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Seanad Éireann debate -
Wednesday, 29 Mar 2000

Vol. 162 No. 19

National Minimum Wage Bill, 2000: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

I thank the House for taking Second Stage of the Bill today and, hopefully, the remaining Stages tomorrow. It is intended to implement this measure with effect from next Saturday. Legislation such as this cannot be introduced retrospectively. While it is never my desire to rush legislation through the Oireachtas, it has not been possible to bring this Bill to the Seanad before today.

I am pleased to be the first Minister to introduce a National Minimum Wage Bill. The 1997 commitment to introduce a national minimum wage was a social policy commitment placed in the framework of an assault on exclusion, marginalisation and poverty. It was one of a number of measures designed to alleviate social exclusion in our society. In making that commitment the Government also recognised that, like many initiatives on social policy, it had significant economic implications. The terms of the reference of the National Minimum Wage Commission reflected this. I indicated my concern to protect those workers who are vulnerable and prone to be exploited, particularly women and young people, and to do so in a way which protected employment and competitiveness. I have always maintained that no pay is worse than low pay. The Bill strikes the right balance and the outcome is both a victory for jobs and for the rights of workers.

All sides of the House agree that low pay is a major problem in our economy. It is timely to proceed as proposed with a measure that will influence the lives of many thousands of workers. Our economy has been radically transformed. Employment has reached new levels and unemployment has been significantly reduced. Real earnings of employees have improved substantially, although not all employees have equally benefited from our economic progress. Many thousands of workers are paid rates which are no longer acceptable. A statutory minimum wage will greatly alter how, as a society, we view and value the work undertaken by thousands of workers.

The National Minimum Wage Commission was the first step towards fulfilling the Government's commitment to introduce a national minimum hourly wage. The commission was appointed by the Government on 18 July 1997 to advise on the best way to implement the commitment. I take this opportunity to thank the commission members, Evelyn Owens, Rita Ahern, Carmel Bolger, Phil Flynn and Peter Malone for their valuable contribution to this important policy initiative. I published the commission's report on 5 April 1998.

The commission recommended, inter alia, that a target date of 1 April 2000 be set to implement the commitment. It also recommended that the national minimum wage should be measured against the median earnings of all employees. In taking this view the commission went on to state:

The initial rate for the national minimum wage should be set at around two-thirds of median earnings and should take into account employment, overall economic conditions and competitiveness.

These two issues – the implementation date and the initial rate – have been central to the debate that followed the publication of the commission's report.

The Government has, from the beginning, accepted that the national minimum wage should be introduced from 1 April 2000 and I have repeatedly stated this since April 1998 to ensure that both employers and workers have adequate time to prepare for the introduction of the national minimum wage. I regret that to ensure introduction of the minimum wage on 1 April, the debate in this House has to be limited.

The debate in the select committee resulted in some changes, particularly to strengthen the measures designed to prevent unscrupulous employers from avoiding their responsibilities and from victimising employees. I have broadened the scope of the Bill and accepted amendments which significantly alter the basis for calculating the average minimum hourly rate of pay. In removing from the text some components initially reckonable for the purpose of calculating that average, I was also responding to representations I received from trade unions when the detailed text of the Bill was published. The design of this legislation, therefore, has followed considerable and lengthy consultation not only with ICTU and IBEC but with the public generally by way of the widely publicised report of the minimum wage commission and the interdepartmental group which worked out the details of the legislation.

On the issue of what hourly rate should be set for a national minimum wage, the commission recommended that it should be set at around two-thirds of median earnings and should take into account employment, overall economic conditions and competitiveness. Some people have tended to focus on the first element of this recommendation and ignore the latter element. The Government does not have that luxury. In deciding on the rate I considered that, in line with the thrust of the commission's recommendation, the impact of any proposed rate on employment and competitiveness must be taken into account.

An ESRI impact study puts figures on the realities facing us in this regard in deciding on the appropriate rate – reduced employment, increased unemployment and reduced competitiveness. It would be easy in the current economic climate to disregard the impact of a high minimum wage but I must have regard to the welfare of the economy and, more importantly, the employment opportunities of its people in the future. The Government believes that the introduction of a rigid automatic rate setting mechanism would not be the best way of addressing this issue. Since April 1998 I have stated that I consider the appropriate rate should be £4.40 from April 2000. After considering the results of the ESRI impact study I remained even more convinced that this was the appropriate rate.

The recently negotiated Programme for Prosperity and Fairness has also included a recommendation that the initial rate, which will be £4.40 per hour from 1 April 2000, should be increased to £4.70 from 1 July 2001 and to £5 from 1 October 2002. Mechanisms for adjusting this rate are contained in the Bill and agreement by the social partners to specific increases in the rate during the lifetime of the new agreement will be dealt with in that context. I also welcome the commitment of the trade unions and employers in the Programme for Prosperity and Fairness that no repercussive claims related to or following on from the application of the national minimum wage will be made by trade unions or employees.

Questions have been raised about how the legislation interacts with the pay provisions in the recently negotiated Programme for Prosperity and Fairness. A worker on a wage which is less than £4.40 an hour will on 1 April, in accordance with the legislation, have an entitlement to the new national minimum hourly wage.

The new agreement will apply to various workers at different dates throughout 2000 and may apply to some with effect from 1 April. The agreement does not provide a different regime of timing, flat or percentage increases for those whose pay would be altered by the legislation on 1 April. Consequently, it will be open to such workers to pursue the basic pay increases under the Programme for Prosperity and Fairness separately from increases granted under the legislation. All of the relevant terms of the draft pay agreement would apply in these, as in all cases, but that is a matter separate from the establishment of the national minimum wage. This Bill strikes the right balance between the desire of society to prevent the exploitation of workers on low pay and to share the fruits of recent economic growth more fairly and the need to continue to grow employment and create wealth in our economy.

I would like to draw attention to some of the more important provisions of the Bill. Section 1 provides the Short Title and permits the Minister for Enterprise, Trade and Employment by order to appoint a date on which the Bill will come into effect or dates on which particular provisions of the Bill will come into operation. As I said earlier, I intend that the Bill shall be implemented with effect from 1 April 2000.

Section 10 is central to the operation of the Bill. The pay of an employee may vary from time to time due to particular circumstances within the workplace, for example, working on different shifts or working on a bank holiday. The purpose of a pay reference period is to allow these variations that may arise to be averaged over the pay reference period. The employer may choose the pay reference period which best suits his or her pay patterns, subject to its being no longer than one calendar month. The selection of a pay reference period for the national minimum wage under this Bill does not alter an employee's existing pay period. To ensure that an employee is informed by his or her employer as to the period which the employer has selected, section 42 of this Bill will, accordingly, amend section 3 of the Terms of Employment (Information) Act, 1994, to provide for this requirement.

Section 11 enables the Minister for Enterprise, Trade and Employment by order to prescribe the national minimum hourly rate of pay having taken into account the impact the proposed rate may have on employment, overall economic conditions and competitiveness in the economy. It is appropriate at this point to inform the Seanad that I intend to create a monitoring committee, representative of ICTU, IBEC and Government, to observe the implementation of the national minimum wage and to review its effectiveness and enforcement. I have already arranged that the ESRI survey which contributed data for the debate up to now will be continued after the introduction of the national minimum wage. I will ask the monitoring committee to report to me at regular intervals and I intend to table those reports before the Dáil and Seanad.

In relation to the review mechanism for the national minimum hourly wage, it is necessary, in line with the recommendation of the interdepartmental group, to provide two mutually exclusive alternative mechanisms. Where a national agreement is in existence, or proposed, and contains a recommendation to the Minister for Enterprise, Trade and Employment in relation to the national minimum hourly rate of pay, then section 12 will apply. However, where these circumstances do not apply, section 13 provides that the Labour Court can be requested by an organisation substantially representative of employees or employers to make a recommendation to the Minister for Enterprise, Trade and Employment. In either case the Minister may accept, vary or reject the recommendation and if varying or rejecting the recommendation then the Minister must make a statement to the Oireachtas of the reasons for doing so.

The age at which the national minimum wage should apply is far from uniform in the systems which we have studied. In the UK the full national minimum wage applies from age 22 with a sub-minimum from age 18. In our case we should err on the side of the protection of young persons but have regard to the link, however remote, between the need to retain people in the education system and a rate of pay which encourages them to enter employment.

Section 14 prescribes that an employee who is aged 18 or over must be paid the full national minimum wage unless they are trainees or first time job entrants. An employee under age 18 must be paid for his or her working hours at an hourly rate of pay that, on average, is not less than 70% of the national minimum hourly rate of pay.

Section 15 concerns the entitlement of a job entrant. This is an employee who enters employment for the first time after reaching the age of 18 years or, having entered into employment before reaching the age of 18 years, continues in employment on reaching that age. A job entrant must be paid 80% of the NMW in the first year of having commenced employment for the first time, after reaching the age of 18, or the first year of employment after continuing in employment on reaching the age of 18, and 90% of the NMW in the second year of having commenced employment for the first time, after reaching the age of 18, or the second year of employment after continuing in employment on reaching the age of 18. Any employment under the age of 18 is not reckonable for this section.

Section 16 implements the recommendation of the National Minimum Wage Commission that employees undergoing training should be paid 75%, 80% and 90% of the national minimum hourly wage in the first, second and third year of training. Regulations will prescribe the criteria to which a course of study or training must comply in order for an employer to apply the sub-minimum rates.

Section 19 and the Schedule to which it refers sets out what components of an employee's pay are reckonable and non-reckonable when calculating whether an employee has been paid at least the minimum hourly rate of pay to which he or she is entitled in accordance with this Bill. The basis for this is the report of the National Minimum Wage Commission. The conclusion of the commission was that there was a clear choice between opting for a definition which recognises basic pay only – which has the merit of simplicity – and one which includes other forms of remuneration. The commission concluded that the latter more accurately reflects how people are paid and recommended an approach which accommodated current pay arrangements. That is the route I have chosen. However, I have provided that those employees who should mainly benefit from the introduction of a national minimum wage are not deprived of this benefit by manipulation of reckonable and non-reckonable pay components, and this will be closely monitored.

Section 23 has been designed to provide a structure that allows any potential dispute to be resolved speedily between an employee and an employer. An employee will have the right to request from his or her employer a written statement of his or her average hourly rate of pay during a particular pay reference period. This process should help identify any underpayment and allow the parties to resolve the dispute without recourse to the enforcement provisions of the Bill.

Sections 24 to 29 provide that a dispute which has not been resolved between the parties may be referred by either party to a rights commissioner for a decision and any party aggrieved by such a decision may appeal it to the Labour Court for a determination. Another mechanism to ensure employers will adhere to the provisions of the Bill will be the appointment of inspectors by the Minister under section 33. An employee who feels that he or she could not openly identify themselves by taking a case to a rights commissioner may under section 34 request an inspector to investigate whether his or her employer has failed to pay the employee's appropriate entitlement to remuneration under the Bill.

It will be an offence under section 35 for an employer to refuse or to fail to pay an employee their legal entitlement. Section 37 provides for appropriate penalties to be imposed for offences committed contrary to the provisions of the Bill. In section 36 I have paid particular attention to the need to protect employees against employers who might attempt to circumvent the legislation. The section includes the prohibition on the victimisation of employees for exercising or proposing to exercise their rights under this legislation. If dismissed for exercising his or her rights under the legislation, an employee may bring an unfair dismissal case against his or her employer and the general requirement to have one year's continuous service under the Unfair Dismissals Acts, 1977 to 1993, is set aside. There is a prohibition on the reduction in the hours of work of an employee without a corresponding reduction in the duties or amount of work of the employee. There is also a prohibition on employers from changing the status of non-reckonable components to reckonable status.

The ESRI impact study highlights the potential impact the national minimum wage could have on employment levels. With this in mind, the interdepartmental group recommended that provision be made for an "inability to pay" for firms in difficulty within certain parameters. Section 40 implements that recommendation without undermining the thrust the legislation in that exemptions can only be granted by the Labour Court and then only for a period up to one year.

Section 42 is designed to guard against the introduction of the national minimum wage being used to justify pay claims by better paid workers which would undermine competitiveness. The effect of the section is that the Labour Relations Commission and the Labour Court or a conciliation and arbitration scheme in the public sector may not recommend in favour or endorse any claim or part of a claim referred to it which is based on the restoration of a pay differential between an employee and another employee who has secured or is to secure an increase in pay as a result of this Bill. Similarly, the Labour Court may not accept a proposal for an employment regulation order from a joint labour committee or register an employment agreement or vary a registered employment agreement if the proposal, agreement or variation is based on the restoration of a pay differential between an employee and another employee who has secured or is to secure an increase in pay as a result of this Bill. As I said earlier, the Programme for Prosperity and Fairness contains an agreement by ICTU and employers that trade unions or employees will not make such claims.

The remaining sections of the Bill primarily provide safeguards for employees arising from the operation of this Bill. The Schedule lists reckonable and non-reckonable pay components in calculating the minimum hourly rate of pay of an employee. I propose, subject to the passage of this Bill through the Oireachtas, to bring the legislation into operation from 1 April 2000.

My Department will launch an intensive publicity and information campaign so that employers and employees will be aware of their obligations and entitlements. I recognise that enforcement of the national minimum wage is critical to the achievement of its objectives. Accordingly, the Government has agreed, at my request, to assign significantly increased staffing resources to the inspectorate to enable proper enforcement of the national minimum wage legislation. An additional seven labour inspectors and three support staff will be appointed and this will bring the total number of inspectors to 17.

This Bill marks a new step forward in how society views and values the work undertaken by workers who have until now been confined to the margins of our economic progress. The Bill will ensure that 163,000 workers will receive an improvement in their pay as and from 1 April 2000. The Bill provides a fast and cost-free method to employees of determining disputes between them and an employer, an effective system of enforcement and a transparent method to review the hourly rate. I commend the Bill to the House.

I thank the Minister for her comprehensive overview of this important Bill which is the necessary legislative framework for the introduction of a national minimum hourly rate of pay. My party endorses the thrust of the Bill, which has long been promised. I thank the Minister for accepting the amendments tabled by my party in the other House which will improve this legislation.

The Minister spoke about an assault on exclusion, marginalisation and poverty. I like the formulation of those words and the context in which the Minister applied them. They sum up our main social goal. We must do our utmost to include everyone as yet untouched by the Celtic tiger. We are facing increased difficulties in terms of the development of our economy as a result of rising inflation and consequent attendant ills and an increasing number of asylum seekers and refugees. Another reason I was glad to hear the Minister speak about an assault on exclusion related to the groceries order, which is not relevant to this Bill but which I look forward to discussing with her in the near future.

Will the Senator give away free groceries?

I look forward to the Senator's suggestions.

I thank the Minister. We want to protect our most vulnerable workers, particularly women and young people. While we welcomed the fact that young people at secondary school got summer jobs which helped them to develop a work ethic, they were often exploited. I am glad we are putting a stop to that.

Despite the radical transformation of our economy and the reduction in unemployment, not all employees have benefited from our economic success. This Bill recognises that and will help to put it right. I join the Minister in paying tribute to the members of the National Minimum Wage Commission which did valuable work from 18 July 1997 to March 1998. Its report was published on 5 April 1998. I am glad the date it set will be achieved and that the provisions of this Bill will come into operation from 1 April.

