I move: "That the Bill be now read a Second Time."
I am pleased to introduce the National Minimum Wage (Low Pay Commission) Bill 2015. Given the purpose of the Bill, it is also worth taking stock of the progress we are making more generally in terms of our economic recovery. Over 100,000 extra jobs have been created since the start of 2012, when the Government's Action Plan for Jobs was launched. The latest live register figures from the Central Statistics Office show that in the year to May 2015, the level of unemployment fell by 40,500 or 16.2%. The unemployment rate is now 9.8%. In the 12-month period to May 2015, there was an annual net increase in employment of over 40,000, bringing the total number in employment to 1,930,000.
Most of the increase in employment was in full-time employment, which increased by 52,000, while part-time employment fell by 2.4%. The long-term unemployment rate fell from 7.3% to 5.9%. Tax revenue has increased, primarily as a result of the improving economy, while the social welfare bill has fallen in line with falling levels of unemployment.
What these figures illustrate is the success of the Government's strategy of creating the conditions for job growth and helping people back to work, particularly decent work. The Action Plan for Jobs is accelerating Ireland's transition to a sustainable jobs-rich economy, while the Pathways to Work programme is ensuring that as many people as possible of those taking up work are from the live register. However, we still have a long way to go to ensure that every person in Ireland who wants a job can get a job, a goal this Government intends to achieve by 2018. I am also acutely aware that long-term unemployment levels, while heading in the right direction, are still far too high.
Now that the recovery is beginning to be felt, however, those in work quite reasonably feel that the economic recovery should be reflected in their wage packets. A return to wage bargaining is visible in many sectors of the economy, and IBEC's recent pay survey found that 57% of companies plan to increase basic pay this year. According to that survey, the median pay increase is set to be 2%, and other surveys suggest that this figure may well be higher. So long as pay increases are commensurate with the performance of both the enterprise and the economy and do not hamper the emergence of job opportunities or have an impact on competitiveness either locally or internationally, then such increases can only benefit the economy and strengthen domestic demand.
The national minimum wage in Ireland is relatively high by international standards. Bearing in mind that social transfers differ from country to country, and also taking the cost of living into account, Ireland's rate is the sixth highest among the 22 EU member states that have a national minimum wage. The most recent figures from the Central Statistics Office show that just under 4.4% of all employees were being paid the adult experienced national minimum wage of €8.65 per hour, or sub-minimum, in quarter 4 of 2014.
As it stands, under the provisions of the National Minimum Wage Act 2000, the national minimum wage can be adjusted by ministerial order in the following ways: following a recommendation in a national agreement; in the absence of such a recommendation, following an examination and recommendation by the Labour Court on foot of a request by a substantially representative organisation of employees or employers; or unilaterally by the Minister, whether or not a recommendation under section 12 or 13 has been made. The ESRI, in its 2006 analysis of the last Labour Court recommendation, concluded that adjusting the minimum wage by a substantial amount on an irregular basis, with lengthy gaps between increases, is more likely to have a detrimental impact on employment and contribute to uncertainty for employers and actual and potential employees than more regular and, therefore, smaller and fairly predictable up-ratings. For this reason, a significant benefit of the new approach provided for in this Bill is that minimum wage rates will be assessed annually and any adjustments in future will be incremental and less disruptive for business than the steps seen in the past.
Making work pay continues to be a cornerstone of this Government's agenda, and setting up the Low Pay Commission is one of the key commitments in the statement of Government priorities agreed in July last year. The commission was launched last February, chaired by Dr. Donal de Buitléir, and is currently operating on an interim, non-statutory basis. It has sought and received submissions, which are currently being considered, and I expect its first report by the middle of July.
The Low Pay Commission is a nine-member body comprising an independent chair, three members with an understanding of the interests of low-paid workers, three members with an understanding of the interests of employers, particularly SMEs and those operating in traditionally low-paid sectors, and two members with relevant academic backgrounds. The duties and functions of the Low Pay Commission will be, on an annual basis, to examine and make recommendations to the Minister of the day on the national minimum wage that are designed to assist as many low-paid workers as is reasonably practicable, in such a way that the minimum wage, over time, is progressively and incrementally increased, having regard to changes in earnings, productivity, overall competitiveness and the likely impact any adjustment will have on employment and unemployment levels.
Alongside examining the national minimum wage, the commission will also be tasked with examining matters related generally to its functions under the Act, and it will be asked to undertake a considerable body of work each year. The Bill provides that the commission can be requested to examine a particular matter within two months of its establishment in 2015. In future years, such requests will be made to the commission by the end of February each year.
