We resume the debate on section 9. Amendment No. 16 in the name of Deputies Rabbitte and Higgins has already been discussed with amendment No. 13.
National Minimum Wage Bill, 2000: Committee Stage (Resumed).
SECTION 9.
I move amendment No. 16:
In page 9, lines 45 to 48, to delete subsection (3).
Some issues arose during yesterday's debate which were of concern to Opposition Deputies. I take on board the Minister's comments on how this provision will operate but I made some comments on the practicality of people being able to maintain records.
We made some progress yesterday. However, rather than going over ground already covered perhaps we should ask the Minister to reply.
I responded to the points made but I do not think we are going to agree. We discussed this issue at length. It is a self regulating measure introduced at the suggestion of those representing home workers or those whose hours are not controlled. If someone is illiterate and cannot keep basic hours, the question arises as to whether they understand what they are earning. We cannot cater for every situation and this is an attempt to deal with the category of workers whose hours are not regulated such as those who work in a home situation, sales people or whoever. We cannot improve on this measure as regards this group of workers.
I am concerned about agricultural workers who are expected to keep written records. These procedures are alien to such people. I accept the Minister's point but will she try to ensure that the records will be as simple as possible and are not too challenging or complicated?
Deputy Higgins, how stands amendment No. 16?
I will press the amendment. The Minister opposed an amendment with regard to family members at work on the basis that it could not be policed. She has outlined what this provision is meant to cover but how can it be policed?
I think, in fairness, that question was asked yesterday.
It was not dealt with.
Last night I asked for time to take advice on and examine this point. Having reflected on it I fail to see, if the thrust of the section is as the Tánaiste explained last night, why we are having a dispute about it. If the Tánaiste is saying the purpose of it is to protect workers who require protection, then the obvious solution is to accept the optional amendment. If "may" rather than "shall" was used, there would not be a problem because the Tánaiste's purpose is to protect a certain category of worker and this would allow the option of keeping the records, if that was wished for. If this is not wished for, then the employer arranges it.
I think the Tánaiste is wrong to dig her heels in on this. I do not mean any disrespect in saying that. I do not believe the Tánaiste anticipated this section would be controversial, and she is surprised questions have been raised. The obvious way to deal with it is to provide for an optional basis which will allow workers who wish to keep records to do so while those doing the work Deputies Stanton and Higgins spoke about, who are not inclined to do so or have literacy problems, etc., would not have to do so. Those who wish to keep records in order to protect themselves will have the right to do so. Apart from all the departures from practice in labour legislation which we spoke about yesterday, the minimum amendment which should be taken on board would provide that the employee concerned would have to knowingly mislead or provide false information. Otherwise the provisions of subsection (3) are an entirely unreasonable imposition.
The provision exists to protect workers through having a mechanism for those working in new forms of work, something which is happening all the time, but it also exists as a protection for employers to ensure a person will not return several days or weeks after having done the work and claim they worked X number of hours in order to get Y amount of money. Deputy Owen made a good suggestion about the employee making arrangements with the employer, and I am open to providing for that on Report Stage. The idea is to be fair and flexible - fair to employees in the main, but also to employers. It is not all one way and there cannot be an assumption that the employer can have no protection in relation to the legislation.
Deputy Rabbitte asked if I thought this section would be controversial. We are going through this at such a snail's pace that every single line will be controversial, something I have accepted. What is provided for is necessary and in the main it is a self-protection mechanism for those who work in particular situations, while employers have a ready way of verifying with the employee whether the hours were worked.
Deputy Higgins asked how the provisions can be policed. It is better that, if an employer has a problem, it is raised within a couple of days - 72 hours or whatever period is agreed - rather than some time afterwards when it is virtually impossible to establish what happened.
Deputy Higgins has indicated that he will press the amendment.
Amendment put.
The Select Committee divided: Tá, 5; Nil, 8.
Tá
- D’Arcy, Michael.
- Higgins, Joe (Dublin West).
- Owen, Nora.
- Rabbitte, Pat.
- Stanton, David.
Níl
- Ardagh, Seán.
- Callely, Ivor.
- Daly, Brendan.
- Harney, Mary.
- Lenihan, Conor.
- McGuinness, John.
- O’Flynn, Noel.
- O’Keeffe, Batt.
NEW SECTION.
I move amendment No. 17:
In page 10, before section 10, to insert the following new section:
"10.-Where, in order to comply with the provisions of this Act, the hours of work prevailing immediately before the commencement of this Act in regard to all employees, or any particular employee, employed in any particular form of work are reduced or are otherwise altered, the following provisions shall have effect, that is to say-
(a) the rate of salary, wages or other reward payable to any such employee immediately before the commencement of this Act, in regard to normal working hours, shall not be reduced or be otherwise altered to the detriment of such employee merely because of the said reduction or alteration in the hours of work of such employee; and
(b) the said reduction or alteration of hours shall not terminate or prejudicially affect the contract of service under which such employee is so employed immediately before the commencement of this Act and every such contract shall continue in force after such commencement with such modifications only as may be necessary in order to comply with this Act.”.
It was recognised in the Protection of Young Persons (Employment) Act that there was a possibility that employers, to fulfil the terms of the legislation, could be so minded as to reduce the number of hours people worked to reduce their wage bills and that employees would not have any redress once they were in receipt of £4.40 per hour for the reduced number of hours.
This Bill does not require employers to maintain the number of hours an employee works prior to the introduction of the minimum wage. It is conceivable that employers could reduce the number of working hours but continue to expect the same level of productivity from the employees. Much of our recent legislation contains a number of anti-avoidance measures. When the Worker Protection (Regular and Part-time Employees) Act was introduced in 1991, section 2 gave the Employment Appeals Tribunal the power to consider whether an employer had deliberately reduced an employee's hours below the eight hour threshold which is necessary in some cases to qualify for protection under the Act. Section 13 of the Protection of Young Persons (Employment) Act prevents an employer reducing the number of working hours.
I have replicated the terms of the Protection of Young Persons (Employment) Act, 1996 in this amendment in so far as they relate to working hours. I want to ensure, to comply with the provisions of this Act, that the hours of work that prevailed immediately before the commencement of the Act in regard to all employees shall remain the same and that the rate of salary, wages and other reward payable to any such employees shall not be reduced or otherwise altered to the detriment of such employees merely because of the said reduction or alteration in their hours of work.
I hope the Minister will recognise that it is time for her Department to ensure that a similar range of protections apply for employees across all employment legislation. Obviously, certain levels of anti-avoidance were included in the other Acts to which I have referred. It is difficult to understand why this broad brush stroke does not apply to all employment legislation. One of Deputy Rabbitte's amendments refers to the inclusion of an additional anti-avoidance section elsewhere in the Bill. I hope the Minister will see the wisdom of my amendment.
I am more inclined to accept an amendment along the lines of Deputy Rabbitte's amendment No. 50. Penalty clauses are included in the legislation and we want to strengthen anti-avoidance measures. We will table an amendment to this effect on Report Stage. Clearly, we cannot prevent employers reducing the number of hours but if the hours are reduced, the duties must be reduced accordingly. Employers cannot expect the same levels of productivity in a reduced number of hours. If, for example, a person currently works 40 hours per week in a shop and receives £132 per week - an hourly rate of approximately £3.30 - we could not prevent his or her working hours being reduced to 30 hours at the minimum wage rate of £4.40 per hour. However, we must ensure there is a corresponding reduction in duties.