It is proper that the £4.40 rate recommended in the Programme for Prosperity and Fairness is adopted and that it be increased to £4.70 from 1 July 2001 and to £5 from 1 October 2002. I support the provision in sections 12 and 13 to review these figures in any future national wage agreements. If there are no national wage agreements, the Labour Court will be asked to adjudicate on the matter.

It would have been good if all the representative groups, including IBEC, the Small Firms Association, the Chambers of Commerce of Ireland, INOU and ICTU, had been consulted, although I have no doubt they made representations. When the Joint Committee on Enterprise and Small Business was dealing with the Copyright Bill it invited the interest groups to speak to us. It was a useful exercise and an excellent way to scrutinise legislation. It would be a great service to Ministers and Departments and it would help to keep legislators in touch with what is happening. It would also guarantee their input. We often complain about being bypassed, but such a system would prevent that from happening.

Professor George Bain, chairman of the UK Low Pay Commission, said he would be surprised if there were no job losses but that British workers might be better off without the type of low wage jobs which could be lost. He said the scale of losses would be based on the minimum wage and that the jobs it would be better to lose – for which I am sure he was criticised – would be low skilled, low paid jobs which Britain should be looking to move beyond. Perhaps the same applies in this country. He said he did not think the future for Britain was to try to compete with the low wage economies of the Third World. He also said that anyone who says they know what the impact will be is misleading people because there are so many imponderables. This was also stated in the preliminary report of the minimum wage commission.

We must also consider the effect on relativities. People on a little more than the minimum wage will undoubtedly seek increases following the implementation of this legislation. There will be a knock-on effect, although there is a mechanism in the Bill to deal with this and certain guarantees have been given. However, pressure will be put on the employer and not all employers are well organised. The payment to sub-post masters, who often employ people, is just below the minimum wage. I do not know if that has been examined.

Women and people under 25 years of age will benefit most from this legislation and they deserve to do so. Home helps, who are usually women, are paid £2, £2.50 or £3.50 per hour. We hear many complaints from constituents about this issue. Members on both sides of the House have clamoured for this matter to be addressed over the past three years. However, nothing has been done. I ask the Minister to clarify what discussions, if any, have taken place with the Minister for Health and Children on this issue.

There is an urgent need to exempt those earning the minimum wage from tax. The Government raised the tax free threshold to £120 but the remaining £50 earned by a person working a 39 hour week on £4.40 per hour will be taxed. The Government promised to deal with this issue but it has not introduced any measures to date. My party's proposal to exempt the first £170 of earnings should have been accepted by the Government.

The Government must also provide targeted training for the unemployed and those on low incomes in low skilled jobs because they will suffer if there is a downturn in our economy. The Government must provide a proper employment service. I appeal to the Minister to look again at the community employment schemes. I recently tabled a motion in this House on that matter. From 1 April, in conjunction with the introduction of the minimum wage, the Minister proposes to introduce changes to community employment schemes which will mean that people over 35 years of age who spend three years on a community employment scheme will not be able to join another scheme. In the past, the Minister used words such as "flexible" but, sadly, FÁS officials do not know what the word means. As far as they are concerned, if someone completes three years on a community employment scheme and they are over 35 years of age, they cannot take part in another scheme. Three years is the inflexible cut-off point. The Minister should allow real flexibility as these people will probably never again enter full-time employment because of their age and the fact that the work they are doing suits community employment schemes. The Minister has a responsibility to re-examine this issue and I urge her to do so urgently.

We have heard much talk recently of the need for 200,000 immigrant workers. I do not know how this figure was arrived at as I have not read anything to suggest that such a detailed assessment was carried out. However, there is a shortage of labour in some sectors. When this legis lation is enacted, I hope the rates of pay offered will at least take up the slack among the unemployed. It is difficult to explain why many jobs cannot be filled at a time when more than 100,000 are out of work. The Minister should address this issue in her response. If there is a need to bring 200,000 workers into the country then, perhaps, we should offer more attractive wages and more certainty regarding those wages. This might help to address the problem.

Section 22 requires employers to keep records for three years to show that the provisions of the Bill are being adhered to. All businesses must keep records for six years for tax purposes so why does the Bill require them to keep records for only three years?

Will the Minister address the concerns of those who employ au pairs or nannies? I am aware of a case involving someone who has been ill for the past three years and who is unable to care for her daughter, drive a car and so on. This person reckons that employing someone for 48 hours at £4.40 per hour would cost £211.20, her employer's PRSI would be £7.75, there is also a court accepted figure for board and lodgings of £75, bringing the total cost to £294.15. This figure does not include the cost of telephone or car usage. This woman points out that one is not allowed to claim tax relief on domestic employees. The cost is very high and would be in excess of £500 per week which is far in excess of the supposed intention of the legislation. Will redundancy or involuntary resignation be the solution for such a person?

This woman suggests that one equitable solution would be to allow all registered employers to offset employee costs against their gross income. The cost of such a scheme would be more favourable to the Exchequer as the tax deductions would lead to a rise in salaries, resulting in a higher tax take from employees. Such a measure would also move a significant number of those working in the black economy into the tax net.

Another problem with this legislation is the rigid definition of work and its interaction with the Organisation of Working Time Act. If an employee accompanies the family on a social or family occasion and has responsibility for a child, this is regarded as being at work. The Department informed the woman to whom I referred that the definition of an employee is anyone who works for more than eight hours per week for more than 13 weeks per year. However, in her view the definition of an employee in this legislation appears somewhat tighter. By any reading, all babysitters will be brought under the scope of the legislation. A night out will suddenly become very expensive for parents.

This woman also points out that Ireland has not ratified the European convention on au pairs, even though it has been in existence since about 1973. It seems to her that this Bill will bring au pairs within the scope of the Bill. The Department informed her that these matters will have to be decided by a rights commissioner. I am sure the Minister is aware of the UK legislation in this regard. This woman also points out that the timescale for implementation of the Bill is quite short and asked me to seek redress in regard to these matters. She is particularly concerned that employee costs should be offset against gross personal or business income and I ask the Minister to address these concerns.

The Minister was able to state that 163,000 workers will see an improvement in their rate of pay from 1 April which is a very fine April Fools present for those who suffered the indignity of low pay and its associated problems for many years. I welcome the Bill which has taken some time to come before the House because of the various elements which had to be considered. The Government gave a commitment to bring the legislation into force from 1 April 2000 and I am hopeful that we will meet that deadline.

The Minister spoke about what the minimum wage will mean to people. Tens of thousands of low paid workers, particularly women and younger people, will benefit from this improvement in their minimum rate of pay. Senator Coghlan rightly stated that the Bill is an assault on exclusion, marginalisation and poverty and we should focus on what marginalisation and poverty mean for those who have been on low pay for many years.

It is important to protect the rights and dignity of people who have, perhaps through no fault of their own, been unable to secure the education or the type of employment to move them into the ranks of those who are enjoying the benefits of the Celtic tiger economy and some of its better paid work. Not many years ago people starting work in shops and offices were paid less than £1.50 per hour and the average weekly wage for an office worker was £65 per week. Matters have improved since and an average office worker's salary is now £12,000 or £14,000 per annum for a 35 to 37.5 hour week. The hourly rate is increasing all the time.

The market will decide how much people are paid. While this Bill offers a welcome level of protection, it introduces a minimum wage and we should aspire to all people being able to achieve higher wage levels. We can achieve this by focusing on education, attracting higher paid jobs and training those who have been unable to find such work in the past.

I welcome the protection the Bill offers for women and younger people. It has been said that young people can be enticed away from education when they have experienced payment for summer work. I hope that the minimum wage will not have on impact on people's decision to stay at school. This factor has been recognised by the Department of Education and Science, employers and the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Tom Kitt. We must ensure that people do not leave school early and fall into a rut of low pay from which they will be unable to escape. The only way to address social exclusion and marginalisation successfully is through educating people and encouraging them to train for jobs which offer them the lifestyle and financial security they want.

It is sometimes forgotten by those who talk about the inequity and indignity of low pay that the ability to enforce minimum wage legislation comes about through our economic success and ability to generate money. Only those factors ensure that small and medium sized businesses which traditionally pay low wages are in a position to increase them. Balance is the key. It is no use having a minimum wage if a person is unemployed; low pay is preferable to no wages.

Competitiveness and the ability of companies to succeed are vital to this State where an enormous number of medium and small businesses make a vital input to society and the economy. Their contribution is not just measured in the number of jobs and the amount they pay; it is measured in terms of the contribution they make to peripheral communities in the south and west, communities which depend on these businesses. Often they are run by owner-managers who have put their whole being into the development of their company to ensure they and their employees have a reasonable standard of living but are still able to live in these areas. Many small towns are dependent on small companies to keep people in the area.

Low wages often mean a low level of skill and self esteem for those earning them but the introduction of a minimum wage will solve that problem. Training must be offered on a national basis so we can retain the jobs we have and focus on attracting new ones. Those jobs must not be dependent on a decision in a multinational headquarters thousands of miles away which could move jobs from Galway to somewhere in Asia or Taiwan to reduce labour costs.

This legislation does not solve the problems of low skill, low self esteem, dead end jobs and it will not safeguard our economic competitiveness. It is essential that, as well as introducing these measures to protect those on low wages, we focus on other ways of removing them from the poverty trap into a situation where they can earn money, feel better, where their skills add value to the product, ensuring that jobs stay here and that we can continue to attract more.

As the economy evolves, it is important that legislation reflects the recommendations of the social partners. The provision in the legislation to review the phased introduction and increases in rates over the next two years, from £4.40 per hour in April 2000 to £5 per hour in October 2002, is important. Market forces have overtaken these rates in many jobs. Many companies which used to pay £4 per hour are now paying £5 or more per hour before shift premiums and overtime premiums are included in the overall calculation of the rate of pay. These market rates focus attention again on the need to maintain competi tiveness. While the legislation offers some protection to the low paid, it will be our ability to attract work and our competitiveness globally that will ensure that people are not on the basic wage but on one set by the market which reflects what the companies can afford.

We have made a commitment to introducing this legislation before 1 April. It is important, however, that the awareness campaign is widespread and easily understandable. There are many people who have an idea about the minimum wage but do not understand how the Bill will be implemented, the protection it offers to the employee and to the employer or the impact it will have on business. It is the intention of the Department to ensure that all people affected by this legislation will fully understand what it means for them.

The JLCs and other such bodies have always been involved in statutory wage fixing. They will continue to exist but I hope the need for them will disappear and that nothing in addition to the national minimum wage will be necessary.

I compliment the Tánaiste on this and all the other legislation she has brought before the House. The inbuilt review mechanisms will enable us to review the legislation at any time. Monitoring committees will be set up to ascertain the effectiveness of the legislation and will, perhaps, take a proactive role in assisting the Department and employers in dealing with problems and difficulties that may arise when applying the legislation to their business. We must ensure people are aware of their rights and the mechanics of implementing the Bill.

The Bill recognises the contribution which first time entrants, trainees and people under 18 years of age will make to the workforce. However, I would hate to see its implementation resulting in students leaving school earlier. We need to encourage them to stay at school, complete their leaving certificate examinations and gain further qualifications, be it through plc courses, institutes or universities. It is only through gaining education we can hope to see a true assault on poverty and marginalisation.

Most employers are decent but there are times when, through lack of knowledge or ill-advice, they think they can walk over people. I welcome section 36 which deals with the need to protect employees from those employers who may try to circumvent the legislation. There will always be a few people who will try to get around the law. That practice, which is in our culture, is changing slowly but it will take time to filter through to all employers. It is important that a person who proposes to exercise his rights under the legislation is protected from victimisation by the employer. That is very important. Many employers have ways and means of ensuring a person who tries to stand up for his rights or the rights of others in the workplace is victimised. I welcome the prohibition on victimisation.

The setting aside of the general requirement of one year's continuous service under the Unfair Dismissals Act if the person is dismissed for trying to gain his or her rights under this legislation is very important. Employers cannot, and I hope will not, dismiss people who seek their rights under the legislation.

I welcome the prohibition on the reduction in the hours of work of an employee without a corresponding reduction in duties or amount of work. That loophole is no longer available to employers. The section also deals with the prohibition on employers from changing the status of unreckonable components to reckonable status.

Equally important – and I mentioned competitiveness and balance earlier on – is the recognition that some firms require time to increase charges and to re-educate their clients about their service. The inability to pay clause is very important in that it recognises that not every company in the immediate or foreseeable future may be in a position to implement this legislation. Exemptions from implementation for a up to one year may be granted by the Labour Court. The Bill recognises that everyone has a role to play.

The legislation should be implemented by way of assistance to employers rather than in an enforced manner. While I recognise that additional resources are being provided for secretarial and inspectorate services, we should take a partnership approach to implementing the Bill. We have seen very successful approaches in the social partnership area over the past few years. I would not like to see that jeopardised. We should work together to ensure the legislation results in improved competitiveness for all companies and an improvement in the fairness and equity of wealth. I look forward to moving forward on a partnership basis so that no part of the legislation is exclusive but will benefit us all. A concept of balance is particularly important.

Senator Coghlan mentioned the difficulties we are having in recruiting people. There is a need for additional labour but I am not sure how we will bring in the people we require. Some of the needs are short term, others are long term and the remainder are in specific skill areas. Those wishing to recruit in the specific skills area will have to go outside the country and will pay dearly for it. The challenge for us is to ensure that our training programmes are focused on the type of skills required to fill the jobs available.

I heard on the radio this morning of a group of people who will graduate from the LES programme in association with computer companies in the Dublin area to very well paid jobs in the computer industry. I would like to see that scheme, which has been highly successful in Dublin, implemented throughout the country, particularly in areas with poor infrastructure like Connemara, the islands off the coast of Galway and the west coast from Donegal to Kerry. We must train those caught in the poverty trap in computing, networking, telesales and programming skills. These are the skills for which companies are pre pared to pay and accept at a distance. We could see people being able to work from home on PCs linked through the ISDN network which we are putting in place throughout the country. We could see a reduction in the long-term unemployed and in our need to take in people from abroad to fill the vacancies we have.

The question of home helps was raised in the Dáil and by Senator Coghlan. I cannot speak for all the health boards but the Western Health Board has received additional funding through the Department of Health and Children to put into effect the increase in the standard minimum wage to £4.40 per hour. Over the past four or five years that I have been a member of the health board in Galway we attempted to raise the rate each year, but it is good to see the rate will increase to at least £4.40 per hour and will increase significantly over time to £5 per hour and perhaps even more. I welcome that increase.

Senator Coghlan raised the important question of au pairs, nannies and child minders. I do not know the answer to that conundrum but many people who go out to work and whose child care is provided by somebody in their home or elsewhere are not paying £4.40 per hour. They are not in a position to pay child minders £4.40 per hour for a 40 hour week as well as tax and PRSI. That is an issue we need to address. I hope it will stay in people's minds in the coming months and that it will be addressed in our child care policies.

I am sure the 163,000 people who will see an improvement in their rate from 6 April will welcome it. In addition, there will be increases in pay negotiated through the new partnership agreement. I have no doubt there will be many happy people from 6 April who will see a significant increase in their take home pay for the first time in many years as a result of the measures introduced in the budget. Over the first few weeks of April as we approach Easter people will be walking around with smiles on their faces. I commend the Bill to the House and look forward to its implementation.

