure that it does not adversely affect competitiveness. That is what the commission suggested. We will introduce it. I cannot say that it will be introduced for every sector on day one. It would be dishonest of me to say that because I will not introduce it where it will close down some operation or some sector. We have to be conscious of that and we have to do it in a way that is sensible and sensitive. We can do that. The idea is to have a working group in place so that by the time we come to negotiate a successor to Partnership 2000 we will have the operational arrangements ready. It will be negotiated with the social partners. I gave that commitment. I intend to engage with them in the next couple of weeks when the Dáil goes into recess. We have arranged a number of meetings with all of the social partners on this issue. I know there is concern in the Small Firms' Association, ISME and organisations representing the small to medium-sized employers, but their concerns can be very much taken on board and this can be done sensitively. For the first three years in many areas of employment a person will probably be in training and on rates of 70 per cent, 80 per cent and 90 per cent.
Does the Minister agree that her discovery of the sectoral approach is a backing off from her position when she rushed out a report in the dead of the night? I am referring to the report that had a cover similar to that of the first Beatles LP where the typographical errors and so on were not corrected. She fulsomely promised to implement that proposal. There was no equivocation and no "ifs" or "buts". Is the Minister now backing off that?
Is the preoccupation of the Minister's officials, to whom she refers in terms of this internal committee, with second guessing the commission rather than working out ways of implementing the commitment?
The report was not rushed out. I remember being asked on the Order of Business when we would see the commission's report and saying that we would have it by the end of March. As soon as we got it and it was considered by the Government——
The first we heard of it was on Sunday morning when we heard the Minister on a radio interview with RTE.
Surely in a free society I am entitled to go on a radio interview.
The Minister could at least have given us a copy of the report on the previous Friday. Nobody had a copy of it.
At the Estimates committee I gave a commitment that all reports and matters of this kind would go to Opposition parties. I was not aware that a precedent existed in that Department under my predecessors whereby Opposition spokespersons did not get this kind of information.
God forgive the Minister.
I am not having a go at Deputy Rabbitte. I have established a precedent and he will get everything. The Deputy got an excellent briefing on Enterprise Ireland and so on. Surely a Minister of the day is entitled to make a statement and respond to the publication of a commission's report which I had initiated——
Which the Minister has now withdrawn.
——and outline the Government's response. The Government is committed to introducing a national hourly minimum wage of £4.40 per hour when Partnership 2000 runs out around April 2000. As the commission said — and we accepted the commission's findings — it should be done in consultation as a successor to Partnership 2000 in a way that does not adversely affect any particular sector. Deputy Rabbitte seemed to suggest it would be introduced everywhere on day one, regardless of the impact, but that was never the case.
That is what the Minister said on the radio.
I did not say that.
She did.
I said we will introduce a national hourly minimum wage of £4.40 per hour and that is what we will do.
With regard to the hourly rate of £4.40, will the Minister indicate if there will be tax reform because that is part of the problem? We are talking about the net wage for employees. The take from wages by our Exchequer is much greater than that in the UK. Will the Minister indicate if there will be tax reform in the coming budget which would be a start in addressing this problem?
Yes, the Government will continue with its reform of the tax system. Last year we gave £570 million in personal income tax breaks.
I am talking about the lower income people.
A total of 400,000 people are paying the top rate of tax and they are not all rich.
They are not on a minimum wage.
The rich do not pay those rates of tax, as we all know. They have — or had — all sorts of vehicles to avoid paying their taxes.
The people on a minimum wage should get it.
I agree with Deputy Perry. Our main concern must be to get more people back into work. Clearly tax, PRSI and welfare payments must be integrated because we must ensure that we make it as attractive as possible for people to take up employment. These issues impact in particular on people on low pay moving from welfare to work. The Deputy can be assured, in the context of the coming budget and the remaining three budgets of this Government, that we will continue to reform the income tax system, as resources permit, with a view to giving more money back to PAYE workers in particular.
(Dublin West): The Minister is arguing for a minimum wage in a way that undermines the concept. She warns of wage inflation threatening the economic boom. Presumably the Minister is talking about anything over £4.40 per hour. Is the Minister saying, therefore, that the economic boom is based on poverty wages and that that is justified? Will she not agree that £4.40 an hour in the year 2000, which is only two years from now and we do not know what inflation will be in the interim, would be a pitiful wage to expect anybody to live on, particularly in view of the cost of housing? A person earning £4.40 per hour would not get a mortgage to buy the front door let alone a home. How can the Minister possibly say she is prepared to legislate for exceptions, that people would not be on £4.40 per hour? Will she agree that £6 per hour would go some way towards providing a decent wage? I ask the Minister not to be influenced by the Fine Gael argument that tax concessions should be used as a substitute for employers coughing up——
That is not what the Deputy said. He said they should go hand in hand.
(Dublin West): That was the tenor of the question.
The Deputy is entitled to ask supplementary questions, not give advice.
(Dublin West): Will the Minister assure the House that she will not be influenced by the miserly proposal of £3.60 emanating from Britain — I understand that figure has been leaked — which is an insult to the lower paid?