Deputy Rabbitte's amendment provides for a role for the Rights Commissioner and I favour that as it would prove very difficult to establish an employer's intentions. We will table an amendment on Report Stage which will meet the concerns expressed by Deputies Owen, Rabbitte and others in regard to the inclusion of anti-avoidance measures in the legislation.
I thank the Tánaiste. I see the merit in Deputy Rabbitte's amendment which will allow people to check whether they are being discriminated against by their employer.
Does the Tánaiste envisage that many employers will reduce hours because that would nullify the effect of a minimum wage?
One cannot prevent that happening if someone decides to do more work themselves and give less to their employee. The important issue is the rate paid per hour. Clearly if one's hours are reduced, one's duties would have to be reduced correspondingly. One cannot be expected, in order to meet the requirements of the legislation, to achieve the same output with a substantially reduced number of hours. The main issue is that the rate per hour is paid and that if the hours are reduced, the duties are reduced correspondingly. I do not envisage this will happen in a great number of cases, but it could happen in marginal situations. I hope this will not happen in the home help area. I hope the hours worked in this area will be maintained and the rates of pay increased.
Will the Tánaiste monitor this aspect?
Yes. However, one cannot legislate against a reduction in hours and duties.
I was referring to the reduction of hours and duties resulting in——
The intention is to monitor the effect of the legislation. I envisage a monitoring role for the social partners.
Amendment, by leave, withdrawn.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill."
The pay reference period of one calendar month was recommended in the interdepartmental report. Will the Tánaiste read her note to determine why a month was selected? There is a possibility that a month might be too short. Holidays and so on could affect the calculation.
The employee must be paid for his or her working hours in any pay reference period at an hourly rate of pay that on average is not less than his or her minimum hourly rate of pay as prescribed under the Bill. The employee, therefore, does not have to be paid his or her entitled remuneration for each individual working hour.
This section prescribes that the maximum period of a pay reference period is to be one calendar month. This maximum period was recommended by the interdepartmental group on the implementation of the national minimum wage and was accepted in consultation with the social partners. The pay of an employee may vary from time to time due to particular circumstances within the workplace. The purpose of a pay reference period is to allow any such variation to be included when determining an employee's average hourly pay in the pay reference period. An employer is free to select the pay reference period which best suits the employer's pay pattern, subject to it being no longer than one calendar month. The pay reference period could be one, two, three or four weeks whether that period falls within one calendar month. The selection of a pay reference period by an employer does not alter an employee's existing pay period. An employer is judged to have not complied with the provisions in the Bill in relation to the remuneration of an employee over the duration of the pay reference period selected by the employer.
Question put and agreed to.
SECTION 11.
Amendment No. 18 not moved.
Amendments Nos. 18a and 101 are related and will be discussed together by agreement.
I move amendment No. 18a:
In page 10, lines 6 to 10, to delete subsection (1) and substitute the following:
"(1) The Minister shall, by order, declare a national minimum hourly rate of pay in the Private Sector for the purposes of this Act in accordance with the rates laid down in Part 3 of the Schedule.".
This amendment seeks to exclude the very subjective criteria being included in the Bill whereby the Minister will determine by order what is the national minimum hourly rate. My amendment seeks to exclude taking into account the impact the proposed rate may have on employment. The reason is that there are grossly differing views on the effect of a minimum pay rate on employment. Some employers have been claiming that the introduction of a minimum wage will affect employment and that tens of thousands of people will lose their jobs. There have been other alarmist noises along those lines. I reject this theory. It could be argued that the introduction of the minimum wage will increase the disposable income of 163,000 workers. This will mean more disposable income in the marketplace, which will lead to further jobs as the demands of 163,000 people with extra disposable income will be felt. The implication in section 11 as it stands is that the introduction of a minimum wage will impact negatively on employment and cause jobs to be lost. I reject this.
Sitting suspended at 11.40 a.m. and resumed at 11.54 a.m.
We now resume the discussion on section 11 and amendments Nos. 18a and 101.
The thrust of the Bill is to discriminate against workers and in favour of capital and employers. It implies that a national minimum wage and an increase in the incomes of the very low paid workers would have a damaging effect on national competitiveness and on economic conditions in the State. There is no suggestion that the profits of employers rebound on competitiveness. Reference to national competitiveness assumes competition with workers in China or India, who are paid a pittance. When we speak of overall economic conditions in the State do we mean that if economic conditions deteriorate, the level of the wages of the lowest paid workers will be reduced? On the radio discussion yesterday I heard a commentator suggesting that the predicted rise in oil prices would have drastic effects. We know that stocks in the United States are grotesquely over valued and that big corrections are expected in the next few years. Are low paid workers the people who must suffer for this?
Why does the Tánaiste not take into account the level of profits made by employers? She has the necessary figures. The Sunday Business Post of 27 February gave a breakdown of the share of the national cake. In 1987, 75% consisted of wages and 25% of profits. In 1999 wages had shrunk to 58% and profits had risen to 42%.
I have been as helpful as I can be to you, Deputy. It is important that contributions are relevant to the amendment being moved. I ask you to confine your remarks to the amendment and avoid making a speech.
With respect, sir, I am confining my remarks to the amendment. I am arguing that three criteria which discriminate against low paid workers should be removed. It is not permissible for you to intervene in this way. We have finished the discussion on amendment No. 18a. I have moved to the other amendment which you decided to discuss with it.
With the agreement of the select committee.
Amendment No. 101 specifies what the minimum wage should be. The amount of £4.40 which the Minister proposes and which will be implemented in April is derisory. This figure should have been mooted two years ago. From April next, the national minimum hourly rate of pay should be £5 per hour. Based on figures produced by the Central Statistics Office, this figure represents two thirds of average industrial earnings for 1999. According to the ESRI the average industrial earnings in June 1999 - there may be later figures - were £7.70 per hour, two-thirds of which would be slightly over £5. I cannot understand the reason the Government is failing to meet that figure, as if £5 per hour would make anybody very rich or a millionaire but it would be an improvement on £4.40 and would mean an extra £24 per week for someone on a 40 hour week.
The figure of £5 per hour should be tax free to ensure the introduction of the minimum wage is meaningful. The level set by the Minister will be meaningful for some but not as meaningful as it could be. Those on the minimum wage should not be in the income tax bracket. A minimum wage of £5 per hour with proper tax concessions could result in an increase of £1,500 to £2,000 per year, which would make a difference for the better in the economic lives of workers.
The minimum wage has to be seen against inflation in other sectors of the economy. A worker on a 40 hour week and £4.40 per hour earns just over £9,000 per year before tax. Contrast this with the way rents to private landlords, not to mention house prices, have rocketed in the past three or four years. What kind of life can we expect workers on the minimum wage to have?
Low paid workers should expect to see continual improvements in the next few years. The minimum wage should initially be set at the reasonable level of £5 per hour and increase by £1 per hour in the next three years to approach what would be more akin to the European median wage and ensure there is light at the end of the tunnel for those who are desperately trying to make ends meet enabling them to plan with more certainty in their economic lives.
The national minimum wage commission recommended two-thirds of median earnings. I accept what has been said both here and elsewhere that if we were to apply that figure the minimum wage would be somewhat higher. The commission also stated that we have to take into account economic conditions, competitiveness and the effect on employment. It did not state that we should set the rate at two-thirds of median earnings and do nothing else.