This is the emergence, after a long gestation period, of crucially important labour legislation. I compliment the officials in the Department of Enterprise, Trade and Employment who have put such energy, not only this week but over the past couple of years, into producing this legislation, which is a tribute to them. I also compliment the Minister on being prepared to live with this legislation despite the fact that there was much objection to it and that many right-wing conservative reactionary people said it was not the way forward.

There are serious levels of low pay in parts of Ireland. For every worker who is paid £7.50 per hour to work in a shop in Dublin, there are people in the west, the midlands and away from the urban areas who are not getting half that amount. The trade union movement has called for minimum wage legislation for many years. It has been on the agenda for as long as any of us can remember. Over the past three or four years a number of trade unions representing lower paid workers felt that the only future for them was to get this "floor" to the payment of lower paid workers. We welcome the legislation, although there are aspects of it over which we may have differences. However, the overall thrust of the legislation is positive and progressive. It will be effective and is the first guarantee given to lower paid workers, of whom there are plenty.

We should recognise that we do not hear all the stories. I will give an example which could be replicated on many other occasions. Recently, the media paid much attention to the closure of a small jeans factory in County Louth and the fact it was a blow to the local economy and the industry. These workers, however, were earning £3 per hour. That is the answer to people who say we did not need minimum wage legislation. For people in such situations, this legislation is crucial.

This brings me to the issue of a competitive wage. I have listened to employers say that paying workers a mere £4.40 per hour will, in some way, make us uncompetitive. If we are to pay people less than £4.40 per hour to remain competitive, we do not need that type of industry. Parents do not want their children to grow up to take employment at less than £4 per hour. If it is not good enough for our children then we should not look for it for others. People are entitled to a living wage and to the dignity of being well paid. They are entitled to the comfort of a minimum wage on which they can rely.

There is no doubt that people have been exploited and we have seen what has happened. Senator Cox referred in passing to this and I agree with her. There has been a temptation in many places to draw people out of the school system into work. If anyone wants to see the damage it does to a local area, one only has to look at Fruit of the Loom. Anyone who has seen the Fruit of the Loom file footage shown on the nine o'clock news every couple of months will know it is like looking at an Industrial Revolution scene, where thousands of people are sitting at machines in a small area being paid small wages, which might have seemed like big money when they were 16 years of age. What has happened now that the company has gone to Morocco where it will exploit Africans who will work for even less? People who were enticed out of school to work for small wages, which may have appeared more when they were young, find themselves without any qualifications and with no real future. The question of qualifications and education is an issue we must consider.

I have argued with the Government and employers that £4.40 is not enough and I disagree with the Minister in this regard. It should have been £5 per hour from now. There is no doubt about that and it is hard to argue against it. Asking people to work for less than £5 per hour given the wealth in the country and the flourishing economy is unacceptable. I hoped a minimum wage of £5 per hour rather than £4.40 would have been introduced immediately. Nonetheless, I also recognise that people have to realise the value of centralised bargaining and of the partnership programme. We have been able to ensure that, over the next 33 months, this wage will increase to £5 per hour by the end of that period. Although it is too little too late, I welcome it as a progressive and important move.

I remind the Minister of another element in the Programme for Prosperity and Fairness, that is, the objective that during the course of the agreement people being paid less than the minimum wage will be outside the tax net. That would make a huge difference. At the moment people are drawn into the tax net at approximately £110 to £112 per week. The minimum wage will that mean people will earn up to approximately £160 to £180 per week depending on the times and hours about which we are talking. It would make a considerable difference if those people were taken out of the tax net. If the objective – I understand it is not a commitment – in the partnership programme was delivered, the tax free income would go from £110 or £112 to £160 or £170. That would be a clear improvement in people's take home pay of perhaps £25 or £30 per week depending on how one calculates it. That would make a significant difference. If the Government were to provide for that in the next budget, it would take the sting out of my argument that the minimum wage should be £5 an hour with effect from now. We could move forward in that way.

This legislation focuses on low pay. It is the first time the trade union movement has given a commitment that increasing people's wages to a minimum level will not give rise to continuing relativity claims based on it. That is not intended and it will not happen. People are standing back and for the first time letting the lower paid take a series of levels of support.

This is an outcome of consensus negotiations, new trade unionism and of moving away from old confrontational type tactics to tactics that involve people sitting around the table, defining and establishing a clarity of objectives and moving forward together. It took a long time for the trade union movement initially to convince the Government and then employers regarding minimum wage legislation. It has happened and it should be recognised as an important move forward. That argument outweighs my demand that the minimum hourly rate should be £5 from the start. That the Minister has been so enthusiastic about introducing this legislation and has not been behind the door, so to speak, in defending it to employers and other groups reflects the progressive nature of her approach to her job. I commend her on that.

The legislation reflects a civilised society. At a time when more and more commentators are concerned about the greed, selfishness, self-centredness and egocentricity of Irish society, when people are thinking more and more about themselves, about creating wealth and bringing more money into the economy, it is welcome that we are able to introduce minimum wage legislation that will provide for people at the lowest end of the scale.

The development of partnership over the past ten or 12 years has contributed to the fall in unemployment from 18% or 19% to 4% or 5%. We are not satisfied with ensuring people are employed but want to take the next step of ensuring they are paid an acceptable level of wages. The minimum hourly rate of £4.40 is too low, but nonetheless I welcome the legislation. It should have been set at £5 an hour from the start, but this legislation provides a solid foundation for the future and for an increase in the minimum hourly rate. That will be welcome by Members on all sides of the House.

The trade union movement welcomes the legislation, although it has concerns about some aspects of it. My colleagues in MANDATE have made their position clear. An argument was made in the other House about some items that should not be used to work out reckonable components in terms of what the minimum wage should be. The worst excesses were amended. I emphasise that the Minister accepted important amendments in the other House. I would have tabled similar amendments if they had not been accepted.

Paragraph 5 of the reckonable components in the Schedule provides that piece and incentive rates, commission and bonuses, which are productivity related, can also be included. I would like to hear the argument in support of that. I could support an element of it, but it could also be a formula for exploitation. I do not find it attractive and I would prefer if it were not included. I intend to table an amendment on it on Committee Stage.

Paragraph 3 of the Schedule, which refers to a shift premium, is included for a particular purpose. It could result in people being asked to work the awkward shift all the time as a device to allow the employer to go under the bar of the minimum wage.

I welcome the legislation and I will vote in support of it. The issues with which I have a problem are important, but the overall progressive nature of the legislation outweighs my arguments. I ask the Minister to reconsider the issues I raised on the Schedule. I ask that an extensive information programme be put in place to ensure that people understand their rights under this legislation. Such a programme should be put in place immediately and it would be of great importance.

The legislation should be policed in a pro-active manner. People will have to check that workers are paid the appropriate level of wages as required under the legislation. I ask the Minister to give a commitment that the Department will respond with alacrity to information from trade unions on the non-compliance of employers with the provisions of the legislation. The putting in place of an information programme, the policing of the legislation and an efficient and effective response to information by trade unions on non-compliance with the legislation are extremely important.

This legislation is an important step forward, in the middle of all that is happening in this booming economy. It shows that as a society we did not give up on ourselves. It is the first indication that there is a caring society in the midst of a selfish society. To that extent, the legislation must be commended. I support the Bill and I recommend it to the House.

I, too, welcome the Bill. It is long overdue. It is sad that we must introduce laws to ensure things work. As a former employer, I employed people who otherwise might not have got a job, as work was scarce at that time. This legislation will be good for the brightest, but those with some slight drawback might be passed over. In the past employers would have taken on such people, trained them and have been patient with them. Some of those people became not only excellent workers but excellent employers and ran their own businesses. We tend to forget that when some young people are at school they may not be so focused. Many young people who went away to England and elsewhere with limited knowledge later studied. They became late developers.

Many people do not produce their best in the first 16 years of their lives. We expect young people to be geniuses at 16, but they cannot be. Young people should leave school at 16 if they wish and take up work, but they might return to education at a later date when they could make better students. I am delighted it has been proven that students who avail of the transition year get better results when they return to the classroom. They are faster learners.

I was educated in the university of reality. When I left Grange tech at 16 years of age I did not have a lot of experience. I had a smattering of an education, but when I went to work I learned how to make a living. I took the ups with the downs. The same applies to many people. Some of our best and brightest never did the leaving certificate examination. However, when they went into business or work they developed excellence. While I agree our laws are important, I am afraid that many of them may militate against a person aged 15 or 16 years who is not too interested in work. They may not get a chance to enter the workforce because an employer who must pay full wages will only employ the best.

Nature has a great way of creating equality. There is such a shortage of workers now that employers are glad to get people. However, in the past, too many employers made a virtue of bad pay and making little of their employees. This was sad and led to the need for the Bill because we must protect people and ensure that those who have the ability to work receive fair pay. I am glad that 163,000 workers will receive improved pay after the Bill is enacted on 1 April.

I am also glad that the Bill excludes from its provisions employees who are close relatives of an employer and statutory apprentices within the meaning of the Industrial Training Act, 1967, and a member of the Defence Forces under the 1977 Act dealing with labour services. It is important that members of families are not included in the Bill. It would be a bad day if a father or mother could not employ a son or daughter without having to act strictly within the law. It would destroy family life if parents had to treat their sons or daughters as an employee and not as a member of the family. This is a good distinction and the Minister should be congratulated on it.

In common with other Bills, this legislation is much needed. It will make life easier for many young workers. It is a most important Bill and I have great pleasure in recommending it to the House.

I also welcome the Minister of State to the House and compliment the Government for initiating this important legislation. It has entered the legislative process at a time when, once again, consensus has been achieved between the Government and the social partners on the way forward for social and economic policy over the next three to four years. All those involved in the vote last week on the Programme for Prosperity and Fairness should be commended for once again showing foresight in accepting the consensus which was reached during the lengthy negotiations over the last six months.

It is also interesting, in the context of the programme, that the fourth pillar, the voluntary and community sector, had a proactive involvement in the process. I do not enthusiastically embrace this development, although I have the deepest respect and admiration for all those who work in the community and voluntary pillar. I have had occasion to work closely with them as a long standing member of the National Economic and Social Forum since 1993. While they made an important input to the discussions and influenced elements of this legislation to a large extent, it raises a fundamental question which I take the opportunity to mention every time legislation of this nature comes before the House – that is the democratic deficit which is emerging in the context of discussions of this nature.

Surprisingly, this democratic deficit is hitting the heart of democracy, the Members of this and the other House. As legislators, we are increasingly presented with innovative social legislation of this nature but we do not have any real input to it other than having the opportunity to debate it by way of a motion. The real decision making is increasingly taking place in Government Buildings. The Government represents the people and, by extension, both Houses of the Oireachtas sit at the negotiating table as of right. The social partners, the employers and the trade unions also sit at that table, representing their interests. However, the introduction of the community and voluntary pillar has created a large corpus of people who also sit at the table and have a direct input to the negotiations but who are not publicly accountable to anyone.

I do not wish my remarks to be interpreted as attacking the concept of the community and voluntary pillar. I am merely raising this issue because a dangerous trend appears to be developing where those who are not elected to the positions they hold are increasingly having a direct input to the country's socio-economic policies to the extent that they can emerge from Government Buildings and state that, but for them, a certain initiative – for example, the National Minimum Wage Bill – might not have been introduced. I am concerned about that trend.

I accept that this matter is not proper to today's debate. However, Members on all sides have raised it on many occasions and I hope they will continue to do so. It seems that, in the long term, this trend represents a direct assault on the concept of participative and parliamentary democracy. Increasingly, decisions which require the introduction of legislation are being made outside the parliamentary process.

Notwithstanding that, I wholeheartedly welcome the initiatives contained in the Bill. The minimum wage will start at £4.40 per hour and rise to £5 per hour over the next 18 months to two years. That development came about as a direct result of a Government initiative to establish a commission to consider the issue of the minimum wage. The Government is to be commended for ensuring that the commission arrived at its conclusions and offered its recommendations in a speedy and efficient manner and the Minister rightly paid tribute to those who participated in that process. The Government signalled early on that it would take on board those recommendations and, once they were published and a date of commencement set, it stated without hesitation that it would implement the recommendation on the minimum wage on the relevant date. That day has almost arrived and it is an historic departure that many hundreds and thousands of workers, particularly those employed in the services industry, will be able to have recourse to a legislative model which states, unequivocally and unambiguously, that they cannot be paid less than £4.40 per hour.

When replying, will the Minister of State indicate whether we are being overtaken by events? Anecdotal evidence suggests that, because of demands on the labour market and the difficulty employers in the services sector are experiencing in recruiting suitable staff, the minimum wage of £4.40 is being significantly and substantially exceeded. For example, fast food outlets throughout the country are paying employees up to £6 per hour. While the legislation is welcome and commendable, is the Government of the view that by the time the minimum wage has reached £5 in 2002 employers in many industries – partic ularly the service industry to which the legislation mainly applies – will be paying double that amount?

The engine of our economic success, which has been generating wealth since the mid-1990s, may be in danger of faltering unless sufficient people can be encouraged to enter the Irish labour market. The areas in which Irish workers were employed when they travelled abroad in the past are those to which we are finding difficulty in attracting labour. That is a welcome irony because for over 150 years people have haemorrhaged out of our workforce, particularly in the 1950s and 1960s when there was an unprecedented brain drain. We are now experiencing difficulties attracting workers to take up positions in industries where, traditionally, there was never any problem filling vacancies.

This is an innovative Bill. It is another example of the Government's commitment to ensuring that all citizens of the State enjoy the fruits of their labour, that they are paid a fair wage for their day's work and that the Celtic tiger – I hope someone can suggest a replacement for that tiresome term—

The way things are going I hope we are not mauled by it.

I hope the legislation will be seen for what it is, namely, a genuine acknowledgment and recognition of the need for the Government to acknowledge that those who are involved in developing economic success in this country are entitled to share its fruits. I commend the Bill to the House.

With the consent of the House, I wish to share time with Senator Costello.

Senator Ross has 20 minutes to make his contribution whereas Senator Costello has 30 minutes.

That is right. I will leave it up to Senator Costello.

Acting Chairman

Do the Senators wish to share a 20 minute slot?

If that is agreeable.

On a point of order, I am sure the Chair will allow these two eminent gentlemen to share more than 20 minutes.

Acting Chairman

Senator Coghlan should not interfere. I am in the Chair and I would appreciate it if he would respect my rulings. I am merely informing the Senators of their rights.

I only intended my comments as—

Acting Chairman

They were not necessary. It is agreed that the Senators should share 20 minutes.

Senator Ross may take the full 20 minutes allocated to him. I wish to use the 30 minutes at my disposal.

Why have the curtains been drawn?

Acting Chairman

Because the sunlight is affecting the television cameras.

The television cameras are the least of my concerns.

Acting Chairman

The Senator should concern himself with speaking on the Bill.

I presume the clock is ticking.

Acting Chairman

It is, and Senator Ross is wasting time.

It is important that the forces of darkness are not allowed to dominate the House.

This Bill is not controversial in party political terms because everybody wishes to be seen to favour a minimum wage. I was not inclined to add to what I have already said on this and many other topics until I heard Senator Mooney speak earlier. He said, if I understood him correctly, that the decision to introduce a minimum wage was not taken in the Oireachtas but elsewhere. My problem with this Bill is not the principle of a minimum wage but where and how the decision was taken and its timing.

No Member of this House, with the exception of Senator O'Toole in another capacity, had any input into the decision. It was taken behind closed doors by those who are now taking control of this country and making its important decisions. It does not matter whether the minimum wage is too much or too little. What is happening here is a surrender of power by the Government to the unions and the employers.