Deputy Higgins might be surprised to hear me say that I agree with much of what he said. I would like people to get £10 per hour if it was a competitive wage but our rates must be competitive. We do not want to put people out of work. Deputy Rabbitte suggested I was backtracking but as he knows the commission took into account that in some sectors people are paid a combination of hourly rates and tips, for example. All of these aspects will have to be taken into account when calculating the hourly rate. There are complex issues involved here and we must ensure we do this in a way that does not put anyone out of business and, in particular, does not increase the capacity of the black economy. I believe we can do that.
There were two employers on the commission — not representing IBEC or any employer organisation — one from the hotel and catering industry and another from the food sector. Both of them enthusiastically signed on for this and told me that one of the major difficulties they face is to get people to work for rates even higher than £4.40 per hour. With negotiation and a commitment from the trade union movement, I believe they will not look for any relativity impact because this proposal will cost approximately £800 million per year. We cannot allow a situation to develop where everybody who gets a wage level relative to the lowest will want a similar increase to keep the margin. We currently have about 18 different JLC agreements covering more than 100,000 workers, many of which relate to each other. If we introduce a minimum rate of £4.40 we must ensure that everybody whose rate is currently calculated in relation to the minimum does not seek to get the margin they currently have. If that were the case it would cause wage inflation. The purpose of the interdepartmental group is to examine all of these issues and advise the Government and the Minister on the best way forward. That seems to be by way of ministerial order, sector by sector.
We will hear final supplementaries from Deputies Owen and Rabbitte.
I am very confused. Like Delaney's donkey, the Minister seems to want to go a bit of the road with everybody. Will the Minister confirm that in answering the question on the radio when she announced this report she said that she accepted the rate of £4.40? Will she tell the House the exact terms of reference of the interdepartmental group and outline the discussions with the social partners? Is it automatic that there will not be a rate lower than £4.40 or the equivalent in the year 2000 and is it open to the interdepartmental group to recommend a higher rate? The Minister has not clarified the parameters in regard to the interdepartmental group. If it is trying to implement the commission's report, is it on the basis of £4.40 per hour with allowances made for people under a certain age and those undergoing training for three years who get between 75 per cent and 90 per cent? Is the interdepartmental group working on a rate of £4.40 or is the Minister trying to indicate to the business sector, which is concerned about a rate of £4.40, that this matter will be left up in the air in the hope that they will be nice to her while also keeping the trade unions happy? Will the Minister clarify her position?
My question is along the same lines. I admire the Minister's skill but not her consistency. We have learned, by skilful drip-feed today, a number of new terms — sectoral, tips, inflation and relativity. Is it not the case that if the Minister is waiting for somebody to give her a commitment on relativity, the people on low wages will be waiting forever for a minimum wage? Whatever she might achieve in practice, she will not get that commitment. Is it not the case that if tips in the non-unionised catering industry were to be taken into account it would undermine the purpose of a national minimum wage? Tips always went into a separate fund and were distributed, in reasonably good employments, to workers. The Minister is now taking that into the calculation in terms of setting the minimum rate. It appears the Minister is committing herself to sectoral implementation so that perhaps the lowest paid areas will be the ones that suffer. Is it not the case that there will be no difficulty in implementing this in respect of those already bordering on the Minister's minimum target but that there will be difficulty in cases where they are a long way short of that?
Will the Minister say whether the task she has given to the officials in her Department working on this committee is to begin drafting legislation on how to implement the commission's report? Is that the riding instructions they have received or are stories about them second guessing the commission correct? I do not believe all the stories I hear.
The staff have been asked to draft the legislation and, as I said on many occasions, it will be enabling legislation. Deputy Rabbitte said I am introducing new concepts, but that is not the case. I am implementing the commission's report. Remuneration for different sectors of workers is calculated in various ways. In other countries where minimum wage legislation exists that is taken into account. There are agreements between workers and employers at firm level on how people are remunerated. It is not as simple as introducing a law to the effect that everybody receives at least £4.40. The minimum wage will be £4.40 and we must get a commitment from the unions that there will be no relativity impact. That commitment has already been given forcefully to the commission and the Government wants to get that commitment.
A wage agreement negotiated by a previous Government will begin to run out in April 2000 and we will not upset that arrangement because employers and workers are entitled to expect, when wage agreements are entered into between the social partners and Government, that they will be honoured in full. This one will be honoured in full and that is why we will begin to introduce the national minimum wage in the context of the successor to Partnership 2000.
The commitment is to introduce a national hourly minimum wage of £4.40, beginning in April 2000, as recommended by the commission. There may be individual firms or sectors that might, for particular reasons, require extra months for implementation. I am not talking about years, cop-outs or exemptions, I am talking about introducing this measure in a way that is fair and practical, does not cost employment and does not lead to increases in the black economy. We can achieve all those things, as was done in the United States and many other countries where there is a minimum wage. The system operates effectively on a sector by sector approach.
The enabling legislation will be published later this year or next year and will be ready to be implemented. The group of officials chaired by my Department will meet to advise the Government on the complex issues referred to by the commission in regard to the minimum wage. I have not withdrawn the commitment I gave after the commission's report was published. I have had long, argumentative discussions with employer organisations about this issue and I remain determined to introduce it, but we must be sensible on how we do that. It may take a little more time for one or two sectors that will be vulnerable, particularly in the context of EMU coming onstream from 1 January, but most Deputies will not want anything to happen that might upset arrangements that have been made at local level between firms and their employees.
The Minister said she is implementing the commission's report, but——
I have yet to find out Fine Gael's view on this issue.