As Deputy Higgins may recognise, labour and capital are very mobile. If we were to start restricting profits in Ireland - there are places where they do - one thing is certain, there would not be much economic activity. We are in the happy position where we attract 27% of US mobile investment in Europe, even though this country accounts for less than 1% of the population of Europe. Much of that investment is fuelling growth in the economy. More people in manufacturing and internationally traded services work for foreign companies than Irish companies.
In addition to direct employment and revenues paid to the Exchequer, this foreign sector has helped grow a big indigenous sector or sub-supply base. Many people have started their own companies having gained experience in these multinational world class companies. There are 700 to 800 indigenous telecommunications and high-tech companies.
There are huge benefits to the economy. If we were to do some of the things suggested by Deputy Higgins one thing is certain, we would not attract that investment and the money already invested would go very quickly. We have done much better than any of our European neighbours and that is the reason unemployment is down to 4.9% and the labour force has grown to 1.78 million. There are 500,000 people at work today over and above the number before we engaged in social partnership in the mid-1980s and real take home pay has gone up 30%. The sensible policies we have been pursuing in the economy are working.
There is no one here who does not want people to earn as much as possible. We are quickly moving to a situation where this will be a high-tech, knowledge based and high wage economy but we are not competitive in many of the traditional sectors. Labour is much cheaper elsewhere. Where labour costs account for a huge percentage of overall costs, goods and services are generally produced elsewhere. We have to recognise this.
The figure of £4.40 is a start and can be developed. It has been agreed in the national agreement between the Government and the social partners that it will move to £4.70 on 1 October 2001 and £5 in 2002. To be honest, no matter where the base was set we were always going to have a debate about whether it was high enough but we have to bear in mind the effect on employment. The biggest poverty fighter is having a job and finding employment. Thankfully we are in a situation where more and more people can find employment. What we want to do is help them to find better employment which is better rewarded.
I am not in a position to accede to Deputy Higgins's request. I know the reason the substitute amendment has been tabled. It is to overcome the fact that amendments were ruled out of order yesterday because of their cost implications for the Exchequer. We could not have a situation where we would bring forward legislation to impose a regime on the private sector only but I know that was not the intention. It has been done for procedural reasons.
It is extraordinary that it has taken a Bill like this to ensure everybody in State employment is paid even £4.40 per hour. The cost to the health service will be £12 million, mainly in respect of home helps but there may be others. The explanatory memorandum mentions a figure of £2 million in respect of others in State employment. It is extraordinary that even our own employees are not being paid what I regard as a reasonable rate for their efforts.
This is a political decision. Politicians are elected and accountable to the Oireachtas. Would it be sensible to put people out of work by setting the rate too high? If it was set too low and had no impact clearly there would be no point in introducing legislation. I accept that the market has taken over in most but not all sectors in Dublin. However, there are still people working in the greater Dublin area for substantially less than £4.40 per hour. In a buoyant market where there are labour shortages in many sectors it is clearly a question of supply and demand. People can demand and achieve higher rates but that may not last forever and it does not apply in many parts of the country or in sub-sectors. I referred yesterday to workers in County Donegal who are losing their jobs in the textile industry and they certainly were not earning anything near £4.40 per hour.
The proposed rate will have a major impact on young people and women in particular. The ESRI anticipates that 163,000 workers will benefit. It may be argued that this is excessive but the number is certainly in that ball park. There was a discussion yesterday about those working in the hairdressing sector. Once the principle has been accepted we can ensure the figure is increased over time bearing in mind the economic implications and the effect on competitiveness. As we have a very small domestic market we have to export 82% of what we produce. If our companies cannot sell their goods and services they will go to the wall placing employment at risk and putting people out of work. It is a question of striking a balance to achieve what we all want - a decent and fair reward for all those who work in society, particularly those at the very bottom who are vulnerable and who can and are, in some cases, being exploited.
I wish to make one or two points in response to what the Minister has said. The Minister says that giving low-paid workers a decent wage will frighten off investors and have a dramatic impact on profits. That is not the case. Currently the level of national income going to profit in the Republic is massively greater than that going to profit in the United States or in the United Kingdom. In the United States, 70% of income goes to wages and 30% to profits. In the Republic of Ireland it is 58% to wages and 42% to profits. It is obvious that profits can take a considerable reduction if that is where a little of the fat has to come from, to give low-paid workers a better life.
The second point I want to put to the Minister is that last year or the year before, the figure given for the repatriation of multinational profits was a massive £7.5 billion. Is the Minister saying that £7.5 billion is dependent on low-paid workers? I do not accept that that is the case.
Because of its effect on Exchequer finance, to include anything in regard to the public sector is ruled out. It goes without saying that whatever level is introduced in the private sector, the same must apply to the public sector. On one thing I can agree with the Minister. That is that it is an absolute outrage that workers hired by public bodies are on less than £4.40 an hour. The situation of home helps is a scandalous example and the minimum wage will be a step forward for them. However, it is quite outrageous that anybody working for a public agency, a State agency or a semi-State agency should be obliged to exist on poverty wages.
Amendment put and declared lost.
Amendments Nos. 18b and 19 have been ruled out of order.
Amendments Nos. 18b and 19 not moved.
Question proposed: "That section 11 stand part of the Bill."
I listened with interest to what the Minister said. I would have expected that young people in the public sector, for example, starting a job involving inspectoral work, would have reasonably good pay. I was surprised that their take-home pay was less than £150 a week. For a young person starting out, it seems good until they make a contribution at home and provide themselves with a car, which is a necessity. I have found across the board that the excitement of the job soon wears off. The money is not as much as it seemed and it is not a reasonable wage on which to expect young people to start. It is exploitation. A minimum take-home pay of £200 would not be excessive. It may be different in larger urban areas where a car is not necessary and people can get to work more easily - perhaps they can cycle - whereas in rural areas a car is a necessity to travel distances of five, six or ten miles. It is suggested that people share a car. However, not many people are interested in sharing because of insurance consequences and so on.
I agree with the Minister that we do not want to price ourselves out of the market. At the same time we cannot refuse to face up to reality and leave young people on subsistence wages. They have to have a decent starting wage.
Question put and agreed to.
SECTION 12.
I move amendment No. 20:
In page 10, subsection (1), line 18, to delete "from time to time" and substitute "at least once a year."
The section as it stands provides that the Minister shall from time to time review the national minimum hourly rate. My proposal is that it should be reviewed at least once a year. It is in the interests of low-paid workers that at least once a year, there should be a formal review of their position and the level of the minimum wage with the view that conditions can exist for it to be increased every year by a significant amount and that should then be published or explained to the Dáil.
That will happen during the life of the current agreement. We have pay-setting mechanisms in the economy which have worked extremely well since the middle of the 1980s. We are moving on to our fifth agreement. We have agreed rates within that agreement which will be honoured by Government. We provide in the legislation for a number of ways of reviewing the national minimum wage. If there is not a national economic agreement, if there is not a national pay agreement, we will provide a mechanism where a group of employees can take their case to the Labour Court and the Labour Court can make recommendations. It is a political decision at the end of the day, and it is always open to any Minister to review the minimum wage from time to time. We should not include a compulsion. We have satisfactory mechanisms in the legislation for dealing with what a minimum wage should be from time to time.