This was negotiated by people who have no democratic mandate. Look at what happened to the national pay agreement last week. The programme, which includes this legislation for a minimum wage, was passed by the unions. However, it was passed unanimously by IBEC. What discussions are taking place among those who are taking control of democratic procedures in this country that they could pass such controversial measures unanimously? There is no dissent, apparently, within the employers' union about matters of such great importance. They decided everything was all right and rammed it through. That is the type of body it is.

This is not democracy at work but corporatism or corporate Government. This Bill and the PPF were cooked up by people whose interests are their own and not those of their members on either side. One group passed it unanimously, the other simply passed it. However, as a result of how this country is now being governed, there is rebellion in the ranks and it is not related to minimum wages, which is not really an issue. It is fascinating to see that those who devised this Bill as an ingredient of the national package are already in turmoil.

On the day the national agreement, which includes the minimum wage Bill, was agreed I heard a spokesman for IBEC say smugly: "We may have paid a bit much but one has to pay a premium for industrial peace." That is an extraordinary statement. He spoke about industrial peace last Thursday just before all hell broke loose in one of the country's key industries. Those who are negotiating deals of this nature are not in touch with their members. That is all right for IBEC because it has always been out of touch with its members. It never will be in touch with its members; it is not its business to be.

The trades union movement, however, is also out of touch with its members. ICTU, the body which negotiated this deal, is unable to deliver the industrial peace it promised because of another union which is not even a member of ICTU. The National Bus and Rail Union is in open rebellion. It cannot be contained by anybody because it is not a member of ICTU. It says the national pay deal is irrelevant and that it will not abide by it because it is not party to the agreement.

The union is quite right. It did not agree to 5.5%, minimum wages or anything else. It is not a member of the cosy group which makes these agreements to keep themselves happy and in power and which wishes to retain, for as long as possible, the clout it wields in Government Buildings. The most extraordinary aspect of the bus strike is the deafening silence of the trade union movement. There is plenty of noise from the busmen and rightly so. However, one cannot see Peter Cassells for dust.

Or Deputy O'Rourke.

He cannot control what is happening in the busmen's union. The trade union leaders have lost control because they are out of touch. They are so obsessed with holding on to their power, as is IBEC, that they have lost touch with their members.

The same applies to the ASTI. It suddenly disappeared from ICTU towards the conclusion of the agreement and demanded a 30% wage increase. If its members do not get their demand, according to a paper which was wickedly leaked to the press—

I do not know and we do not know who is the author of the paper. They say that if they do not get their 30% they will disrupt the examinations next year. Is that industrial peace? The national pay deal is for industrial peace. There will be disruption of school examinations and we now have a transport strike. Is anything else to go? Other unions have said they will not accept the agreement. MANDATE is one. It is going to try to close the gap. Another teachers' union, not unfamiliar to these benches, says it wants 30% under the benchmarking.

They also seek a reduction in the number of teaching days.

Where is the Senator's leader?

My leader is well able to speak for himself. He does so regularly and ad nauseam. He has already spoken on this legislation.

The problem with this Bill is that it was decided elsewhere and will be rubber stamped in the Oireachtas. I have no problem with the humanitarian motivation of those who ask the House to agree to a minimum wage. However, I do not believe the process which locks people into either high or low wages is right. The problem with this type of legislation is that it curtails the free market. It means that some people are paid too much and some are paid too little. If there is a minimum wage and a maximum wage, which is effectively what one gets with a maximum pay increase, people are locked into a situation where everybody deserves the same amount of money. We are imposing a philosophical uniformity on a public service and private sector which do not merit it.

The problem with pay deals is that everybody gets the same amount, regardless of ability or work. That is crazy. Take the case of the busmen. I could not get the exact figures this morning but I understand they earn a basic wage of £273 per week. That is indefensible. More politicians should say so but they are afraid. They are worried about public opinion. It is also indefensible that busmen should have to work seven days per week to provide a living wage for their families. That is wrong. Regardless of whether somebody is working in the public or private sector, when they are doing important work it is wrong to pay such wages. The only reason the Government has decided to make a stand on this issue is that it thinks public opinion is running against the bus drivers. I believe the Government is wrong and that public opinion is evenly divided, although it might move that way after a long strike.

I am tired of hearing other sections of the community, who are better paid, saying they have to put up with recalcitrant people, syringes, stress and rough this, that and the other. I agree that it is rough and difficult for them. We should be understanding about that problem for teachers, nurses and others.

And politicians.

However, bus drivers have to put up with the same and worse late at night when they are working overtime to keep bread on the table for their wives and families. Are they not entitled to the same consideration from the public, the taxpayer and the Government?

The powerful unions are winning, not on merit, but because they are members of the club. The strong unions are getting a better deal for their members regardless of the merits of their case. The busmen have a far better case than many of the others.

The busmen who are not members of ICTU have put in a claim for a 20% increase with no strings attached. There is nothing wrong with that. They are not part of ICTU and are presumably not party to the pay deal. There is nothing wrong with that either. The Government can easily give them the money they seek on the basis that they have not signed up to the pay deal and are not part of the cosy cartel. However, it has decided against this approach on the basis that everybody must be covered within the 5.5% agreement. That is wrong.

More than the private sector, the public sector is full of enormously diverse groups of people with different merits, abilities, dedication and commitment to their work. They operate in different circumstances, but if they are weak they are open to exploitation. The bully boys in the public sector are winning while the small guys are being bullied and, to its shame, the Government has adopted their point of view. As a result, the Government, employers and unions are in a devil's pact. They are flummoxed if somebody outside the cosy arrangement they have established requests more. They are especially flummoxed if such people make a case that has obvious merit but has been ignored and is confronted only because those making the case are seen to be weak.

We are at the beginning of the end of national pay deals. This Bill is part of that process. We have seen such deals broken within minutes of their agreement, before the ink is dry on the paper on which they have been signed. It is not possible to impose the same terms on the whole population of workers.

For this reason there are two problems with the National Minimum Wage Bill. It will be used by some people to pay people too little and by others to pay them too much. Some employers, especially those in small businesses, will not be able to afford it and they will evade and avoid it. Others will exploit it by telling their employees that is all they can give but that they are being given the minimum wage.

Second, there should be neither a minimum nor a maximum wage, but there should be free collective bargaining, where those like the busmen should be given more money because they deserve it. Other areas of the public service should not get such a large slice of the national cake simply because they have strong bully boys in their unions.

I will not oppose the Bill because there is very little point in doing so. The decision to implement it has been decided elsewhere. However, I strongly protest about its timing and about the method by which it was negotiated.

I have listened with interest to the forceful contribution by my friend and colleague, Senator Ross. He passionately believes in what he has said. As one of the longest serving Members of the House he has always excelled in his contributions and has displayed his passionate commitment, especially in financial matters. Over the years the House has benefited from his vast knowledge of this area.

Perhaps the Leader will let us know where he stands on the free market.

Acting Chairman

Senator Cassidy without interruption.

The Bill sets a minimum hourly rate of pay of £4.40 per hour from 1 April. It is a start to the Government's commitment to this area. Having considered the findings of the ESRI study, the Minister has said she is satisfied this rate strikes the right balance between the need to ensure that vulnerable sectors of the workforce, mainly women and young people, are no longer exploited and the need to ensure that employment and competitiveness are maintained. She said it is proposed to increase the minimum hourly rate to £5 by 1 October 2002.

People associated with and involved in industry, especially small industries, will say that advertisements placed in daily newspapers four years ago for available and vacant positions would have attracted up to 200 replies from highly qualified men and women and young boys and girls. Often only one position would be vacant. Last week, following a similar advertisement in a morning national newspaper four replies were received for a vacant position. Only two applicants attended for interview.

The introduction of the National Minimum Wage Bill is a welcome development. We must protect the weaker sections of the community, especially young people who are starting off in employment. Market forces in the Irish economy decide the wages that many people, including the young, will secure. Those of us who are employers know that if we do not pay our workers above the levels recommended by trade unions and others they can pick and choose their employment, even if they are in new employment for only six months. This arises because of the fantastic opportunities in the economy at present.

It is mind boggling to see the developments in the Irish economy. Very few would have forecast them three or four years ago. I welcome them. The purpose of the legislation is to protect the weakest sections of the community and young people. It will have a meaningful impact in future years when, as surely as the economy is on an upturn today, it faces a downturn.

I welcome the decision made at yesterday's OPEC meeting. Of the 11 OPEC countries nine decided to allow more oil production for export to the countries buying it at such a high price at present. Anyone who uses oil on a daily basis will know that its price has increased substantially over the past ten months. I welcome yesterday's OPEC agreement. There are forces outside the control of governments in all countries and the cost of oil is one of them. The increase in oil prices has been one of the contributory factors to the increase in the cost of living. Financial institutions, banks and building societies have increased mortgage interest rates over the past months.

It is natural that there are downturns in economies. In such an event the minimum wage will be a safeguard for those who will be affected by it. We are told that 163,000 people will benefit from 1 April. That is an enormous amount of people in the workforce and I welcome the measure on that account. I also welcome the safeguards provided in the Bill for those who may not be able, for various circumstances, to meet its requirements. I welcome the Bill's aspirations, but if an employer is unable to pay the minimum wage at a particular time and jobs might be lost, there is a safeguard in the Bill against that and problems that might arise for employers.

Small-scale industries and employers must be congratulated, particularly those who continued to employ people through the bad times from the early 1980s to 1993. They continued to employ people in areas even though it was not profitable. They did it because it was a way of life and they believed that the economy would turn around at some future point. Many small industries and employers appreciate the work done by the family bank, that is the ICC Bank.

No one was more pleased than I when the ICC Bank was not sold. Many colleagues of mine are captains of small industry and in the past when their backs were to the wall they approached their public representatives to find out whether there was a friendly bank that would help to keep a family business going or keep a factory open, particularly in rural areas. If a serious constituent, who had made a contribution and had a good track record, wanted me to make a recommendation to a bank I knew that the ICC Bank was the only one that would give a sympathetic hearing in the national interest.

That is true.

As a result of national understandings Ireland has shown the world what it can do. It is only right that we have a small friendly bank which believes that it is people who matter in the long term, not short-term profits. The profits will follow.

Senator Ross made reference to the national understanding in 1987. Last Monday night I watched a television programme in which the former Taoiseach, Mr. Charles J. Haughey, who played a pivotal role in taking the economy by the scruff of the neck, explained to us the difficult times that we experienced from 1968 and 1969. Oireachtas Members, particularly those from the Border counties, will know how difficulty it was to survive. They know how difficult it was to see thousands of young people emigrating. In the words of the song "The Flight of the Earls", you could hear it on the streets of New York or in Sydney or London. Many of our school friends emigrated – there were 57 children in my class at school and 53 of them emigrated. Thankfully, emigration is no longer a problem. The main movers behind that were Charles Haughey, Michael Mullen, a leader of the trade union movement at that time, and Mr. T. K. Whitaker. They got together and introduced what was called then the national understanding.

At that time the top rate of income tax was 58% and anyone unfortunate enough to be on the lower rate had to pay 35%. Nobody had the incentive to work and that is why everyone left. For those people who were left here to keep family businesses going or to keep the small industrial plants going, the only bank that would help them out, in the many cases, was the ICC Bank. I pay tribute to Michael Quinn and the bank for the way it helped the economy.

Sitting suspended at 1.15 p.m. and resumed at 2.30 p.m.

Before lunch I welcomed the fact that 163,000 people will have improved payments from 1 April and congratulated the Government in that regard. I spoke about my various experiences down the years and, in particular, about small family businesses, small industry and the contributions made by them. In bad times often they could pay only very low wages. I paid a compliment to the ICC bank for its contribution, understanding and attitude and to Mr. Michael Quinn, chief executive, in particular, for keeping the family run small businesses and small industry alive and for affording them the opportunity and confidence to keep those businesses going in difficult times.

A proposal could be considered by the Department of Finance to have the ICC and ACC banks amalgamated and a friendly attitude could be extended towards farmers, small industries and family businesses who are in difficulty. They always showed a clear understanding of the Government of the day and the public representatives who made heartfelt representations on behalf of these people down through the years. The contributions made by these two banks have been enormously important to our success.

Before lunch I also spoke about the national understanding which led to our prosperity and outlined what had happened four years ago when an advertisement for a job was placed in a newspaper and 200 replies were received. When the same advertisement was placed in a newspaper two weeks ago four replies were received and only two people turned up for interview. That is a sign of the strength of our economy and what we have achieved as a nation and as a Government.

I acknowledge the contributions to the national understanding made by the former Taoiseach, Charles J. Haughey, and Michael Mullen, the trade union leader, and Mr. T. K. Whitaker for working hand in hand with the trade union movement, the Government, the farmers, the employers and all those who played an important part at that time. I acknowledge the tens of thousands of people on very low wages in unskilled positions and jobs who played a major part down the years. I pay tribute to the dedication, commitment and loyalty of scores of people who did tremendous work in low skilled jobs for years and who have had very little experience of the Celtic tiger as we know it and the buoyancy in the economy today. I refer also to those who served in voluntary bodies which are the backbone of our communities and represent everything that is good and supportive of the family unit.

As Leader of the House, I wish to put on the record our appreciation for their dedication, commitment, full support and loyalty. I have often found that the people who were most supportive when someone's back was to the wall or when a company or firm was in trouble were those who received least from the particular business or endeavour. They are the people I want to acknowledge and it is they who will form part of the 163,000 who will benefit from the minimum wage of £4.40 from 1 April until it reaches £5 in October 2002.

I welcome the section which gives protection to businesses experiencing difficulties – for example, businesses which have just been set up and are trying to establish themselves or those which are going through a transition period and need assistance. I welcome the review mechanism and the monitoring committee. Obviously, we can legislate for many things but there are always exceptional circumstances.

It has been a privilege and an honour to be a Member of Parliament and to make a contribution on Second Stage welcoming this progressive legislation which will help those in need and who will very much appreciate it. Many people will benefit from this legislation and it will mean a great deal to them when they receive their pay package. A sum of £10 or £15 may not be much to some people nowadays but for many it means a hell of a lot. I welcome Second Stage of the Bill and wholeheartedly support it.

I support the principle of this legislation. As is stated in the explanatory and financial memorandum, the purpose of the Bill is to provide the legislative framework for the introduction of a national minimum hourly rate of pay; we have to agree with that. I would depart from my colleague, Senator Ross's remarks that there should not be a statutory minimum wage, that it should be left to the marketplace, and in his opposition to the partnership role in terms of wage agreements. I agree with him that the present partnership structure leaves a lot to be desired in that it is not fully representative of all the interests that should be represented in the determining of very fundamental policy decisions on the economy, people's incomes and a variety of social matters which are being brought within its ambit.

The membership of the social partnership has changed since 1987. In 1987 it consisted purely of representatives of the trade union movement, the business community, farmers and the Government. A total of 24 voluntary and community organisations have been added and are part of the pillars which make up the social partnership. Members of the Opposition in both Houses did not have a role to play, good, bad or indifferent, in terms of consultation or advice and they have no status or standing when these important decisions are being made, yet these matters are as important as any collective legislation which might be passed in any given year. They determine to a great extent the direction the country will take for a three year period. It is not satisfactory that any major plank of what should be the decision making process is omitted.

