Skip to main content
Normal View

Dáil Éireann debate -
Wednesday, 14 Oct 1998

Vol. 495 No. 2

Other Questions. - National Minimum Wage.

Dick Spring

Question:

40 Mr. Spring asked the Minister for Finance if his Department has carried out work into the implications of a national minimum wage of £4.40 per hour; the results of this work; and if he will make a statement on the matter. [19508/98]

As the Deputy is aware, following receipt of the Report of the National Minimum Wage Commission earlier this year an interdepartmental group was established by the Government to assist in formulating proposals and a plan of action. A number of Departments, including the Department of Finance, are represented on the group.

As regards the implications of the minimum wage, the National Minimum Wage Commission did not examine the economic or budgetary effects of its recommended rate of £4.40 but advised that this rate should take account of employment, overall economic conditions and competitiveness. In order to prepare an appropriate plan of action, the group has commissioned independent consultants to undertake a comprehensive study of the impact of the recommended rate on competitiveness and employment, as well as those sectors most affected. The study will also provide an analysis of the extent of the dynamic economic effects.

I can assure the Deputy that my Department is participating fully on the group. I understand that the group will be submitting an interim report to the Government in the near future.

I put down a question, in common with others, to the Minister in June in respect of the whole business of the national minimum wage. Unfortunately, because both I and Deputy Noonan were out of the country at the time, I was not here for the response.

The Minister will be aware that a note given to him by his Department, which has since been released to me under the Freedom of Information Act, specifies that the Minister should stress that the £4.40 did not represent a Government commitment but was merely something that could be negotiated. Will the Minister confirm whether this represents his view, that the £4.40 does not represent a Government commitment but should be regarded as something to be negotiated with the social partners in the context of any follow-up agreement to Partnership 2000.

My colleague, the Minister for Enterprise, Trade and Employment, has been quite clear on this matter. She has said that it is hoped to introduce the minimum wage in the year 2000 under a successor agreement to the Partnership 2000 agreement. In the lead-in to that a study is being carried out on the economic effects of these matters. The group will give its interim report shortly. That is how matters will proceed. The Government is committed to introducing a minimum wage.

At £4.40?

The Tánaiste has been quite specific on the matter.

The Tánaiste has been specific but the Minister has not, which is why I am inviting him to outline the economic implications.

There is not a more specific Minister in the House than I. The Government is committed to introducing a minimum wage.

Does the Minister consider it anomalous that at present persons on wages that are less than half the minimum wage are subject to income tax? Does he think there is logic in changing the tax code so that persons on the minimum wage will be exempt from income tax from the year when the minimum wage is introduced?

It is hoped that in the context of our taxation objectives we will be able to realise that very admirable objective.

What I am asking is whether the Minister appreciates the contradiction in legislating for a minimum wage and then taxing it and taking back 24 per cent of it so that the minimum wage is less than the minimum wage? Is the Minister making a commitment that it is Government policy to exempt from income tax weekly earnings amounting to the minimum wage or less?

One would not want to mix up the two concepts. One is talking about a minimum wage on the one hand and a minimum rate per hour. The commitment is to a minimum rate per hour, not a minimum wage. What happens in the taxation area has also to be taken into account. The two concepts are not the same. They are mutually exclusive.

The Minister will run out of separate boxes.

In my profession we are inclined to keep things in separate boxes. I am greatly influenced by my training in the past.

Will the Minister confirm that the terms of reference of the interdepartmental group invite the group to consider the economic implications of several rates other than the £4.40 recommended by the commission and that the lowest of those figures is £3.30?

I do not have the terms of reference of the group, but I can refer the Deputy to them. One of the terms of reference is to assess the dynamic impact of a minimum wage and all the other matters to which I referred earlier.

Top
Share