The commission will be statutorily independent in the performance of its functions. While it is not provided for in the Bill, it is intended that it will adopt a consensus-based approach to its reports and recommendations. In discharging its function, the commission will be required to ensure that any advice or set of recommendations it makes to the Government is evidence-based, utilising agreed data, carrying out research and consultations with employers, workers and their representatives, and taking written and oral evidence from a wide range of organisations. Alongside this hard data, the commission will consult with workers and employers who are directly affected by the national minimum wage. This real, lived experience will be vital for the commissioners when deciding on what the minimum wage rate recommendation should be. I am aware that the commission, as part of its current deliberations, has engaged directly on a face-to-face basis with employer and worker interests. This approach draws on that adopted in the UK, where, since 1997, the recommendations of the UK Low Pay Commission have brought about a progressive increase of the minimum wage that has had little detrimental effect on the functioning of the economy or the labour market.
Work should always pay. However, I am also conscious of the need to balance a basic statutory minimum pay rate that is fair with one that is sustainable and that allows employers to continue to create high-quality jobs. The changes proposed in establishing the Low Pay Commission on a statutory basis are essentially taking much of the politics out of setting the national minimum wage. It is very much in keeping with the dignity of work agenda I am pursuing, and complements work such as the study on zero-hour and low-hour contracts by the University of Limerick, which I have commissioned.
I would like to briefly outline the purpose of each section of the Bill. Section 1 defines the "Principal Act" as meaning the National Minimum Wage Act 2000. Section 2 amends the principal Act to provide for the insertion of a number of relevant definitions in that Act. Section 3 provides for the establishment of the Low Pay Commission and specifies that the commission will be independent in the performance of its functions.
Section 4 outlines the duty of the commission and, in this regard, provides that the commission will be required to make such recommendations regarding the national minimum hourly rate of pay that are designed to set a minimum wage that assists as many low-paid workers as is reasonably practicable, is both fair and sustainable, is adjusted incrementally, where adjustment is appropriate, and, over time, is progressively increased. All of this should be done without creating significant adverse consequences for employment or competitiveness.
Section 5 provides for the functions of the commission. In this context, the commission will be required to examine the national minimum hourly rate of pay and make a recommendation and a report on the issue by 15 July each year. This section also sets out the range of economic factors that the commission is required to take into account when making a recommendation, including changes in earnings, currency exchange rates and income distribution in the period since the previous minimum wage order; whether, during that period, unemployment, employment and productivity have been increasing or decreasing, both generally and in the sectors most affected by the making of an order; international comparisons, particularly with Great Britain and Northern Ireland; the need for job creation; and the likely effect that any proposed order will have on levels of employment and unemployment, the cost of living and national competitiveness.
Section 5 also provides that the commission may be requested by the Minister to examine and report on matters related generally to the functions of the commission under the Act. In addition, the commission will be required to report every three years on the general operation of the Act. The commission will be required to consult with employers and employees when preparing reports under section 5. A copy of each report and recommendation submitted by the commission will be laid before each House of the Oireachtas.
Section 6 provides that the Minister shall, within three months of receiving a recommendation from the commission in regard to the national minimum hourly rate of pay, make an order in the terms recommended, make an order in other terms, or decline to make an order. The Minister will be required to lay a statement before both Houses of the Oireachtas setting out the basis for any rejection or variation of a recommendation. If the commission fails to make a recommendation on the national minimum hourly rate, the Minister may, having had regard to the economic factors specified in the legislation, make an order in regard to the matter.
Section 7 provides that the Minister shall advance to the commission out of moneys provided by the Oireachtas such amount or amounts as the Minister may, with the consent of the Minister for Public Expenditure and Reform, determine for the purposes of expenditure by the commission in the performance of its functions. Section 7 also provides that the Minister shall make available to the commission such officers of the Minister and reasonable facilities and services as the Minister, after consultation with the commission, may determine.
Section 8 provides for a number of technical amendments to the principal Act. Section 9 provides for the repeal of sections 11, 12 and 13 of the principal Act. Section 10 provides for the Short Title, collective citation and construction provisions of the Bill.