I do not know what more the Minister can say. She has all-encompassing powers, including the power to reject any recommendation from a national agreement and so on. Having regard to the fact that we are talking about the most vulnerable category of workers, the Minister should at least go on the record indicating her intention. Regarding the power in subsection (2)(b) to reject the recommendation, I would have thought it unlikely that one would have an agreement in the first place if it warranted a unilateral rejection by the Minister. I do not know whether “from time to time” is a plus or a minus. It greatly depends on the Minister. It could be a plus or a minus in terms of how frequently a Minister would move on it. The Minister said, in terms of the earlier discussion on section 11, that £4.40 is a start. It is. It is not adequate, but I am more concerned about the loopholes than about the difference between, say, £4.40 and £5.00. We have addressed some but not others. I would like to hear the Minister on this. It is an important area of policy and something ought to be on the record on how she intends to operate what are very wide powers in that section.
Clearly this section is written on the basis of what has served this country well for the past ten to 12 years. That is the partnership concept which is a model now being examined by many of our European partners and others. This is very much an Irish model that we have built into this legislation. Whereas we all love and respect the current Minister and believe she will abide by what the partnership for fairness, peace and happiness has decided, a situation could arise where the importance of national agreements is lessened or there is no agreement. My question is, will Ministers of the day be allowed to indicate in a partnership negotiation where they stand on a particular recommendation? The only reference to a national minimum wage in the current Programme for Prosperity and Fairness is that a recommendation to the Government has been made, but I am sure much discussion took place to the effect that it should be made as generous as possible and we will see if it is accepted. That is fine because there has been much discussion about this for the past few years but in future negotiations the mind of the Minister might not be known in terms of whether he or she will accept an increase, reduce the wage or whatever. Subsection (3) states that "the Minister shall, as soon as practicable, make a statement . . . ", but it is all post the negotiation, and knowing the Minister's mind might be a very important element of any negotiation of an agreement.
Before the Minister replies, a number of Members are indicating their wish to speak on the section. Will the Minister respond to the amendment first and then we will go back to her on the section?
I think I dealt with the amendment. The points that Deputies Rabbitte and Owen made related more to the section.
Amendment put and declared lost.
On the section and the power that is given to the Minister in this regard, I presume it is in the realm of the theoretical that where there is a change of circumstances following an agreement or a swing in inflation, something can be done in the national interest - to quote a phrase often parodied but used by a former leader - to vary the recommendation of the social partners. We do not often like to do that but obviously there are certain circumstances in which this should and has to be done in the national interest. One can think of the example of Mr. MacSharry not honouring a pay deal because it was not good for the public finances at the time. I presume this is not something that will be used often but presumably if there is not a good national pay agreement, a recommendation will be unilaterally rejected.
Before calling the Minister, I would like to deal with the amendments, as we agreed, and then the section. Amendment No. 21 is out of order, as is amendment No. 22. I call Deputy Higgins to move amendment No. 22a.
I do not want to rehash the argument made yesterday about one's surprise, especially since there was no indication of it, that so many of these amendments were being ruled out of order but I am totally puzzled as to the reason amendment No. 21 is out of order on the basis that it would impose a cost on the Exchequer. Much has happened in recent years that leads one to the conclusion that it is time parliamentarians asserted some control over the parliamentary system. I just do not understand that decision, but I do not want to labour the point.
Thank you, Deputy Rabbitte. As I said, you are free to contact myself, the clerk or indeed the Bills Office——
That is like the Ceann Comhairle inviting me to go and see him.
Seriously, if I can be of assist-ance——
I know. I appreciate that.
I think the Deputy has found on many occasions that I have been as helpful as possible.
I could not find a more agreeable and accessible Chairman.
Thank you.
Amendments Nos. 21 and 22 not moved.
I move amendment No. 22a:
In page 10, subsection (2)(a), line 30, to delete “order or” and substitute “order provided that in the Private Sector the acceptance or variation is for an amount per hour not less than the recommendation.”.
To follow on from what Deputy Rabbitte said, it is ridiculous that we have to go into contortions to get the intent of an amendment on to the clár. I am not saying it is the Chairman's fault but it is the majorities in this Dáil who allow Standing Orders to stand, and they must take responsibility for that.
This amendment is important because it relates to a recommendation made to the Minister by agreement between employers and effectively the trade union movement, or such other organisation that might represent workers, and low paid workers in particular. It is unthinkable that the Minister would vary the recommendation made in a way that would be detrimental to low paid workers, in other words, that the Minister could revise downwards the figure that would come from an agreement between economic and social interests. The effect of my amendment, which refers to the private sector but obviously my intention is the same with regard to the public sector, is that the Minister should not vary downwards the recommendation made by agreement between employers and workers, and it would simply remove that power. That figure or a greater figure would have to be set by the Minister. I do not know why the Minister would want to keep the power to go against what would be a significant agreement between employers and workers in regard to the national minimum hourly rate of pay.
The Minister to reply on the amendment.
Perhaps I could deal with the section and the amendment together, if that is in order, because I have responded to Deputy Higgins's initial comments on the rate and the points he makes in his amendment are similar to the points made by Deputies Rabbitte and Owen.
For the sake of proper order and procedure, we should deal with the amendments and then deal with the sections. Otherwise we will have repetition, as the Minister said. We should deal with amendment No. 22a first and then with the section.
Since you are going to dispose of the amendment first, Chairman, may I ask the Minister a question? Is it her understanding that the Minister has the power to set a rate lower than that recommended by an agreement?
As we said throughout the debate, this is enabling legislation and Deputy Rabbitte referred to the need for parliamentarians to assert themselves. To a large extent, what the minimum wage is at any time is a political call. This legislation is not just to be used by me in my current position. If Deputy Higgins becomes Minister for Enterprise, Trade and Employment he will be able to use it. We may disagree about the minimum wage. He may decide it is better to have half a million people unemployed and have everybody paid a much higher rate, and I may decide it is better to have a balance in relation to this matter.
As a party to national pay talks, the Government is an employer and it has signed on for the current agreement, which has not yet been adopted by the various participants because it is being voted upon. I could not envisage any circumstances where I would not honour the commitments that have been agreed. However, if there was a major downturn in the economy and this country got into a crisis similar to that which arose in the 1980s, we might like to go back to the drawing board to talk to people because we have to consider the impact this would have on competitiveness, employment and the economy generally. I do not envisage circumstances, particularly in the current climate, where the Minister of the day would not be in a position to honour agreements. If those involved could not honour agreements, they would have to discuss the matter with those with whom they had made the agreements.
Because this is a political call, it is important the decision on whether to increase or reduce the rate recommended rests with the Minister, irrespective of whether it is recommended in the context of a national agreement to which the Government would be a party, as it has employees who would be affected and so it is an employer, or whether it would be the Labour Court, the State machinery for making recommendations in this area. A Government that would not go along with its industrial relations machinery would be foolish. I am a strong fan of the LRC and the Labour Court. If the Labour Court was to make a recommendation, I do not envisage circumstances where it would not be adopted but we cannot rule out that possibility. It must be a political call and politicians are answerable to the House and the Oireachtas.
Deputy Lenihan referred to the national interest. It is sometimes felt that if an issue is in the interest of a group or an individual, it is in the national interest. It is in the national interest that this is a political call and those who make the call are accountable to those who elect them through the Oireachtas.
Amendment put and declared lost.
Amendment No. 23 is out of order. Amendment No. 30 is related to amendment No. 24 and the two may be taken together by agreement.
Amendment No. 23 not moved.
I move amendment No. 24:
In page 10, subsection (3), line 32, to delete "or rejects".
