I would like to say at the outset that this is a very simple, straightforward proposal. It is a fulfilment of an election promise. It will give 303,000 lower paid workers an extra £1 per week. It is as simple, as straightforward and as direct as that.
I shall deal with how I arrive at the figure of 303,000. This matter was adverted to in the Dáil but it is a very accurate calculation; I will put it more precisely, it is a very accurate projection. We have approximately 900,000 insured employees in this country. Of those about 200,000 are in the public sector or elsewhere, and we are left with the figure of 700,000 which is the relevant figure for this calculation. The most accurate projection we can make by analysis, from statisticians' and the Revenue Commissioners' figures is that approximately 43.4 per cent of that number is under £50 a week—a figure which, when superannuation is deducted, is £50 a week or less. This means that 43.4 per cent of 707,000 is approximately 303,000. I do not think there is much point in arguing a great deal about that. It is an interesting figure from the point of view of the indication it gives us as to how our workforce is constituted. As far as this proposal is concerned, it is as accurate as it can be and points directly to the cost of the proposal, that is £13 million in a full year.
The existing system of a flat rate contribution for social insurance is in essence unfair. It does not matter what a person earns at the moment, provided he is in a particular category he pays the same level of contributions. I want to emphasise that this reduction of £1 a week in the stamp for people earning less than £50 a week must be regarded as an interim measure. I intend, by April, 1979, to introduce a fully pay-related system of social insurance where an employee's contribution will be directly related to what he earns. This will be calculated on a percentage basis. That is the right and fair way to give effect to insurance. As I said, I hope that will be in operation by April, 1979. I wished to bring it earlier but unfortunately this sort of changeover can only be given effect to at the beginning of an income tax year because we will be using the Revenue Commissioners' PAYE mechanism for collecting this contribution. It had to come into operation either in April, 1978, or April, 1979. Unfortunately, because of many complex administrative difficulties it cannot be brought in by April, 1978, so we have to wait until April, 1979. It will be coming in then and people will contribute to the insurance fund in exact proportion to what they earn, with a cut-off point at a certain figure above which the contribution will not continue to increase. This proposal is seen in the light of that change-over. This is going some way towards that. In that it reduces the burden of the insurance contribution on the lower paid employee. It is as simple and straightforward as that. As Senator Martin says, in the present circumstances we could not use this £13 million more equitably in that area. It is an immediate relief of this flat rate contribution burden on lower paid employees.
A number of Senators referred to the manner in which the £50 will be calculated. As I have already indicated, it will be the gross figure less superannuation. Thereafter it will be calculated in the exact same way as income is determined at present for the 3 per cent pay-related social insurance contribution. Each week by itself will be taken and the employer may be affixing the lower rate stamp one week and the higher rate stamp the next week. That, unfortunately, cannot be avoided. Everything that is normally included as pay will count— overtime, bonuses, holiday pay, danger money and so on. Anything that is brought into account for income tax purposes will be brought in to determine the £50 level.
There is one important point I should like to make. In the case of people who do not work a full week, if a man or woman works one, two or three days it would be the actual earnings that would count. The two or three days' income will not be projected over the whole week to give a higher figure with the possibility of bringing the person over the £50 limit. It will be the exact earnings for the week that will count.
Deputies are suggesting that this £50 limit should be reviewed. They are, I think, overlooking the fact that, in any event, this will all be subsumed into the new pay-related insurance contribution system which will be introduced in April, 1979. To that extent it is not a long-term proposal. It will only operate between now and then at the very outset.
Senator Moynihan specifically asked about hotel workers. In so far as the service charge goes into their pay in the normal way, it will be included for the purpose of determining the £50 per week.
I think these are the main questions raised by Senators during the debate. I am glad that, with the exception of minor criticisms, the proposal has been welcomed by the Seanad, as I expected it to be. It is an interim measure, ultimately to be assumed into a much broader and more comprehensive and fairer arrangement for social contributions. It does make an immediate, positive, helpful contribution to the lot of 303,000 lower paid workers, young people and women workers especially.