Dáil Éireann Debate, Tuesday - 4 July 2017
111. Deputy Maureen O'Sullivan asked the Minister for Finance his views on whether the increase in poor condition and short-term contracts and general insecurities in modern employment are contributing factors in the increase in employment figures and the stagnation of the tax base; and his plans to tackle this situation. [31357/17]
View answerWe are currently seeing very positive signs in the labour market. Total employment, which has passed the two million mark, is at its highest level since 2008.
Encouragingly, the labour market recovery remains broad based with gains recorded in all sectors and at all levels of occupational status last year. The composition of growth also remains strong driven by gains in full-time positions. In fact, according to the latest employment data released by the Central Statistics Office (CSO), annual increases in full-time employment of 5.5 per cent were seen in the first quarter of 2017, while over the same time period, part-time employment fell by 3.4 per cent.
As part of the Quarterly National Household Survey (QNHS) release, the CSO publishes a measurement of underemployment. The following criteria are used to derive underemployment:
1. Working part-time
2. Willing to work additional hours
3. Available to work additional hours
Using these criteria, the CSO data show that part-time underemployment has fallen by 6.4 per cent over the year to Q1 2017, representing less than 5 per cent of all employees while over three-quarters of people who work part-time do so by choice.
In parallel to these significant employment gains, unemployment continues to fall. The unemployment rate stood at 6.4 per cent in May, the lowest rate of unemployment since mid-2008. Crucially, the fall in unemployment is broad-based with substantial declines recorded in short-term, long-term and youth unemployment.
Both average hourly and average weekly earnings have also increased in the year to Q1 2017. Importantly, these increases are broad-based. In the first quarter of 2017, average hourly earnings increased in 9 of the 13 sectors reported by the CSO, year on year, while average weekly earnings increased in 11 of the 13 sectors.
The average number of hours worked over the same period also increased. Like earnings, the increase in the average number of hours worked is broad-based with increases in 9 of the 13 sectors. Importantly, the average number of hours worked increased in sectors such as the Accommodation and Food Services sector, which has a high concentration of part-time employment.
In relation to the tax base, I assume the Deputy is referring to income tax. Income tax has performed steadily in the first six months of 2017, up 3.1 per cent or €274 million on the same period last year. However, income tax receipts of €9,045 million were slightly behind profile, down 2.3 per cent or €214 million. This shortfall against target is across a range of income tax components.
Income tax encompasses a broad range of elements, some of which are not directly impacted by employment or wage developments. These include Deposit Interest Retention Tax, Life Assurance Exit Tax, Dividend Withholding Tax and Back Duty. Some of these components are having a drag on overall income tax receipts in the first half of 2017.
However, it is worth pointing out that the key component, i.e. income tax (PAYE), which accounts for around €13 billion or 65 per cent of total income tax receipts is broadly in line with profile at end-June. This is consistent with the increases in employment and earnings in the labour market which we have witnessed in the year to date.
Overall, the continued momentum in the labour market of late is underlined by broad-based, full-time employment gains coupled with significant reductions in short-term, long-term and youth unemployment. The solid performance of PAYE receipts in the year to date is indicative of these positive trends.