I wish to withdraw amendment No. 30.
I thank the Deputy for that indication, but I will ask him to withdraw it when we reach it.
Amendment No. 24 deals with the point that has just been dealt with, that a recommendation could be rejected. I argue that in no circumstances should a recommendation agreed between employers, employees or whoever be rejected by the Minister, but I accept it could be rejected in favour of a higher minimum wage being set. I will withdraw my amendment on that basis.
Why is amendment No. 24 in order when amendment No. 21 was ruled not in order.
That is a matter for the Bills Office not for the Chair.
I may approach the Chairman in his private chambers afterwards.
I will be happy to accommodate the Deputy.
The imponderability of the rejection of amendments on the basis that they would pose a charge on the Exchequer is stretched so thinly in some instances. In this instance the amendment refers to the position if the Minister varies or rejects a recommendation and that was not ruled out of order, on the basis that rejecting a recommendation could have a cost.
Or a saving.
It could have a saving but it could also have a cost because the Minister of the day could come back with a higher minimum wage and that would involve a cost. Rejecting a recommendation and replacing it with a higher figure and deleting the word "reject" could be stretched to infer that it would pose a charge on the Exchequer. It is another imponderable. I cannot understand how it could pose a charge on the Exchequer.
It has the potential to pose a charge.
Does the Chairman wish me to analyse some of the other amendments?
I ruled that the amendments to a section must by taken in order, as it is the only way we can follow the appropriate procedure. I apologise for not allowing the Minister to reply earlier, but I want to deal with each amendment and then with the sections.
I wish to make one correction, the £4.70 refers to 1 July and not 1 October. It will be £4.70 on 1 July 2001.
Amendment, by leave, withdrawn.
Section 12 agreed to.
SECTION 13.
Amendment Nos. 26 and 27 are related to amendment No. 25 and they may be taken together by agreement.
I move amendment No. 25:
In page 11, subsection (5), line 22, to delete paragraph (b).
I am puzzled by subsection 5(b). I would be interested to hear the Minister’s comments on it. Will she indicate how relevant exchange rate movement impacts on agreement between parties and how it relates to the national minimum hourly rate?
Is the Deputy referring to subsection 5, line 22?
Yes, page 11, line 22.
Is the Deputy asking me what it means?
We share this island with the UK economy and part of the island is in a different currency zone. In deciding whether we are competitive or whether jobs are vulnerable, the Labour Court would have to be in a position to assess the likely impact of any exchange rate movement. The subsection means exactly what it says. Deputy Rabbitte also tabled an amendment to this section relating to particular sectors. The Labour Court when considering a review of the national minimum wage is expected to take into account the impact of competitiveness on the economy, unemployment and so on. One of the factors we would expect it to take into account is the impact of the exchange rate, particularly in the Irish case vis-à-vis sterling in the current circumstances, where it is outside the same currency zone as the punt.
It is strange how all these matters can be taken into account in a way that could be detrimental to wages of low paid workers. We do not have any such reckoning for other sectors of society. In regard to how the punt moves against sterling, the implication is that the real take home pay of low paid workers should be determined according to the fluctuations of the exchange rate and that the activities of major speculators on the international scene can determine the minimum rate of pay of workers who are on the lowest rung of the ladder. I find that objectionable.
In the early 1990s when we had a currency crisis, the Government had a number of mechanisms available to it to help vulnerable companies. We established what was called a marketing fund at the time to help very vulnerable companies. If such a crisis were to arise again, we would not have those mechanisms in place to help vulnerable sectors. At present nobody considers this because there is such a differential in the exchange rate between the punt and sterling that many of our companies have a major cushion. Many of them do not have 20% margins, yet they have a currency differential of 20% or in excess of 20%. When the Labour Court is assessing the impact on competitiveness of any rate, it may recommend to the Minister that this is something it should take into account. We are simply providing that this be taken into account.
Thousands of jobs in this economy depend on exports to the UK. One of the problems facing many companies in the indigenous sector is that they have not diversified beyond the UK. They have not branched out into other markets. They are totally dependent on one market and are therefore very vulnerable. We are saying here that when the Labour Court looks at the effect it will have on the economy, it should look at it in the broadest possible context.
I am open to accepting Deputy Rabbitte's amendment which deletes "and, in particular, the competitiveness of vulnerable sectors of industry". Once the court looks at the overall impact, I will be happy, and this is one of the issues it should consider when it does that.
Has the Tánaiste given consideration to the point made by the Irish Congress of Trade Unions? Under section 11, when the Minister is making the order she is obliged to take into account the impact the proposed rate may have on employment, which is covered in subsection (5), and the overall economic conditions in the State, which would apply to such matters as inflation and competitiveness. However, she has not listed the relevant exchange rate movement. It appears that the argument being made is that it is inconsistent with section 11 to include the relevant exchange rate movement. As soon as the UK joins the single currency it will have no relevance. Why can the amendment not be accepted?
In assessing national competitiveness, inflation, level of employment and so forth, the exchange rate effect will also be taken into account. Nobody will carry out that type of assessment without taking it into account if it is relevant at that time. One is inserting something that is under a time constraint, as it were. The UK plans to join the single currency in a few years and this will be a superfluous and obsolete element which the Minister will be obliged to remove at a later stage. It has not been listed in section 11(1).
It also boggles the mind as to how this amendment can be considered to be in order, because taking it out it might have an effect on the Revenue that would have to be paid. Why this amendment was allowed is imponderable, although it is good for Deputy Higgins. We could have a day long debate on the amendments that were left in and taken out.
There is merit in the arguments advanced by Deputies Owen and Higgins. Deputy Owen points to the conflict between the criteria to be taken into account by the Minister in respect of section 11, that is, national competitiveness, the overall economic conditions in the State, and the relevant exchange rate movement. The congress argument in that regard is right.
There is also something anachronistic about it. We are supposed to be Europeans now and, notwithstanding the temporary hiatus on the neighbouring island, the exchange rate is consigned to yesteryear. It is most unlikely, as Deputy Owen said, that the Labour Court would not have regard to an exchange rate crisis vis-à-vis certain types of traders into Britain in a different exchange rate set up. The Labour Court would take it into account and it need not be included here. It is a throwback to times past in our psyche. I do not know if anybody has been watching the television programme, “The Seven Ages”. It is very interesting although, equally interesting, the labour movement has not yet figured after three programmes. Apparently, there was no labour movement from 1913 to 1945.
We are discussing the section, Deputy.
I am sorry, Chairman. The second argument, made by Deputy Higgins, is a strong one. It is an odd place to start. If the exchange rate between Ireland and Britain becomes punitive, it is strange to start with the lowest paid workers in the economy. There is no justice in that. In any event, it is superfluous because the Labour Court would bear that in mind.
I thank the Tánaiste for accepting amendment No. 27. Given the inclusion of the other criteria, retention of the phrase relating to vulnerable sectors would undermine the character of a national wage. It is a little like telling people they can eat ice cream but not during the summer months. I am glad it is gone.
This was recommended in the national minimum wage commission report. The report referred, in relation to the exchange rate, to the high degree of labour mobility between Ireland and the United Kingdom and suggested that the level of the Irish minimum wage and other key features of the system should be set giving due weight to the choices which will be made available with a statutory minimum wage in the UK. It said that competitiveness vis-à-vis the UK is a further factor in determining the level of the national minimum wage. Irish owned manufacturing firms export 45% of their exports to the UK and UK firms are stronger competitors for Irish firms on the domestic UK market and on third country markets, particularly in the traditional manufacturing sectors which tend to be low wage and cost competitive sectors.