From that point of view, I agree with Senator Ross that partnership is not ideal in its present constitution, that it smacks of corporate Government and is too narrow. I recognise that the social partnership arrangement which has been in operation since 1987 has provided enormous benefits to the welfare and well being of the people on this island and I am fully supportive of that concept and principle.

We are dealing with Second Stage today and remaining Stages tomorrow. This smacks of corporate government at its worst. The Minister has come to the second House of the Oireachtas, which is constitutionally prescribed to deal with all legislation, having made up her mind. We are dealing with this legislation today and tomorrow, 29 and 30 March, and it must come into operation on 1 April. The Minister does not have the slightest intention of accepting any amendment from the House. It is outrageous considering that we have discussed this matter so often and have promoted the idea in the belief that it should be teased out in considerable detail.

Members have a considerable interest in amending the legislation. I have tabled amendments which are significant in terms of improving it. Since the Minister now imposes a time guillotine that the Bill must be passed and signed into law by 1 April, there is no possibility of its being returned to the Dáil with any amendment by the Seanad. It is a charade. We are being asked to talk in a vacuum on the Bill. We are not being consulted. It is an insult to the House that it should be dealt with in this fashion. Will the Minister reconsider the situation, have an open mind and listen in a meaningful fashion to the amendments which will be tabled rather than guillotine all the amendments as I am sure she has intended to do? This intention is clear, given that a motion for earlier signature of the Bill has already been tabled. She should have an open mind on what we have to say.

Both matters have been dealt with outside the remit of the House. The level of the minimum wage has been decided through the social partnership and the legislation is being decided without the House having a say in the terms in which it will be worded. It is not good for democracy and it is meaningless for Members, who are elected on behalf of the people to rigorously examine and critically analyse all legislation which comes before them, if the Minister has not made provision to deal meaningfully with anything they have to say. That is a major concern and I am greatly disappointed by the peremptory fashion in which the Minister has dealt with the passage of the Bill through the House.

I fully support the concept of a statutory minimum wage. I disagree with Senator Ross who said a statutory minimum wage should not be introduced, that neither a minimum nor a maximum should be imposed and that it should be left to the marketplace to determine. I disagree with him because the untrammelled marketplace is not the best forum to determine a minimum wage. We know that they will opt for the minimum wage and will not opt for the maximum they can afford. They will always try to get as much as they can while paying as little remuneration as possible. That is why there has been such a clamour in the era of the Celtic tiger for decent remuneration for a decent day's work.

Large sections of the economic community have been remiss in their failure to provide a decent wage to their employees. There have been horror stories about wage levels throughout the country. Women especially have suffered most from the absence of a minimum wage. Women's work has always been undervalued – not just here but also in other countries – and underpaid relative to men's work. There are whole areas where wage levels for women are less than satisfactory. All services employment has paid a low level of wages, be it catering, cleaning or whatever.

For that reason it is important that there be a benchmark for wages and that we do not tolerate people being paid less than that. It is important we do that and now more than ever because the Exchequer is in surplus with more tax revenue being paid to it than is being paid out to provide the various support mechanisms to the community. It is important in the first instance that we set a guideline which will flag the point at which a decent quality of life will be provided for everyone and at which there will be a reasonable distribution of the financial benefits of the Celtic tiger.

It is a sad situation that, as we discuss the minimum wage and with the trade union movement having accepted the new Programme for Prosperity and Fairness less than a week ago, Dublin Bus workers are out on strike and marching in protest on the streets of Dublin. It is a dispute which will last three working days this week. There was a dispute in the same company last week and there will probably be one next week. The basic pay of those workers is in the region of £200 per week, which is little more than the minimum wage we discuss. It is also the same as the basic minimum wage of £5 per hour which we and SIPTU sought instead of the proposed £4.40. That will increase to £4.70 in 2001 and will not reach £5 until October 2002, which is two and a half years from now. That is not a wonderful phased introduction of the minimum wage. Almost all the national wage agreement period will have expired before the £5 minimum wage is granted.

What will have happened on the other side of the coin? Let us look at the corporate sector. The level of corporation tax will have reduced from 40% a few years ago to 12.5% by 2003. In roughly the same time, the business sector, which encompasses the businesses which employ those workers to whom we will now grant the minimum wage, will have their corporation tax due to the Exchequer reduced from 40% to 12.5%. Surely they can afford the minimum wage. Their crocodile tears at their inability to pay the minimum wage are outrageous.

They have to make a profit.

They are outrageous. They have had their tax reduced by the State from 40% to 12.5%. The European Union accused us of being anti-competitive and in breach of the competition laws because of the discriminatory manner in which we treated the corporate sector as compared with other sectors. The issue arose with the European Union in terms of indigenous industry as against multinationals. What did Ireland do? It reduced corporation tax for indigenous industry to meet the corporation tax it imposed on multinational industry, which was increased from 10% to 12.5%. It is rich to listen to people clamouring about an inability to pay.

The Minister said that 163,000 people will benefit from her proposals, which is approximately 10% of the working population. That is a significant number of people who will not receive two thirds of the median industrial wage recommended by the National Minimum Wage Commission but will receive less than that. We still have a long way to go. We are not introducing a princely wage. It is disproportionate compared to what other sectors are getting in the Celtic tiger economy.

It is sad to see Dublin Bus workers getting the equivalent of the minimum wage as their basic pay and having to work all the hours God sends. One reads horror stories in the newspapers about them working 70 and 80 hours a week from 7 a.m. to 2 a.m. each day to get a decent wage to raise their families. That is not safe, healthy or beneficial to family life.

It is against the law.

It is outrageous. These people have careers. This is not a fast food operation where somebody is employed for a few years and then they leave. These people have families to rear and they have responsible and difficult jobs. They must deal with the public in a stressful environment, but they receive only the minimum wage. We have a long way to go in terms of treating workers properly.

The budget provided for tax to be taken on earnings of £107. A rate of £4.40 an hour for a 40 hour week equals £176 per week, of which almost £70 will be subject to tax. Why did the Government not set the minimum wage and the tax exemption rate at the same threshold so that people could receive the full minimum wage? The Minister for Finance did not provide for that. He decided to provide tax benefits to the racing fraternity by reducing betting tax to 5%. He has tried to ensure that the racing industry is not affected by the Exchequer. However, we have difficulty ensuring that workers get a decent hourly rate.

It is unusual to see signs in shop windows in Dublin offering an hourly rate of less than £5. The Aldi store in Parnell Street, which is like Centra or Spar, is offering workers £7 an hour. Dublin Bus workers do not get £7 an hour.

The basic minimum wage will become outdated as the number of workers decreases. Yesterday's report of the National Economic and Social Forum indicated that approximately 42,000 long-term workers would be specifically targeted by local employment services. The figure is higher than that if those at home who are not included in the labour force statistics are taken into account. The decrease in the number of available workers means that wages will increase.

I would have preferred if the minimum wage had been set at £5 and made tax free. This would not have contributed to inflation. Money spent at the lower end of the scale by people who do not have substantial incomes is generally spent at home and not on luxury goods from sterling, dollar and yen economies which cause inflation. Inflation will not be fuelled if tax relief is given to those at the lower end of the scale. Money should be given to people on low incomes.

The Minister said that under section 11 a monitoring committee will be established and that its membership will consist of the Irish Congress of Trade Unions, IBEC and the Government. Why did she limit membership to those bodies? Why did she not include farmers and the voluntary and community sector? I welcome the establishment of a monitoring committee which will observe and review the implementation of the hourly minimum wage, but the Minister seems to be curtailing its membership. The number of bodies involved in the consultation process on the minimum wage was also limited.

I am also concerned about the reckonable and non-reckonable pay components in the Schedule. I always thought a minimum wage was a basic wage. However, significant reckonable components diminish the value of the minimum wage. I spoke already about the tax take from the minimum wage when it should be tax free in the interests of equality and reasonable distribution of resources.

While the Minister took on board some of the proposals made in the other House about improving the legislation in this regard, employers may still reduce the minimum rate of £4.40 by factoring in a shift premium. I do not understand why employers would do that. Why should piece and incentive rates, commission and bonuses be factored in to make up the £4.40 hourly rate? Service charges and allowances for special duties do not constitute a basic minimum wage. Why is it necessary for workers to keep records and to be exposed to prosecution and fines? There is a perception that those who will benefit from the minimum wage, rather than employers, will abuse it. Workers between the ages of 18 and 20 will also be discriminated against and this will further undermine the concept of a minimum wage.

A number of issues must be teased out on Committee and Report Stages. We support the concept of a minimum wage. However, we cannot support the manner in which it is being introduced in terms of the rate or the caveats and curtailments involved. The concept is constrained to an unnecessary degree and the acceptance in the PPF of a two and a half year run-in to a rate of £5 per hour is too long. This period has been accepted by the trade union movement but it is disappointing that it will take that length of time to introduce.

I support the minimum wage but I am not happy about the manner in which it is being introduced in terms of the pay agreement. I am also unhappy at the Minister's decision to guillotine the debate and would like the opportunity to argue a number of pertinent and relevant amendments to the Bill.

I welcome the Minister and wholeheartedly welcome the Bill. This legislation is long overdue but, thankfully, it is being introduced. For too long far too many people have been on low pay, the consequences of which have been felt throughout society. The introduction of a national minimum wage is good for politics as, too often, commentators express the cynical view that politicians cannot be trusted, that their promises will not be delivered on and that their commitments are meaningless. However, that cannot be said in this case.

In An Action Programme for the Millennium, published in June 1997, the coalition partners committed themselves under the heading of an inclusive society to the introduction of a national minimum wage. The rate of progress since has been impressive and the Minister and her Department are to be congratulated on the tremendous work they have done in expediting this important initiative.

The Commission on the National Minimum Wage was established within weeks of the Government taking office and reported in less than one year. Now, 33 months after taking office, the Minister is introducing legislation to give effect to the commitments set out in the joint programme for Government. This is good government by any standards.

It is not easy to set a national minimum wage. If the rate is pitched too low the whole concept becomes meaningless and offers no real benefit to those on low pay. If it is pitched too high it can have a very negative impact, destroying jobs and damaging competitiveness. The Government has got it just about right and the national minimum wage will be introduced at an initial rate of £4.40 per hour.

By the time the Government has completed its term of office, the rate will be reaching £5 per hour, or just under £200 per week for workers on a standard 39 hour week. I am not suggesting that £200 per week is a lot of money but this is meant to be the minimum wage for which anyone is expected to work. When viewed in these terms, the national minimum wage will provide a reasonable earnings floor.

I am somewhat surprised by the level of Opposition griping on this issue, particularly the Labour Party view as enunciated by Senator Costello. One would expect the Labour Party to enthusiastically welcome an initiative such as this and to hail it as a major step on the road to social progress and inclusion. One would also expect it to be loud in its praise for such a valuable contribution to social cohesion. However, we have heard no such praise. Instead, the Labour Party has been carping in its criticism of almost every aspect of this proposal. It claims that £4.40 per hour is too low but it is £4.40 higher than any minimum wage it introduced, as it produced no such proposals.

The Department of Enterprise, Trade and Employment was represented by Ministers from the Labour Party and Democratic Left between 1992 and 1997. There was ample time for Deputies Quinn and Rabbitte to do all the necessary groundwork and pass minimum wage legislation during that five year period, if they so wished. However, I would question whether they ever wished to do so. If there is a will there has to be a way, but they did not do so. Despite the strong growth in the economy, the then Government's clear Dáil majority, its stated commitment to social inclusion and its desire the help the less well off, the Labour Party never got around to introducing a national minimum wage. This fact says it all.

I am proud that the Progressive Democrats are in Government when this important and progressive social measure is being introduced. I am also pleased that it is being introduced in such a way as to confer maximum benefit on the lowest paid workers while doing least damage to the strength and competitiveness of the economy. I am confident that the rate will not cause serious economic problems and the increase in pay which this measure will bring to those on low income is richly deserved.

It is vitally important that we do not allow repercussive claims to destabilise the economy and threaten the growth in employment and I welcome the trade unions' commitment not to use the minimum wage as a springboard from which to launch new pay claims based on relativity. This legislation will be a real test of social solidarity. Everyone talks about a fairer society but that can be a difficult concept to put into effect. If a low paid worker receives a pay rise, will other workers be happy to see them doing well or will they also seek a pay rise to maintain the existing earnings differential? This issue will have to be confronted in many workplaces from 1 April and I hope it can be dealt with in a spirit of fairness and maturity and that people will accept the introduction of a national minimum wage in the proper spirit, in other words, as a measure designed to help some of the least well off workers.

The national minimum wage is the latest in a long series of progressive social and economic measures introduced by the Coalition. However, listening to some commentators, one would think that the country was never worse off, that poverty was increasing and that all social progress ceased the day Deputy John Bruton left office as Taoiseach. All the evidence suggests otherwise and the figures speak for themselves. The number of people in employment has risen by almost 270,000 since April 1997. The level of unemployment has fallen by 70,000 over the same period and the level of long-term unemployment has fallen by 50,000. This is a record of real achievement and social progress by any standard which has never been seen under any Government. The reduction in the level of long-term unemployment is particularly welcome as long-term joblessness is one of the most pernicious causes of underlying and enduring poverty in any society. For a long time we thought we would never solve this problem but, thankfully, we have put that thinking behind us. The Minister stated that long-term unemployment can be eliminated by the time this Administration leaves office in 2002 and this objective can and will be achieved. The introduction of the national minimum wage can help us to achieve that goal by encouraging more people to move from unemployment to work.

It is estimated that 160,000 will be affected by this legislation. Those people welcome the legislation, they look forward to its introduction and they deserve it. I compliment the Minister and her Department on the balance struck, setting the minimum wage at a level which should not tempt younger people out of education into the work place. Skill levels are a factor in low pay. Our economy is growing in such a fashion that people must develop skills and to do that they need to pursue their education for as long as possible. The level agreed and its scaling accommodates that need.

Scaremongering tactics have been employed by IBEC and the Small Firms Association in the run up to the introduction of this legislation. Those bodies suggested that it would cost £800 million and would lead to the loss of 36,000 jobs. We can do without such scaremongering, it does not help anyone. It is vital that a proper minimum is paid in such a way that our competitiveness is not affected while wage levels rise for those on low pay.

Senator Costello said those earning the minimum wage who work a 39 hour week receive a weekly income of £176 while taxation starts at £107. He failed to mention that the Government is committed to introducing legislation to ensure that the first £200 of income will be free of tax in the next few years. We cannot dissociate the national minimum wage from the taxation system. The amount of money people take home is the most important factor.

For years we have dealt with serious problems in the economy, problems we thought were insurmountable. We have shown, however, that with the right structures, such as the social partnership which has proved so successful, we can solve all our problems if we set about the task correctly. I recommend this legislation to the House. It is one of the most positive measures ever taken to deal with social exclusion.

I welcome the Bill in many respects. Many amendments to it were accepted in the other House and I listened with interest to many contributions in the debate. As a person who has been in the workforce for almost 50 years, I think we should congratulate ourselves that we can introduce the minimum wage. Until recently we could not have introduced such a wage.

Senator Costello remarked that Centra stores now pay £7 per hour. The other stores, which are paying £5 or £6 per hour, must be asked how they got so far before the Centra chain was introduced. We must also ask what we pay for produce in Centra and other stores which are prepared to pay such wages. I am not, however, saying that the employees of Centra should not be getting as much money. I wish everyone could earn that much.