The new Schedule provides that the commission will be a nine-member body, comprising an independent chairman, three members who will have an understanding of the interests of low-paid workers, three members who will have an understanding of the interests of employers, in particular small to medium sized employers and those operating in traditionally low paid sectors, and two members who will have relevant knowledge or expertise in economics, labour market economics, statistics or employment law. The Schedule also provides that the Minister shall, in so far as is practicable, endeavour to ensure that among the members there is an equitable balance between men and women. The term of office of its members will be three years. Members may serve two consecutive terms of office and will be eligible for reappointment after a break. The Schedule also includes standard provisions dealing with resignation and termination, disqualification, remuneration and other terms and conditions of office, appearance by the chairman before a committee of either House of the Oireachtas and the regulation of its procedures by the commission.
As I have said, throughout the crisis the Government has been committed to maintaining and enhancing employment rights and protecting the most vulnerable workers. Where changes have been made or new legislation introduced, it has been to improve employment rights. On low pay alone, one of the first actions of this Government was to restore the minimum wage to the level it was at before the last Government cut it just before leaving office.
There is now general agreement that this year will be a good year for the economy, employment, those in lower paid jobs and industrial relations reform. Separately, the Industrial Relations (Amendment) Bill 2015 is progressing through this House. Deputies are aware that this important Bill provides for significant reforms to industrial relations machinery in the fields of registered employment agreements, sectoral employment orders and collective bargaining. We are determined to ensure that the economic recovery continues to strengthen, that employers hire more workers, as well as more full-time workers, and that the low paid, in particular, will share in a fair economic recovery. That is what this Bill is about. It about fixing a minimum wage that assists as many low paid workers as possible without threatening jobs or the economy. Setting up the Low Pay Commission is one of the most important policy initiatives taken by any Government in recent years. It is evidence of this Government's commitment to making dignity at work a reality.
I want to bring to the attention of the House my intention to introduce a number of amendments to the Workplace Relations Act 2015 on Report Stage of the Bill in the Dáil. As Deputies will be aware, my colleague, the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, has been implementing a programme of reform of the State's employment rights and industrial relations procedures and institutions since 2012. The aim of this programme is to establish a world-class workplace relations service and employment rights framework by streamlining the existing mechanisms and establishing a simpler structure, while building upon the recognised strengths of the existing systems.
The relevant legislation, that is, the Workplace Relations Act 2015, was signed into law by the President on 20 May 2015. The Minister has announced that the Act will be commenced on 1 October 2015. It is a complex piece of legislation and its effect will be to replace the five existing workplace relations bodies with a new simplified two-tier structure. It will also result in the establishment of new structures for the resolution and adjudication of complaints and disputes across the entire corpus of employment rights and equality legislation. As a result of the introduction of these new structures it has been necessary to make consequential amendments to 24 primary Acts, 34 specified parts or sections of Acts and numerous statutory instruments.
As part of the very technical and complex drafting process, it became clear following the enactment of the Act that a number of technical and drafting amendments would be necessary in order to ensure the smooth running of the new structures. This became clear as certain technical legal elements were worked through. As a consequence, it is essential that these amendments be effected before the commencement of the legislation and the establishment of the new structures on 1 October 2015.
I refer to the amendments to Workplace Relations Act that are required. They include amendments to ensure that the transitional arrangements concerning the manner in which employment rights complaints referred to the existing workplace relations bodies for adjudication will be dealt with post-commencement of the Act are legally robust. This will require amendments to sections 1, 2, 28, 40, 41, 53, 74, 76, 80, 81, 83 and 84 of the Act. Consequential amendments to the Unfair Dismissals Acts are necessary to accurately provide for the new adjudication and redress mechanisms being introduced by the Act, as provided for in section 80 of the Act. Amendments are required in order to take account of the proposed replacement of references to the director of the Equality Tribunal in the Act of 1998 and the Act of 2000 with references to the director general of the Workplace Relations Commission, WRC.
It will also be necessary to introduce an amendment to the Freedom of Information Act 2014 to ensure that the exemption from the legislation which currently applies to the Equality Tribunal, in so far as it relates to its mediation functions, will be extended to the WRC upon commencement of the Workplace Relations Act 2015. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, has agreed to the extension of the current exemption to ensure that it will cover records of the WRC mediation service, in so far as it applies to its functions regarding the resolution of complaints and disputes on a voluntary basis under equality and employment enactments. It is my intention to introduce these amendments on Report Stage of the Bill in the Dail.
During the crisis we remained committed to maintaining employment rights and protecting the most vulnerable. Our aim in government now is to continue towards a balanced economic recovery. That means jobs growth in the regions as well as Dublin. It means spreading the recovery to all socioeconomic groups, because there is no future for this economy and for our society unless we remain committed to these twin objectives, that is, to sustain the recovery and to share the benefits. I commend the Bill to the House.