If the exchange rate reaches punitive levels, it is certain that those at the bottom will lose most. Under section 11, the Minister will consider the recommendation of the Labour Court or the recommendation from a national agreement. Since that will have already been considered by the Labour Court or in the context of a national agreement, there is no need to repeat it there.
With regard to amendment No. 26, will the Tánaiste agree that when determining the rate of pay for the lowest paid workers, everything is thrown in to weigh against or at least to make it more difficult for a decent level to be fixed, something to which I take serious exception? Take, for example, the Labour Court taking into account inflation in the economy. The implication is that an increase in wages for the lowest paid workers causes inflation. Does the Tánaiste not accept that the lowest paid workers are the people who suffer from the inflation that is caused elsewhere? If inflation is caused by an increase in oil prices, it is out of the control of low paid workers. However, the implication is that inflation that originates elsewhere should impact negatively on a decent level of wages being set for them.
Will the Tánaiste agree that a relevant provision to include might be that the Labour Court should take account of increases in the level of profits among employers and, also, the disparity between the rate of profit in the Republic of Ireland and in other countries? Why are there not any provisions that will rebound to the advantage of the low paid? The Tánaiste did not answer the point I made earlier in regard to the huge disparity between profits here, in the United States and in the United Kingdom. The amount of profit is far greater here than in the others. Why did she not include a provision that the Labour Court should take that into account? That is something that could rebound to the advantage of low paid workers when a rate is being fixed. Why is it always considerations that are negative for the cause of the low paid?
The amendment is wrongly construed because this section seeks to insure against the possibility of an asymmetric shock to the economic system if there is rapid movement in the exchange rate, inflation or in external costs to the economy which would require wages to be adjusted downwards. We discussed this at length prior to joining the euro. This section does not mitigate against the more vulnerable sections of society. All of society must be flexible because we do not have the tools to adjust our economy downwards in a single currency. The economy would have to be adjusted downwards if our wealth was adversely affected by external shocks. It is QED economics.
There is a large gap of approximately 14% between GNP and GDP. That is accounted for by transfer payments and repatriation of profits because we have such a heavy FDI sector. We are more heavily dependent on FDI than any country of which I am aware but we have done well from it. It has generated high quality employment both directly and indirectly and it pays big revenues to the Exchequer which help in the areas of health, education and welfare.
The Deputy asked why these competitiveness issues are a factor only for the low paid. The market generally determines rates of pay in other sectors. At present, the market is the determining factor in most sectors in the Dublin area. The supply or shortage of labour is determining the rate people are paid. That is not always the situation and it is not the situation throughout the country or in every sector. That is why we are introducing a minimum wage for people's efforts. This is the statutory rate we believe people should get where market conditions do not give them this type of return.
If, for example, the Labour Court decided a pay increase would add 1% to inflation, that does not mean it would not make the recommendation. We are not saying it will not make a recommendation based on such factors. We ask it to consider these factors and then to make a recommendation. If they have an adverse effect on competitiveness, that is a matter for the Minister when deciding whether to strike the rate. This will become a factor only if the two parties cannot agree. If employers and workers' representatives, the trade unions, agree before the Labour Court that the minimum wage should be a certain amount, it will not become a factor. However, if they disagree and the Labour Court carries out an examination with a view to making a recommendation, we ask it to take these factors into account and then to make a recommendation. It may decide to look at these issues and to ignore them.
Given our high dependency on the UK economy, particularly our indigenous vulnerable sector, it is not unreasonable to ask that at least the impact of exchange rates at any given time should be taken into consideration.
Amendment put and declared lost.
I move amendment No. 26:
In page 11, subsection (5), lines 23 to 30, to delete paragraph (c).
Amendment put and declared lost.
I move amendment No. 27:
In page 11, subsection (5)(c)(iv), lines 29 and 30, to delete “and, in particular, the competitiveness of vulnerable sectors of industry”.
Amendment agreed to.
Amendments Nos. 28 and 29 have been ruled out of order.
Amendments Nos. 28 to 30, inclusive, not moved.
Question proposed: "That section 13, as amended, stand part of Bill."
Section 13 deals with circumstances in which there is no national agreement. We do not know if social partnership will continue. A number of people thought the current agreement would not survive the negotiations, although I am glad it did. If there were no national agreement, this section would allow a group of employees or employers to apply to the Labour Court to determine a minimum wage.
Subsection (4) states that the "Labour Court in undertaking an examination as the result of an application under subsection (3), shall consult with such persons, including representatives of employers and employees in the private sector and public sector of the economy, as it thinks appropriate”. Perhaps the Minister could confirm if that is wide enough to include an organisation, such as the INOU, which is not representative of employers or employees but of people who are not covered under the description of employee, such as community employment workers and people on schemes. It is important to allow the INOU to be part of the partnership discussions so that we do not lose out on the progress made.
Subsection (7) states that the "Minister shall, within 3 months after receiving a recommendation of the Labour Court . . . . . to accept or vary the recommendation and declare the national minimum hourly rate of pay under section 11 accordingly, amend the order or reject the recommendation”. Will there always be a minimum wage regardless of whether the Minister can vary or reject a recommendation under subsection (7)? When I read this subsection, I was alarmed that the Minister could reject a Labour Court recommendation which could result in there not being a minimum wage.
The only way there could not be a minimum wage is if we do not make an initial order. The existing order stands until we do not make a new one. Unless no order is made to implement this legislation or the legislation is repealed, there will be a minimum wage.
While the INOU is a party to the social partnership, it is not a party to the pay talks. It is important to keep the pay element, in so far as the Labour Court is concerned, to those responsible for the pay element of those negotiations, that is, the trade unions, the employers, the Construction Industry Federation and the Government. It would not be desirable to broaden it beyond that because then it could be said the voluntary and social pillar, for example, should be involved because of the effect on women or young people. It should be kept to the parties involved in negotiating the pay element of the agreement which are specified under subsection (4).
Subsection (4) states that the "Labour Court in undertaking an examination as the result of an application under subsection (3), shall consult with such persons . . . . . as it thinks appropriate”. It also includes the phrase, “including representatives of employers and employees in the private sector and public sector of the economy”. It gives them the power——
And that would include——
If I was a member of the social partners I would argue that the Labour Court has the right to consult people other than the representatives.
However, the onus is on the Labour Court to do so and to decide who might be appropriate. I would not want to write into the legislation specific bodies over and above those broadly referred to as employers and employees.
The minimum wage is a gross amount at the moment. When does the Minister see it becoming a minimum wage net of tax? That is a big difficulty at the moment. How much additional revenue will the State get as a result of the introduction of the minimum wage?
The matter of taxation was already dealt with.
The figure given was that £100 million in taxation will be raised.
In regard to future agreements, does the Minister envisage a situation where the minimum wage will be a net wage after tax?
I cannot look into my heart and say what will happen in the future. However, I hope to see this minimum wage become tax free quickly, if I am in office long enough with my colleagues. I hope that will happen before the next election. I do not know what would happen if Deputies Perry and Rabbitte were in power because they have not shown great commitment to reducing taxes in the past.
The Minister has me there.
I do not want to make smart comments. Clearly, the minimum amount people get for their labour should not be taxed. We must move quickly to arrive at that situation.