We must be careful that we do not create a ‘them and us' situation. Two days after the recent budget, I spoke to a man who was congratulating everyone on it. I agreed with him that it was a constructive budget and that the Minister was unfairly criticised. The man speaking was a retired bank manager whose wife works 20 hours a week and he told me that the budget was worth £43 per week to them – £2,200 per year. I congratulated him. When I went home, however, my son came home with a friend who had started work as an accountant two weeks previously. He was £2.80 per week better off.

That is where we are getting it wrong. The commission set up by the Tánaiste to examine a national minimum wage made sure the taxman got more money. Under no circumstances should people on the minimum wage pay tax – there is no need for them to do so. The tax paid by those who will be on the minimum is worth approximately £3 million for the Department of Finance. Next year it will be worth more to the Department following the 40p increase and even more again when it reaches £5 per hour in 2001. The tax take increases all the time but we are not allowed to spend the money the Department is making at present.

We should not think for a moment that there will not be a reaction to this decision from people earning £5.50 an hour. The minute someone on £5.50 finds out that someone on £5 per hour has been given an increase of 50p, he will want more because there will always be a 'them and us' approach. I remember when a mason would not drink out of the same kettle as a labourer. Let us not give the impression that we are sorting everything out by introducing a minimum wage of £4.40 per hour. There will be a reaction right up the line.

I worry that the rate of inflation is running at 4.6%. I remember inflation running at more than 20% in the 1970s and saw the damage it did to society. Under no circumstances should we think that we can give this to everyone and get on with it. Everyone would help the less well off. Senator Cassidy summed it up – long before people started to come back from other countries for the nine to five jobs in high tech industries, people worked very long hours in small business because there was no work elsewhere. They are the backbone of the workforce and we must not knock them now. They were loyal when others ran. I would like to see those people looked after but we refuse to do so. We continue to tax earnings over £107.00. A young man came to me complaining he gained only £2.80 per week while the retired bank manager gained £43 per week. I did not feel very happy that night, though I did not say that to him because it might have embarrassed him. He might not even have gone to work on Monday. We are creating situations like that.

What is the position of those paid by our Departments and semi-State agencies to look after the less well off in society? The health boards differ in the amount they pay per hour to these people. Will they now pay the minimum wage?

They pay an average of £3 per hour which will be increased to the minimum wage level.

It may average £3 an hour, but that is not what is paid by the Southern Health Board.

I am sorry, the Minister said it averages £3 per hour. The Eastern Health Board pays more.

I should have said the minimum payment is £3 per hour.

That is different. I do not say one thing and mean something else. What do I tell the person being paid less than £3 an hour for working long hours taking care of an incapacitated man or woman? Is the Minister telling me they will receive £4.40 per hour from 1 April?

Perhaps the Minister should make the health boards aware of that because that is not what they are telling the people providing the home help service. Will they be paid £4.40 per hour or a fixed amount for the hours they work? I do not wish to aggravate the situation but there is no specific reference to the fact that those providing the home help service will be paid £4.40 per hour. I would like clarity on that matter.

That is agreed.

Is Deputy Cregan referring to the hours they work?

Yes, or part thereof.

No, not unless that is agreed by the health board. They will be paid £4.40 per hour as agreed by the health board.

What I am saying is—

We are dealing with Second Stage of the Bill. I would be pleased if Senator Cregan could make his contribution without interruption.

I am sorry, a Chathaoirligh, I went off the point. However, the matter has been clarified for me. I can now tell those providing the home help service they will be paid £4.40 per hour.

Over 163,000 people will benefit from the introduction of the minimum wage. Senator Gibbons made the point that earnings up to £200 will be tax free in the next few years. Benefits should be paid to the less well-off. The person to be paid £4.40 per hour from 1 April still has to pay the same taxes as the person on £300 or £400 per week. The minimum wage should be structured so that the less well-off receive benefits faster. We should not give to those who do not need it. Earnings up to and including £10,000 should not be taxed and those earning £30,000 should be well taxed. I would work it that way. Many people making a great deal of money, well over £20,000, £30,000 and £40,000 per year, are not being taxed fairly in comparison to the person on the minimum wage. That is very frightening. The example of the bank manager is a very confusing, particularly to young people.

I am involved in small business and thankfully I have been employing more people every year. There is a danger that we are creating a 'them and us' society. The impression that conflict will not arise with the person earning £5.00 or £5.50 per hour is wrong. They will look for more money. The answer lies in ensuring everybody receives proper tax benefits. That is the easiest way to deal with the problem. Once a person earns over the specified amount, they can no longer make an argument. I do not see any reason we could not do that since the country is awash with money.

The Department of Finance is doing very well. It was doing well also in 1997 when Deputy John Bruton left office. Senator Gibbons's comments are most unfair. The Department and the country was on a roll. It is unfair to say the previous Government was a bad one. It was very fair and sincere. To give the impression that things were not good is wrong. Fewer people were working but more of them were coming into the workforce. When I was Lord Mayor of Cork in 1991 I was grateful for one new job in the city. That was only eight years ago. The country has done well since then thanks to successive Ministers for Finance. Deputy MacSharry was an excellent Minister for Finance. Deputy Dukes did a good job. Our good times started in 1987. Let not any one party take the glory for our good times. Mr. Haughey was the Taoiseach at that time.

We should not create the impression that everything is rosy in the garden. I remember when inflation ran at 25% and bank rates rose to 12% in the 1970s. I am not suggesting that people earning £4.40 per hour will increase the wage bill but there is a danger of inflation rates rising. I remember what high inflation rates did in the 1970s. We do not want that situation to prevail again just because we are not prepared to pull in the reins. I am glad to see unions are conscious of inflation rates. I do not know if the stated inflation rate is accurate because house prices are not included in the consumer price index. It is above 4.6% now, though it is expected it will drop by the end of the year. We need to take control of ourselves. If we are to spend money we should do so constructively.

Many people such as those working in offices, cleaning women and young people require training. We must ensure that people in tourism, our second fastest growing industry, are properly trained. We are not doing too bad a job in that area. I do not see anything wrong with immigrants taking up work in our hotels. Many people emigrated from Ireland to work in hotels abroad not so long ago. I am glad to see change taking place.

We are regulating everything, yet people in some of our semi-State bodies are not being paid a proper wage. I am glad the Minister of State said that home helps will be getting this increase from 6 April.

I refer to the direction the banks are taking in regard to small business. We need to ensure that we do not sell off the family silver and leave the major banks in full control. It is important to consider the position of ICC, ACC, TSB and the credit unions, which are becoming more popular. I know the Minister for Finance is very conscious of what they do not pay and what he believes they should pay. Now that everything in the garden is rosy, it is important that the large banks do not have full control. We may be inclined to think that ICC, ACC or TSB are not needed, but these banks were always there to help people when times were not as good.

We talk about small businesses. America is the largest economy in the world. The average business in America employs eight people, not 80 or 800 people. Small businesses keep America going. It is important to ensure that a certain view, whether that of the banks or otherwise, does not dictate. We want to make sure everyone gets a chance, including the fellow earning £4.40.

I welcome the Minister of State, Deputy Moffatt, to the House and I welcome the opportunity to speak on the National Minimum Wage Bill. No legislation in the past two years has been as eagerly awaited by the ordinary Joe Soap as this Bill. I listened to Senator Cregan and I acknowledge that Ministers down through the years have performed their task admirably. We must also acknowledge the fact this legislation was promised by this Government and it is fulfilling that promise by introducing the Bill.

Despite the disagreements and discussion which took place prior to establishing a rate of £4.40, we are lucky we are in a position to introduce this rate. Senator Cregan was right when he said that it is only ten years since the country was in a very sorry state. To introduce such a measure would have been unthinkable at that time.

I am thankful to have seen a radical transformation in our economy with unemployment levels lower than ever anticipated and employment levels reaching new heights. It is right that we at least attempt to share the prosperity we enjoy currently. Workers at the lowest level of the pay scale, who are often women, young people and unskilled labourers, have every right to share in the common wealth we enjoy as a nation.

The legislation is an attempt to prevent unscrupulous employers from exploiting their workers and there should be no opposition to it. We may all see problems in the future with a minimum wage not only in terms of people who may possibly be excluded but also in regard to those who must pay the minimum rate.

It is a workers market at present. In the hi-tech, computer and telecommunications industries, individuals transfer from one company to another almost on a weekly basis. In smaller industries, where workers are often unskilled labours, workers are going from one industry to another comparing between prospective employers how much they would be guaranteed on an hourly basis and are negotiating in their own right. This is a position with which small businesses in my county are faced. It is a growing problem for smaller businesses, particularly many indigenous industries.

The agri-food business is probably the major industry in the Border counties of Cavan and Monaghan. I wholeheartedly welcome the introduction of this legislation but refer to one or two problems expressed to me, particularly as the legislation refers to the agri-food sector. These problems could be exacerbated not only by the introduction of the minimum wage, but also by the wage increases proposed under the Programme for Prosperity and Fairness. While I support fully the national minimum wage and the pay agreements, I must highlight some of the problems which affect the agri-food sector.

The mushroom industry has a long tradition in County Monaghan. It depends almost entirely on exports to the UK and I know many people will say that anybody in the Border region who depends on exports is in a very good position at present given the difference in the exchange rate between sterling and the punt. There is, however, considerable competition from other European countries and sterling is strong. Industries, such as the Monaghan mushroom industry, are totally dependent on the large retail units in the UK which have, over the past year in particular, been bringing down the price. The price has been reduced by 10% in the past year for products such as mushrooms. I have no doubt it is the same for other food products we produce and export to other countries, particularly the UK given there is such a difference between sterling and the punt. This reduction in price automatically reduces the margins for the processor and the profits for the company.

The industries about which I speak pay the minimum wage at present but if the value of sterling drops further, the profit for the company will be further reduced and it will make it more difficult for Irish companies to compete with their European neighbours. The food industry, in particular, depends greatly on exports. If large retailers in other countries, on whom we depend, cut prices, our profits are reduced. The increase in the wage, as agreed in the Programme for Prosperity and Fairness, further reduces an ever decreasing profit margin for these smaller companies.

This is affecting industries such as the mushroom industry in my county. It is a Border county which is almost solely dependent on agri-food businesses. Although these industries pay the minimum wage, I am concerned given the factors which affect them, including the markets, competition, the difference between sterling and the punt and the reduction in prices abroad.

I am concerned about the future of small indigenous industries, to which Senator Dino Cregan also referred. Compared to the scale of employment in some companies, particularly those located in or close to the capital, the indigenous industries are small. Nonetheless, they have been the backbone of enterprise in Monaghan for the past 20 to 30 years.

I am also concerned about the future of family run businesses, small grocers and publicans in our towns and villages. Other speakers mentioned that such businesses are experiencing great difficulty recruiting staff. A job in a retail business such as a grocery store, which involves dealing with the public, does not suit everyone. I am sure we all have gone into a shop to buy something and come out and thought that the person who attended us was not particularly suited to the job and that rather than attracting business that person would turn away customers. I agree with Senator Cregan that people are better trained now, but people are individuals, we all have different talents and dealing with the public is a talent that some people do not possess.

Employers in the retail business have told me on a number of occasions that they find it difficult to get suitable employees. The owners of family run businesses are concerned about the extra financial burden compliance with the provisions of this legislation will place on them. Small grocery businesses are already under pressure due to competition from large supermarkets.

I am sure all Members have been contacted by the owners of various grocery stores throughout the country who are concerned about the lifting of the ban on below cost selling. During the past week many people expressed concern to me about the possible lifting of that ban. I am opposed to removing that ban because its removal would be detrimental to the economy of rural towns and villages.

We discussed the importance of the local post offices last year when they were under threat of closure. The local post office, grocery store, church and school are the backbone of our rural communities. I seek an assurance from the Minister that the ban on below cost selling will not be removed in the interests of rural Ireland. The owners of small retail businesses are under enough pressure due to competition from large outlets and the introduction of a national minimum wage. I am sure the Minister is aware of this concern. I hope this matter can be addressed in the near future because the public are concerned about the propositions being put to the Minister that the ban on below cost selling should be lifted.

I welcome the introduction of this legislation. I look forward to people in low paid sectors being able to share the benefits of our economic growth. It is the role of the Opposition to oppose. While that is the nature of the game, I was surprised to hear some Senators, particularly those who come from the so-called left, criticise the legislation as I thought they would have welcomed—

Mr. Ryan

There is no "so-called left".

—it as a minimum measure. This the first legislation of this type to be introduced. The so-called left failed to introduce similar legislation when it was in a position to do so a few years ago. I am glad my party, which considers itself to be the more socialist of the parties, has done so and I wholeheartedly welcome its introduction.

I welcome the Minister of State, Deputy Treacy, to the House. It was interesting the hear the various views expressed during the debate. Nobody could possibly object to the well-meaning principles behind the Bill because nobody wants anyone to be exploited. I do not believe anyone objected to the principles behind the Bill. Questions may have been raised about technicalities, which we need to discuss. Some workers were exploited in the past and some workers may be exploited today, and nothing justifies such exploitation. To the extent that the Bill addresses such exploitation, it is welcome.

I want to draw attention to two inconsistencies in the Bill and to some possible undesirable side effects of its enactment. The inconsistencies arise when the Bill seeks to deal with exceptions. Its approach is wrong in that it allows as exceptions cases where there is no justification for making exceptions and it fails to allow as exceptions situations that are likely to give rise to the side effects about which I am concerned.

The first exception may seem trivial to some, but in matters of equality and human rights no exceptions should be considered as trivial. The Bill proposes to exempt from its provisions employees who are closely related to the employer. Section 5 lists 17 family members and some of the inclusions are questionable. I will not elaborate on that now as we will examine it on Committee Stage. If one's extended family happened to include a certain group of people, I imagine one could probably run a medium or large sized business if one organised its running by step-mothers, step-fathers and other family members. One might ask whether that matters, but it matters in commercial terms. If I was a bachelor with no immediate family and I ran a small hotel, restaurant, pub or corner shop, such as those about which Senator Leonard spoke, I would not consider it fair that I was bound by this legislation while my competitor next door, who happened to be blessed with a large family, some of whom were not immediate relations, was not bound by the law. The appears to be unfair. I wonder what the view of Competition Authority would be on such cases.

There is an even more fundamental flaw in the blanket exception from the provisions of the Bill of employees who are family members. It is entrenched in the outmoded idea that people can be the property of another. That idea was unquestioned when there was slavery, but slavery was abolished, at least in regard to people who were not related to one another. When our ancestors abolished slavery, they did not entirely abolish the slavery that underlines the concept that one person could own another. The notion that men could own their spouses remained intact. I say that in the knowledge that half the membership of the Seanad is female. Therefore, I must be careful about what I say.

We own our spouses. We do not mind.

The term "chattel" was widely used in the past.

A wife was a chattel.

In the past parents could own their children. That principle was not attacked until recent times and, as the Bill indicates, that principle is not dead yet. This Bill provides that employers must not exploit their employees unless those employees are family members. If that is not a licence for exploitation, I am not sure what is. We all know that families can have unusual arrangements, but some people are exploited in family businesses.

I grew up in and operate a family business. I would not like my children to complain that they were exploited but perhaps they were. In those days, our sons were packing bags and filling shelves at 10 years of age, but that does not happen any more. I have always been a champion of family business but I have never believed that family should be exploited.

This is an exception that at first glance looks fine. When I looked at it first, I understood the reason for it. However, on further investigation, it is fundamentally wrong and should not be included in this or other employment legislation. Unless we still believe that spouses are chattels and children are the property of parents, we should not allow these provisions to stand. If they are allowed to stand, my guess is that it will not be too long before a smart 14 year old takes us to the High Court because we have done our homework wrongly in this regard.

Similarly bad logic applies to another exception in section 41 regarding a company which pleads inability to pay. It is not a blanket exception like that which applies to families; there is some control. It includes qualifications and time limits, but it is nonetheless fundamentally misconceived. Thankfully, Ireland is no longer a low wage economy.

Mr. Ryan

Bus drivers.

Any business that is structured on the basis of low pay is doomed to failure in today's competitive conditions. It will not survive. Businesses that once were viable, for example, in the footwear area, are no longer so if they only sell on the basis of price. That type of business has gone, mainly to the Third World. It is the height of foolishness nowadays to think that we can compete with a place such as Bangladesh with regard to cheap t-shirts. However, some companies are still thinking in that way. They make products and price them in a way that is less viable. In the medium term, they are doomed to failure if they do not change direction.

We should do all we can to help such companies change into more viable businesses. We cannot compete on commodity t-shirts or shoes, but we could perhaps compete on designer t-shirts or high fashion shoes. This is the direction in which we would have to move but making such a change is not easy. It is necessary and it is easy to give companies in that position a crutch. However, a crutch will not cure what is wrong with them. It may even be a bad thing to do because it may put off the day when they must face up to reality. The Bill offers a crutch to such companies.

This has been done with the best intentions and I congratulate the Minister on the design of the Bill. However, its effect may be counter productive. Businesses on the verge of going bust are being offered a way of prolonging the agony. We should be offering them a way to cure themselves. If they do not take the cure, they no longer deserve our help. The Bill creates two classes of exceptions which are wrong. However, it does not make exceptions in situations where the Bill may create unwanted and undesirable side effects.

Many people forget that a sizeable number of people are still long-term unemployed. This was highlighted this week in the NESF report launched on Monday. I called for a debate on it because of the problem of long-term unemployment. Two Senators approached me and said they did not know what I was talking about because there is no longer a problem with long-term unemployment; it has been solved. I heard this view expressed again today, but one will see from reading the NESF report that the problem is not solved. Those who think it is gone are of the opinion that there is only a shortage of skills. However, there is a hard core of long-term unemployment and the Celtic tiger has blinded us to this fact. We have missed it, or we have been codded into thinking that, in boom times, unemployment must disappear in time.

I understand that one could draw such conclusions from the almost miraculous drop in unemployment figures compared to the level a few years ago. However, we must focus our resources so that we can give attention to the people whom the rising tide will never lift. This is the first task. The second is to develop a system which will create jobs that will match people's skills. A hard core of people have been left behind. Realistically, some people do not have any marketable skills at all. There is a skills gap between where they are at present and the first rung of the ladder. This is the gap we should attempt to bridge. It is not an easy task but it can be done.

There was a graduation ceremony in Ballyfermot this morning for a number of people who bridged that gap. We should congratulate all those concerned. I had the pleasure of speaking in Coláiste Éoin in Finglas this morning at the launch of a survey showing the work that must be done. We have reached full employment but only for those who are employable. There is still a core of approximately 40,000 people who are long-term unemployed and will remain so until they acquire skills that can get them a job. There is a danger these people could be forgotten. Nobody would suggest that they should be forgotten, but that is happening. We are doing this by pretending that we no longer have an unemployment problem. This Bill turns its back on those people because it ignores their special position.

The nation needs to do two things for those 40,000 people which are not being done at present. A problem which the Bill makes worse is that having reached the first rung of the ladder, the newly skilled people may find that there are no jobs available. They may find that jobs are only available on the second rung. It may be beyond many long-term unemployed people to go from the ground to the second rung. Why are there no jobs on the first rung of the ladder? Why will the Bill in its current form ensure that there are even fewer of those jobs after it is enacted on Saturday? As I said over the years, the reason is that some jobs do not exist except at a certain price. It is not possible to have these jobs over a certain level.

The example I mentioned last year related to pulling into a petrol station to get petrol. I waited for somebody to come out and fill the tank as had always happened, but I then realised it had changed to a self-service station. I filled the tank and went in to pay. I got talking to the owner who told me that he could not run a service station without paying a certain level of wages and it did not work on that basis so he changed to self-service. Certain jobs do not exist except at a low level.

I am in the supermarket business and we employ people to pack bags. It is a relatively highly skilled job but people do not realise the skill involved. A number of companies no longer employ people to pack bags because that job probably does not exist at a certain level. Those jobs cease to exist once a certain level and price is reached. This is an example of a job that is being priced out of the market. I disagree with Senator Gibbons's point that this will solve the long-term unemployment problem because those jobs do not exist for that core of people who do not have skills. I do not have a solution to this problem but my point is that it is ignored in the legislation. If something is not done about it, those 40,000 people will be left there because price is the determining factor in whether those jobs exist at all.

In an ideal world, that would not matter. However, society has the freedom to decide that it will have only well skilled and well paid jobs. That would be great, but it may decide that it also has responsibility for those people who will not get jobs otherwise. In that case, we will want every member of society to be able to get a job. Such a situation does not exist at present. There are 40,000 unskilled people who have not even reached the first rung of the ladder. We have a responsibility to train these people and ensure that there are jobs available for them at every level, particularly at the level of skills they manage to attain. The Bill is helping to remove the first rung on the ladder. By doing so, it is making the challenge for the long-term unemployed quite onerous. The Bill is making it much more difficult – in some cases it will be well nigh impossible – for people to move on to the ladder.

I am not so unrealistic as to believe that we could amend the Bill in the short time remaining before its enactment. I must stress, however, that if ever legislation needed to be revisited on a regular basis after its passage, this is it. I hope we will return to deal with this legislation in the near future and that we will not abandon those 40,000 people to whom I refer. We should not pretend that they do not exist.

My main concern about the Bill is that it does nothing to remedy this situation. The NESF report indicated that we have almost forgotten the people to whom I refer and that we are not doing enough to resolve the difficulties they face. I do not know that the Bill is designed to remedy their situation. However, the Bill ignores those people and it is clear that we in this House assume that the rising tide of our booming economy will lift all boats and that, therefore, everyone will benefit. We had better come to terms with the fact that this is not the case. We have a responsibility to ensure that we find a solution which will allow the 40,000 people to whom I refer to attain the first rung on the ladder. Let us ensure that we do not forget them.

I welcome the introduction of the Bill. I listened with interest to the contributions of previous speakers and I was struck by a point raised by Senator Quinn, namely, the exclusion of family members from the Bill. That is most unwise. Other Members referred to the effects of the Bill on family businesses. However, I have seen people involved in such businesses being appallingly exploited by one strong member of a family. That member usually pays a pittance to the other family members, who frequently work hard on behalf of the business. I had hoped the Bill would put an end to such behaviour. The effect the cost of board and lodgings will have on the remuneration people receive is most unfortunate.

I regret that the Bill is being rushed through the House with such speed that we will not have an opportunity to try to amend it. As Senator Quinn stated, 17 different categories of people who can be excluded are outlined in section 5. If a person has several sisters, grandsons or granddaughters, they could have at their disposal quite a sizeable workforce whom they could succeed in excluding from the legislation. That is wrong because people working in family businesses can often be exploited to a large degree.

I am sympathetic to the points raised by Senator Leonard in respect of corner shops or small businesses in rural areas. However, I am a member of the Joint Committee on Enterprise and Small Business and I can assure the Senator that there will be adherence to the grocery order. I do not believe that the order will be withdrawn in order that low cost selling, which would affect the businesses to which she referred, can be introduced. I am not in favour of anyone pleading that the operators of small family businesses should be allowed to exploit other family members. That is what is happening at present. One member of a family does extremely well out of a business while others, usually the female members, do not do well at all.

The Bill must be welcomed, particularly by women who, after 30 years of equal pay legislation, are still paid only 74% of the average industrial wage paid to men. At present, the average industrial hourly rate of pay for women is £5.70 while for men it is £7.20. It is incredible that this position obtains after 30 years of equal pay legislation. Four-fifths of those who are badly paid are women. I accept Senator Quinn's point about people not being able to get on to the ladder because there are certain jobs which, apparently, are not even viable at £4.40 per hour. I do not know how some people in Ireland can afford to exist.

We think we are doing the devil and all by paying people on social welfare £77.50 per week, but if I were asked to live on that amount – I am a good manager of money – I do not know how I would manage. If I was a home help trying to exist on the disgraceful sum of £2.70 per hour which is paid by some health boards, I do not know how I could afford to travel by bicycle to help people living in their own homes who are utterly dependent on home helps. It is an absolute cheek that the public service can offer this level of pay. Given that a loaf of bread costs £1 and a pint of milk costs 36p, how can people earning £2.70 per hour afford to buy food? It is utterly appalling that the health boards were obliging people to accept an hourly rate of pay of £2.70. I share Senator Dino Cregan's concerns about the health boards and the minimum rate of £4.40. Will they be forced to pay this rate or will they plead an inability to do so?

It was fascinating to see the breakdown of payments to the directors of Allied Irish Bank on news programmes last night. The bank's chief operative in America was paid £1.2 million and the various top executives in Ireland were paid amounts of the order of £450,000, £350,000 and £150,000. I accept that these people occupy important positions, but at a certain stage one must ask how much people should be paid in order to allow them not even to live but merely to exist.

I was in a shoe repair shop recently where a young man was about to pay for repairs carried out to his shoes. Senator Quinn was correct to point out that the unemployment situation has not been resolved because when the owner of the shop told the young man that the cost was £3 – in my opinion that was an extremely reasonable price for the work carried out – he replied that he was on the dole and that £3 was a lot of money. The owner reduced the price to £2, which was good of him, but it must have been barely worth his while doing the work in the first instance for that amount. Many people continue to have problems.

I accept Senator Quinn's point about certain jobs which are not worthwhile doing. However, we must accept that there is a certain level at which life is barely worth living and at which people cannot exist. How could someone who receives £77.50 per week pay rent for a room in Dublin and feed themselves? The answer is that they could not possibly do so. It is no wonder the city is at a standstill with people preaching to the masses about the Celtic tiger.

Senator Leonard referred to mushroom growers. In my capacity as a member of the Joint Committee on Enterprise and Small Business, for which I carried out a survey on small businesses and the problems they may have encountered in terms of transport, the only matter in respect of which mushroom growers contacted me involved the huge costs they incur as a result of traffic chaos in Dublin. I was informed that lorries travelling through the city were being delayed while trying to reach the ports which led to their missing the vessels on which they were meant to sail and this caused trouble in terms of the businesses to which I referred fulfilling contracts in England. Perhaps these businesses could afford to pay their workers more if we could solve the appalling traffic congestion, thereby ensuring they would have no difficulty in fulfilling their contracts. We cannot concentrate solely on wages, we must also consider the costs incurred by businesses.

Parental leave is not covered in the Bill but as maternity leave is not mentioned, I presume it is covered. I am glad overtime is covered but standby time is not. There has been trouble with this with regard to non-consultant hospital doctors' wages. They are the only people in the world who are paid less money for overtime. Their wages for Sunday working and other such overtime can be a third of their normal rate. There is a dispute with non-consultant hospital doctors about standby time. If an employee is at home on standby, they cannot do anything else. They must stay there on standby. This is being introduced in this Bill. Since it is already a problem, perhaps it should have been made clear whether standy is or is not part of overtime. If one must be in a certain place and cannot do anything else, I would have thought it should be considered overtime.

There are difficulties with standby. It was a dreadful problem with supermarkets who kept employees on standby at zero rates. That was a disgrace. If the employees were called in, they had to find child minders and race to work. Children were sometimes left alone, as I discovered. It was always women who were in these situations. This matter should have been dealt with in the Bill.

I welcome the Bill. It will help women, particularly those in the child care industry. They have been paid extraordinarily bad rates to date and I hope they will get better rates now. At least they will have to be paid the minimum wage. It is extraordinary that people seem to think they can pay half nothing to people who are in such important positions of trust and care.

I anticipate some problems with the Bill regarding families and how the standby issue will be related to overtime. It is long overdue but I am glad the Tánaiste has brought it forward at last.

Mr. Ryan

This is a measure of fundamental civilisation that is long overdue. Its impact, both negative and positive, has been outrageously exaggerated.

Senator Henry spoke about its impact on the working conditions of women. It is worth pointing out, as Senator Henry said, that women, by and large, are worse paid than men and that our equality legislation has not really tackled the dreadful under-payment of women in certain sectors of society. One of the reasons public sector wages tend, on average, to appear higher than private sector wages is that there is a fairly rigorous process of equality in the public sector. The proportion of women in private sector employment has increased, particularly in areas which are institutionally lower paid. The average female industrial wage is considerably less than the male industrial wage whereas in the public sector women have equal pay. As a result, it is inevitable that there will be spurious statistics. In the only comparable area of employment, that is, finance, insurance and banking, average remuneration has increased at roughly the same rate over the last ten years as in the public sector.

One of the current great national icons is competitiveness and what is called "national competitiveness". It is worth putting on record the fact that some of the world's best and most innovative economists say no such concept is sustainable and that countries are not more or less competitive. Sectors of industry within countries can be more or less competitive but to attempt to put together a concept such as national competitiveness is to turn logic on its head.

I am not an economist and I am glad I am not because I would have to tie myself up in such ideological knots that, being a pragmatist, I could not handle it. Most Irish economics are driven by ideology and we are required to fit into the ideological assumptions and rigidities of Irish economics. There is another type of economics written in other countries, mostly in Scandinavia and, to a degree, in the United States, which deals with reality and acknowledges culture, history, political institutions and so forth as factors in the way economies function. Unfortunately, and to a considerable extent in our society, the concept of national competitiveness has been enshrined as almost the first national aim to replace the Irish language and national unity. Having been so enshrined, it has been identified with the growth in real wages.

There is no reason to believe that a real growth in wages in a rapidly growing economy undermines competitiveness, particularly given the nature of many of the products we produce. In the area where this country is particularly successful at present, not information technology but the pharmaceutical industry, the growth in real wages will not be an inhibitor of its future growth. It never has been. We should not get ourselves too tied up by these concepts.

The reason this Bill might not have as much impact as one would wish is that certain pressures in the marketplace have increased wages. The last time I looked at the annual report of the Revenue Commissioners there were approximately 300,000 taxpayers whose gross income was less than £10,000 per annum, that is less than £200 per week. The evidence that large numbers of people are still paid £10,000 per year and less is the reluctance of this Government to exempt people on or below that income from income tax because of the scale of the loss of revenue. We cannot have it both ways. A large section of the economy is expected to work for the minimum wage. Many of them have made their frustration known to the nation in expressive fashion in the last couple of days. They are beginning to realise how badly paid they are and how many of them are so badly paid.

National partnership in the future will have to acknowledge the fact that inequality has grown spectacularly, not just in this country but in most of the western world. Inevitably, there will be a readjustment because society would become so unequal that those who are the victims of that inequality will retaliate. Many people will wonder at a society in which a major bank sees its share price drop by 50%, its directors humiliated and accused of, among other things, not telling the truth and defrauding the tax system but which decides to reward them with a 21% increase in salary. If Members of the Oireachtas were to make such a decision about ourselves, we would not be safely out the door before the wrath of the public was on our heads but the banking system, apparently, is different and the directors are decent, productive people. They are not.