I am glad to hear that.
Question put and agreed to.
SECTION 14.
Amendment No. 31 is out of order.
Amendment No. 31 not moved.
I move amendment No. 31a.:
In page 11, lines 46 to 51, to delete paragraph (a) and substitute the following:
"(a) in the Private Sector an employee who has attained the age of 16 years shall be remunerated by his or her employer in respect of the employee’s working hours in any pay reference period at an hourly rate of pay that is not less than the national minimum hourly rate of pay, and”.
Unfortunately, we must use the awkward device of applying this to the private sector when it is intended that it should apply elsewhere. Section 14 cannot be discussed without reference to the following sections, in regard to the percentages for various ages and also the provisions for those whom the employer deems to be engaged in authorised training or study.
The point I make strongly is that every worker, on attaining the age of 16, should be entitled to the national minimum hourly rate of pay. The provisions made for a lesser national minimum hourly rate for people of 18 and 19 years of age and older are quite shameful. At 18 years of age one can vote and join the Army - or it might be younger - and can be sent out to be killed. However, an 18 year-old is not deemed to be entitled to receive the national minimum hourly rate of pay. That is quite shameful and I want to hear the Minister justify it. It gets worse, in the sense that a 19 year-old is still not entitled to it. If people enter employment before they are 18, they only become entitled to the national minimum hourly rate of pay when they are 20. If somebody does not enter employment until he is 19 or 20, he must wait a full two years before he is entitled to it.
I accept many people begin work younger than that. However, people could work in a family business without being on the books or receiving remuneration - I am not speaking here about a situation of illegality - and might not move into full-time regular employment. According to the Bill, if they began full-time employment when they were 20, they would only be entitled to a lesser percentage of the national minimum hourly rate. That is quite bizarre.
I will not discuss in detail sections 15 and 16 because we will be discussing them later. However, the background to my proposal is related to the provisions in sections 15 and 16, which can be massively abused. Many 16 and 17 year olds are doing the same work as an adult. This is providing a charter for exploitation by employers using loopholes to pay less than the national minimum wage. Furthermore, it is an encouragement for employers to discriminate against adult workers because of the lower national minimum hourly rate they are allowed to pay young workers, who in many cases do the same type of work. There is no justification for it. The most just and reasonable way to acknowledge the role played by youth in this economy is to entitle 16 year olds to the minimum wage.
This is one of the issues on which there was considerable debate, both among those we consulted and between myself, officials and others. Some would say that, in a buoyant economy with a substantial number of jobs available, that would be a disincentive to remain in education. On the other hand, people opt out of education for reasons other than the availability of jobs. It is a question of trying to strike a balance.
In the UK one must be 22 years old to be entitled to the minimum wage. In Ireland one must be 18 years. I accept the point Deputy Higgins made about the two year period. However, I would not be in favour of reducing it to 16 years. We must do everything we can to find new mechanisms and incentives to keep people at school until they are at least 18 years old. The chances of someone who does not have a basic second level education being able to access any kind of reasonable job or work for life will be severely damaged in the environment in which we now operate. We must try to strike a balance in everything we do. A 16 or 17 year old will get £3.08 per hour. That is much more than many are earning at the moment. It is right that the minimum wage should be introduced at the adult age of 18 years.
I support the Minister's point about young people leaving school early. Due to the scarcity of workers, there is a practice at present of canvassing young people, particularly in the regional colleges, before they have acquired their certificates or diplomas. In many cases, they would be capable of doing a degree if they were encouraged to stay on and we would have highly skilled people. That is a problem.
Why is it necessary to have a two year break-in period after they enter employment at 18 years? Why not give them the minimum wage - which is very minimal - at 18 years? There are huge problems in rural Ireland with getting started in life and with the disappointment of pay packets not being as great as they look. Why not give them the minimum wage when they begin employment at 18 years or encourage them to stay at school and get the maximum qualifications by giving them the full minimum wage at 18?
I am concerned about young people being attracted out of school by high wages. This is happening because of the booming economy but many such people end up in dead-end jobs. On the other hand, as the Tánaiste quite rightly said, some young people leave school to work in the agricultural sector. A youngster of 16 could drive a tractor all day, which is hard work. Should he or she be paid the same as a person of 30 who is doing exactly the same work? That is the difficulty.
People cannot be compelled to stay at school after the required age limit, but there are young people who will spend most of their lives as unskilled workers. They may start in casual jobs and end up on the dole as long-term unemployed persons because they left school early. I would welcome any initiatives to target such people while they are in the education system, and the earlier the better. This area should be monitored very closely in the operation of the Bill.
Nobody wants to see young people being exploited and we want to ensure that will not happen in future. Society is now reaping the benefit of an educational policy whose foundation was laid 30 years ago. We want to make absolutely sure that any actions we take do not drive young people out of school. I recently attended the FÁS "Training 2000" conference in the RDS where I saw groups of young people in school uniforms rushing from stand to stand. I heard them saying: "Intel offered us X amount. What did Hewlett Packard offer you?" It was like an auction. My fear was that those students who were not expecting a good leaving certificate result might be seduced into accepting some of the offers. Employers should try to encourage students to finish the leaving certificate by telling them they will earn more with that qualification.
As the mother of three children, I am also very conscious that young people like to take up some jobs in that period between 15 and 16 years of age. They want to do some work to get extra pocket money that their mothers and fathers cannot afford to give them. If the age limit for the minimum wage was reduced to 16, employers might not take on young people who in turn would lose out. At £3.08 per hour the wage is not too bad. There are many who are getting less than that.
The down side of reducing the age limit to 16 is that employers will stop hiring people aged 16 or 17 because of the cost. They will hire older people or not fill the vacancy at all. Those who gain from getting these jobs will lose out. Many households need the benefit of such jobs because they cannot provide teenagers with pocket money. In her discussions I am sure the Tánaiste has come across the dilemma of people who want jobs to be available for people under 18 but who do not want to price themselves out of the market.
Deputy Boylan, who is offering, has already spoken on amendment No. 31a.
I am aware of that, but I wish to ask the Tánaiste about recruitment and canvassing. Opportunities are being offered by firms to young employees to further their education when they are hired. Companies say that opportunities will be provided for training but they do not materialise. Even if the opportunities are there, there may not be time for young people to avail of them. There should be some safeguard to ensure that inducements offered to young people to leave an institute of technology materialise.
That is dealt with under section 16.
I was not aware of that. I am re-emphasising the point because it is very important. If such safeguards are not included in the legislation, we could in future have many young people who are not fully qualified to further their employment prospects.
Young people must be encouraged to remain in the educational system. If they are earning £3.08 per hour they will have an opportunity to partly fund their education. Unfortunately, much employment in the retail service sector is on a temporary basis. If students want to enter more stable employment they should be encouraged to complete college courses.
It is pitiful to cite early school leavers as an excuse for introducing this highly discriminatory measure. Surely, young people should be rewarded according to their economic contribution. Nobody has referred to the fact that many young people are doing the same work as adults. Why, therefore, should the benefit of hiring young people in such positions lie with the employer? I am in favour of keeping young people in school, but that is a separate issue. It is a question of creating other encouragements to keep them at school and helping them to realise the benefits of education, including better and higher paid jobs.
One could put the argument the other way round. Has the Tánaiste considered that having the minimum wage at £4.40 for 16 year olds could help them to stay on at school? Those who earn £4.40 per hour at 16 or 17 years of age by working part-time, would have a higher income than if they were earning £3.08 per hour. As Deputy Owen said, because of the economic position of their families, there is a great deal of pressure on young people to take part-time jobs. If, however, they were remunerated at the national minimum hourly rate of £4.40 - as opposed to 70% of that figure, which is £3.08 - there would be less pressure to work longer hours and thus they could remain in school or college more easily.
As regards what Deputy Higgins has said, the international evidence is the opposite. In some parts of Donegal where there was a strong textile industry, people traditionally went from school to the local textile factory and saw their future purely in terms of that employment. When those jobs were removed people asked me what they would do. Those jobs had generated worthwhile employment and consequent economic benefits. One could say the down side was that once people reached school leaving age the job opportunities were there so they opted out rather than continuing in education.
How does one get people to remain in education? Those of us, like Deputies Rabbitte and Lenihan, who are familiar with north Clondalkin, know that a number of school principals there, led by Mr. Brian Fleming, introduced a remuneration scheme for students whom they regarded as having good potential. The scheme is only four years old and it has a small base, but the small sum of money they gave monthly to those children has kept them in school and has increased the third level participation rate fourfold. I accept it is a low base. A small amount of money was allocated - I understand it was approximately £40 per month. Initiatives of that kind need to be considered in a targeted way.
Deputy Richard Bruton's proposal was taken up.
In terms of earnings, the culture is very different from what it was when we were 16 and 17 years of age. We must strike a balance. It is right that the rate should become operative at the age of 18 years and that a person with experience should be paid more than a person with no experience. Most people we consulted agreed that 18 years was the correct age.
Amendment put and declared lost.
Amendment No. 32 is out of order.
Amendment No. 32 not moved.
Question proposed: "That section 14 stand part of the Bill."
I have no problem with the section and I have never supported exploitation, but I must draw the Minister's attention to the fruit and mushroom industries, especially in County Wexford. The fruit industry is very competitive and it has managed to extend the active season to the four months of May, June, July and August. That industry is very strong in County Wexford and it must compete against France, which uses very cheap labour from other countries. Some 95% of the people working in the industry are students, ranging in age from 12 to 24 years. Almost half of them would be under 18 years of age.
Wages in both the fruit and mushroom industries are linked to production. If that were to change the processors would face major difficulties. There is a variation of between 30% and 70% in terms of those who can or cannot reach the high standards. The fruit industry is very important in County Wexford and practically all students from the age of 12 in the county can be assured of employment in it. Last year a significant number of students had to be recruited from abroad. I am advised by the fruit processors that the impact of this legislation will destroy the competitiveness of the industry.
The mushroom industry is different in that people are permanently employed on approximately 26 hour weeks. It suits many married women to work in that industry in their own time because they must pick a certain tonnage. They bring their children to school, pick for three hours and then bring their children home.
In Denmark minimum wage rates negotiated at national level tend to be applicable to only new or inexperienced workers and they vary according to length of service and qualification levels. Special legislation covers workers in the domestic services sector, the agriculture industry, seamen and vocational trainees. Has the Minister taken this into consideration?
Minister, you have already addressed this section at length, but perhaps you may wish to add to what you have said.
Deputy D'Arcy suggests that the rate will make the sector with which he is concerned uncompetitive. I have made similar points. It is about achieving a balance. The rates struck here are not unreasonable. The challenge is to make them competitive. If the fruit picking sector employs people aged 12 and upwards the rate will not apply because it does not apply to those under the age of 16, although there are limitations on hours worked.
Some 50% of fruit pickers are over 18 years of age.
We must ensure a decent wage is paid for a decent return. Perhaps the fruit picking industry will argue its case for a year's exemption at the Labour Court. France has a minimum wage while Denmark has a national wage with regional and sectoral differences.
They apply to the agriculture industries, seamen and vocational trainees.
We decided not to opt for either a sectoral or regional approach and elected for one national minimum wage. There is an exemption possibility of one year for employers who face difficulties, provided they can get the agreement of a majority of their employees. In such instances they can apply to the Labour Court for an exemption period of up to 12 months. We cannot consider exclusion clauses because they would defeat the purpose of what we are trying to achieve. I doubt if many of the Deputy's colleagues would support such a move.
This aspect is relevant to north County Dublin, a horticultural area with a high density of fruit and vegetable picking. How does the Minister propose to explain the terms of the legislation to employers who pay people on a task basis, for example £3 for producing a sack of potatoes or whatever? I presume they will have to shift from paying by the sack, punnet or chip. We all did such work. When I was growing up I picked fruit for Lamb Brothers and others around Clontarf. Employers will now have to calculate how many punnets an hour can be picked by the average worker. How does the Minister propose to assist employers in this regard? Have draft guidelines been prepared? Will there have to be a reduction in the number of hours worked? This is the kind of sector that will have a difficulty with the hourly rate.
The anti-avoidance measures will be important here, especially where hours and duties are reduced in scope. Some employers will use an output measurement to gauge the length of time it should take to perform a task. Employees will have rights in this regard and some of the points made in the earlier discussion on verification will be relevant.
We will provide employers with information on the details of the legislation, the order, the factors that will make up reckonable pay and so on. I do not know how we could advise employers on converting their existing way of calculating return, be it based on piecemeal or output mechanisms. The rate will be £4.40 per hour and it is for them to reach an agreement with their employees on its introduction.
Question put and agreed to.
SECTION 15.
I move amendment No. 33:
In page 12, between lines 40 and 41, to insert the following subsection:
"(4) This section applies to an employee in circumstances described in subsection (1)(a) or (b) whether he or she entered employment, or continued in employment on attaining the age of 18 years, before or after the commencement of this section, but the employee’s entitlement to remuneration as provided for in subsection (1) shall be only in respect of any period remaining after the commencement of this section of the employee’s first and/or second year after so entering employment for the first time or, as the case may be, so attaining the age of 18 years and continuing in employment.”.
On a point of order, does the rule that applies to mobile 'phones in the Dáil Chamber apply to committees?
Yes.
My apologies, Chairman. I thought the call had been diverted.
I hope it has not greatly disturbed Deputy Higgins.
Nevertheless, I know you would want to implement all the rules equally, Chairman, with the same diligence as you rule out an amendment because it seeks to impose a charge on the Exchequer.
I would of course, as my record will prove.
Remember the time guillotine also, Chairman.
Deputy Rabbitte, you should have been present at the start of the meeting. I proposed that we agree to adjourn in and around 1.30 p.m. and that it was agreed.
I beg the Minister's pardon. I will stay until 2 p.m., if necessary. I just wish to point out to you, Chairman, that of all the Standing Orders I have followed in this House I have yet to see one which states "in and around".
I am only starting, Deputy Rabbitte.
Section 15 applies sub-minimum rates of pay, 80% in the first year and 90% in the second, to employees who enter employment for the first time after attaining the age of 18, and to people who have been in employment before 18 and continue in employment on reaching 18.
The purpose of this amendment is to ensure that the section applies to existing employees on 1 April; in other words, that there is no uncertainty that those who are in an existing situation are covered by this. This was raised by Deputy Owen on Second Stage. The amendment will bring legal certainty to this situation.
As the section is being opposed, it is my intention to adjourn now and leave the explanation of the Minister as food for thought. We will resume at 6.30 p.m.
Sitting suspended at 1.32 p.m. and resumed at 6.30 p.m.