We are in a peculiar phase of our national development. It is a good time for the country. The question now is not so much how to make ourselves rich as what to do with our riches. This legislative measure is one of the things worth doing. However, it is not being well done. There is a peculiar paradox in our society. When wages were low, we were told it was a regrettable consequence of market forces. The market decided and market forces were immutable. Now, of course, market forces have changed and we do not have a natural acceptance of them. We now have something called "wage inflation". I have discussed this with various people of differing levels of eminence, but I have never been able to understand how any increase in real wages was regarded as inflationary, especially in a sector where profit and productivity were increasing more rapidly than wages.

There is a simplicity in much analysis which says that if rich people are making plenty of money it proves the economy is growing, but if people on low incomes find that their incomes are increased dramatically that proves the economy is under inflationary pressure. It is time somebody in the Irish intellectual class began to put together an analysis of the reality in Ireland because, as I have said frequently, it is a class that has failed on every one of the big issues. It failed on unemployment – it was the Governments who defied the intellectual consensus who brought us to the state we are in. It also failed on Northern Ireland – it was the then Taoiseach who defied the intellectual consensus and brought us a cease-fire.

Irish intellectuals have served us very badly. That is why I am very wary of concepts like competitiveness which have been foisted on us yet again by them, especially Irish academics. We must be very careful about what they say. I would like to hear why every time wages go up it is called wage inflation but when they go down it is called market forces and nothing can be done about it.

Although this legislation is not as necessary as it would have been in the past, it is necessary for the future and for the hard times that may come again. I hope it will be enforced when conditions are more difficult. Let me give an example of a 17 year old member of my family working in a watersports centre, which advertised a course for children under fully qualified instructors. The parents paid £160 to £180 per week for each child. The member of my family who was the "fully qualified instructor" was paid £40 per week for a 50 hour week because the owner knew that children liked this kind of work so much they would do it for nothing. As of last year there was barely a person working in this area throughout the country paid in excess of the proposed minimum wage. It is an area where, to quote the economists, "the elasticity of demand" would comfortably handle adding £20 per head to the children's fees. It was not because the markets could not sustain it, but because the employer could get away with it and liked to maintain this position. The people concerned were claimed to be fully qualified.

I know the tricks played on people in the hungry 1980s and I know what was attempted in Britain, where the legislative and cultural climate would have been even more inimical to working people. An example is the fast food chain that decided to put people on zero hour contracts provided they were on the premises. They were supposed to sit in the rest room unpaid until they were called to work as the demands of the customers required. Another example is the carry on of our two big banks with the introduction of what was euphemistically described as "yellow pack" workers. In the process customer relations and experienced staff who knew their customers were sacrificed because the market could sustain it. It may have been attractive in terms of profitability but it did nothing to generate public goodwill for the banks. They discovered over the past 12 to 18 months that there was little public goodwill left for them and their recent embarrassment brought great delight to most of the country, including many of their employees who felt they had finally got their comeuppance after a succession of smart alec behaviours.

One of the reasons why the minimum wage legislation is necessary is because labour markets never work. Unfortunately for economists, the commodity on sale in the labour market is known as human beings and they tend to be awkward people who do not behave according to the way economists would prefer. Economics textbooks say that people need to learn how to behave in a market economy and that perhaps people need to be educated to realise that they are commodities. They do not use that kind of language but that is what it amounts to. I read an eminent text book published about 20 years ago which said that people must accept that they work in a competitive environment, that competition is the name of the game and that if they do not understand that they must learn it. In other words, people must learn to fit in to the model that suits economists. However, people are not like that which is why there is no single model to describe the US, Irish, Danish and Swedish economies because culture, history, political institutions, trade union power, previous experience and other factors affect the way in which the labour market works. There is overwhelming evidence to show that anybody who tries to produce a single model of labour market behaviour is talking nonsense.

Even if we accept that there is such a thing as a labour market – it is a very dehumanising concept and the phrase should not be used because it turns human beings into commodities in the market place – as Galbraith and others have pointed out, it is rarely a situation in which employers do not have market power. We are in perhaps the only time in this country's history in which employers do not have market power. It is the first time in my adult life in which employers will engage in radio advertising seeking to persuade people to work for them. Until recently they did not even need to advertise. People queued up looking for jobs. That, of course, was the wonder of the market economy, provided it worked in one direction.

We are now in a position where the market equilibrium has shifted, at least temporarily. Let us not overstate it. As Senator Quinn has said, there are perhaps 40,000 people in the State who are long-term unemployed. There are also many other people stuck in poorly paid jobs because of their lack of skills. Society faces a major decision in this area. Are we going to try to improve the skill base of people who are currently employed in bad jobs to give them opportunity or will we leave them there because of the fear that if we increase their skills the pressure at the bottom of the market will increase?

This is an interesting variation on the argument that used to be made by many of the eminent economists in the 1980s to the effect that we were wasting our money educating people at third level because they were only being educated for emigration to the US and British markets. The implication was that we should not have trained them and should have had a huge pool of unskilled people forced to leave school at leaving certificate level or below. They would have emigrated anyway and would have been unable to pick up any skills.

A great nonsense foisted upon us by eminent economists is the suggestion that people emigrated in the 1980s to avoid the high taxes. People emigrated at that time because they could not get a job. They would not have been troubled by the level of taxation. Among the many things that economists forget is that when two things happen together it does not mean that one causes the other. A trivial example I use with my students is that one of the best correlations is between drownings and the sale of ice-cream. That does not mean that eating ice-cream causes people to drown. The fact that people emigrated at a time when income tax rates were high does not even begin to prove any correlation between them. They left because they could not get work, not because tax was too high, although there is an argument that the levels of tax prevailing in the 1980s discouraged enterprise by entrepreneurs.

The one indisputable fact in Ireland for most of the past 70 to 75 years is that employers always had market power. While there were many well run businesses in which employers saw the value of loyalty – I know many of them – there was also a large section of employers who saw things differently. They used the classic phrases: "Are you not lucky to have a job? If you are not happy with what I am paying you there are hundreds more people who would be happy to do it for what I am paying you." They treated people like that and they are now astonished when people will not work for them any more. The banks have had to rediscover the joys of permanent, pensionable and properly paid employment because the people they took on and exploited in the 1980s left at the first chance. The banks are weeping about the disloyalty of their staff while remaining oblivious to the fact that they were profoundly disloyal to their employees throughout the 1980s when they were not losing money but simply were not making as much money as they thought they should.

Many people in our society are capable of exploiting the weakness of other people. Unfortunately, that applied extensively in areas of work that are now having the greatest difficulty recruiting people, the hotel and catering industry. For many years this industry assumed people would work from 6 a.m. to 9.30 a.m., then work for a few hours around lunchtime and between 5 p.m. and 10 p.m. Now they are annoyed that no one will work for them any more. They were quite oblivious to people's human concerns all through the hard times. They took it for granted that they could treat people like that. They now approach me and other public representatives to talk about legislation and minimum wages.

I take issue with the Tánaiste's comment on the first page of her speech. She should be ashamed of herself for saying it. In the first paragraph she stated: "I have always maintained that no pay is worse than low pay." What does she mean by that? Does she believe that it is better to let people be exploited?

It is better to have a job than to have none.

Over exploitation is what the Tánaiste talked about in practice.

Mr. Ryan

It is not better to have a job than to have none. Everyone in our society over 65 years of age is better off out of work than in work. We all accept that because they have done enough. That is the first section of our society which is entitled to an income without work.

The Tánaiste was not talking about that.

Mr. Ryan

She talked about wages, not income support. The Tánaiste should not use phrases like that if she believes something else. She is right if she believes that well paid work is better than no work, but bad wages are not a substitute for proper income support. In this State we must ensure that the income support network for young people, unemployed people and for older people is such that no one can drive them into exploitative employment. Phraseology such as she used sounds great at a Progressive Democrats conference or when talking to the well-off and those who believe that if they earn £60,000 per year it is unfair to expect them to pay 46% tax on their surplus income, people like myself who troop into the office of the Progressive Democrats and demand that their exploitation be reduced. The Sunday Independent and Irish Independent people who claim they were bled dry by income tax would think her comment was lovely, but the people who live on the ground, who have seen themselves exploited by employers, would interpret her comment as meaning that in rough times we are quite prepared to blink and let people, like my family member who was paid 75p per hour, be exploited.

She did not have to take the job.

Mr. Ryan

She did have to take the job.

She did not.

Mr. Ryan

Jobs were scarce. This is where Senator Cox and I disagree. She believes in the myth of choice but there is no such choice. There is not an infinite world of choice because the understanding implicit in this Bill and in the Tánaiste's statement is that if someone is foolish enough to do a job then the wage is okay and until an employer can get no one then the wage is okay. Now employers cannot employ anyone and they are talking about wage inflation. Which side of the equation do we believe in? If we have a market economy then we should deal with all of it. The market economy was a great idea as long as it provided cheap labour and substantial profits. Now it is squeezing margins because people are in a stronger negotiating position. The howls could be heard from here to Malin Head when employers discovered they could not keep people at work for £4 or £5 per hour because multinationals will pay them more.

Like everyone else I have been asked to do something about it. I am supposed to do something about the fact that small businesses all around the country who thought they could hold on to workers by paying them £5.50 per hour have discovered that there is a multinational within 20 miles of them who will pay workers more. All of a sudden they are whingeing to me and to every other Member of the Oireachtas that there is something wrong with that. The market was wonderful when it worked for them but it is meant to be a mutual arrangement. It produces equilibrium between supply and demand and it does that better than any other system.

There is now a shortage of supply in the labour market for the first time in the history of this State and I thank God for that. The short supply of labour has resulted in people who were institutionally exploited, contract cleaners, part-time workers in the catering industry and people like that, being able to tell an employer that they will not work for them. It was unethical to accept as right the lowest wage the market and the employer could get away with.

I am confused about the distinction between reckonable and non-reckonable components. Perhaps I have not understood them properly. One of the things that is reckonable is the amount of any service charge distributed to employees through the payroll. The amount distributed to the employee by way of tips and gratuities paid into a central fund is not reckonable. What does that mean? Does that mean that if I go into a restaurant which imposes a 10% service charge, that is reckonable income? If there is no service charge and my tip – and I am not talking about individual tips – is put into a central fund it is not reckonable. What is the difference between a service charge and a tip other than one is compulsory and the latter is not? Why is there a distinction being made between them? Some people find the idea of a service charge much more convenient than tips. They also believe that it will be distributed fairly. I do not know what the difference is. I do not understand why one is counted while another is not. A 10% service charge is the same as a tip.

I thank all Senators for their contributions and commendations regarding this important legislation. On behalf of the Tánaiste and myself and our officials, I thank everyone who spoke, Senators Coghlan, Cox, O'Toole, Farrell, Mooney, Ross, Cassidy, Costello, Gibbons, Dino Cregan, Leonard, Quinn, Henry and latterly Senator Ryan.

I think it was Senator O'Toole who put his finger on an important point when he said that this legislation is an important first step in a process which will be monitored and reviewed over the coming years. It will be improved in that context.

Senator Cox correctly pointed out the need for employers and employees to have detailed information about the minimum wage. As soon as this Bill is signed this Government will commence a major programme of public information and awareness raising, using all of the media – radio, television and national and local press. It is our intention that employers and employees will have a complete understanding from an early stage of their rights and obligations deriving from this legislation.

I am pleased at the emphasis placed by several Senators, especially Senators Cox and Gibbons, on training and ensuring that young people are not enticed out of education by the prospect of what they might consider to be a decent weekly wage. People should recognise that we are referring to a minimum wage and that there is no need for anyone to leave education on account of the changes that we propose. As recent reports have shown, there is a real danger that could happen. This is the reason the Government has introduced a provision for sub-minimum rates for those under 18 years of age and a tiered rate for trainees. The expectation is that by offering the possibility of sub-minimum rates for trainees, employers will provide levels of training that will satisfy certain criteria which the Tánaiste will establish in secondary legislation by way of regulation.

Several Senators raised issues for clarification and I will deal with some of the most important ones. I am happy to confirm that home helps are covered by this legislation. These are employees of a statutory body and from 1 April this year they will be entitled to the national minimum wage. So, too, are students who work during their holidays or outside school hours at weekends. Students should only work at weekends or during school holidays because it is not possible to mix work and study. Usually au pairs are not employees. Often their status is as students for whom board and lodging are provided free of charge in return for their working some hours in the home.

I reassure Senator Coghlan that three years is the normal period provided for in labour law for the retention of records. To go further than that would constitute an unnecessary burden on employers and would serve little use or purpose. I wish to inform Senator Costello that the marketing process will involve those involved in the negotiations on the pay agreement which is incorporated in the Programme for Prosperity and Fairness. We do not see why the monitoring committee cannot consult widely in our society as, indeed, the Programme for Prosperity and Fairness is one of wide consultation with all those involved in employment and in the workforce.

While I have noted the contribution of Senators who raised questions about national partnership, I nevertheless express my sincere thanks to the Tánaiste, the Government, ICTU, the trade unions, IBEC, the Small Firms Association and various other businesses and employer organisations whose contributions throughout the preparation of the Bill were considerable. There is no doubt that, historically, trade unions may have had different views on the merits of a national minimum wage system but the clamour for action has been considerable in recent years.

Market forces have improved wage levels but this Bill is still warranted. That said, it is vital that national competitiveness is retained and that we can continue to create wealth and jobs. The provisions of the Bill and the initial rate of £4.40 per hour strike the right balance to ensure that employees are not exploited but that employment and competitiveness are not jeopardised. We must bear in mind what Senator Gibbons said in that this is a floor or a safety net.

Senators Quinn and Henry spoke about relatives involved in businesses and in the workplace. I have a certain amount of sympathy for the argument. This provision is a feature of all labour legislation. In my experience over the years, in various aspects of legislation, unless relatives have worked in the same job for many years they do not have the same rights as other employees and, consequently, the right of a family's commitment to their business is not interfered with by the State – this has been traditional in labour law. Retention rests more on the fact that the State is uneasy to regulate relations between members of the same family or to interfere in family run businesses because, traditionally, they have been a major bulwark of economic activity, particularly at local level and in urban and rural areas where they have made a huge contribution over the years. There has been much flexibility within family run businesses and the State does not have a desire to interfere with that. We must be cognisant of the right of individuals within all aspects of employment.

Senator Henry raised the point about people who are on standby for work, be it in the medical field or any other area. I assure the Senator that the minimum hourly rate of pay is payable for such time that an employee is on standby at the workplace. It is important that people who are on standby are deemed to be at work and, consequently, are protected through this legislation.

I agree with Senators who drew attention to the apparent dichotomy between introducing a national minimum wage and levying tax on it. The taxation provisions of the Programme for Prosperity and Fairness provided a response. Over the next two years, this Government will introduce changes in taxation which will ensure that all workers on a minimum wage will be taken out of the tax net entirely as has been progressively done over the past few years.

I thank Senators for their contributions and pay a special tribute to the officials in the Department who have worked hard with the Tánaiste on this detailed and complex legislation over the past year. On behalf of the Tánaiste, the Department and myself, I look forward to the remaining Stages of the Bill.

Question put and agreed to.
Committee Stage ordered for Thursday, 30 March 2000.
Sitting suspended at 4.50 p.m. and resumed at 6 p.m.