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National Minimum Wage

Dáil Éireann Debate, Thursday - 10 February 2022

Thursday, 10 February 2022

Questions (2)

Mick Barry

Question:

2. Deputy Mick Barry asked the Tánaiste and Minister for Enterprise, Trade and Employment if he will initiate an emergency review of the minimum wage given the rate of inflation; and if he will make a statement on the matter. [7066/22]

View answer

Oral answers (11 contributions)

Yesterday, the Dáil unanimously passed a motion calling for the following steps to be taken: an emergency review of the national minimum wage; mandating an increase that would at least cover the rise in the cost of living as it impacts on the low paid; a new rate to be in place by 1 May; and for it to be index-linked. The Tánaiste voted for that motion. His party voted for it. I understand that legislation may need to be amended in order to fully implement it. The Dáil having passed that motion unanimously, what steps does the Government now intend to take to make it a reality?

I thank Deputy Barry for his question and for the motion we discussed and debated yesterday. We went through the various mechanisms we can use to achieve the results he is seeking. The Government is keenly aware, as we stressed during yesterday's debate, of the pressures people are feeling as the rate of inflation and the cost of living increase. Many costs have increased sharply in recent times and those on lower incomes are being disproportionately affected. Ministers and their officials in various Departments have been tasked with developing proposals for a package to help families and businesses with the cost of living and doing business. The Government is finalising that package this week.

Since its establishment in 2015, the Low Pay Commission has been responsible for making annual recommendations to the Government on the appropriate rate of the national minimum wage. Again, this was discussed yesterday. Since then, the national minimum wage has increased from €8.65 per hour to €10.50 per hour between 2016 and 2022, which is a 21.4% increase. This compares with an increase in consumer prices of 7% in the six years to December 2021, demonstrating that the minimum wage has increased in real terms over consumer price increases in recent years. As I discussed with the Deputy yesterday, if we followed the proposals in his motion, they would possibly result in a lower minimum wage, which I do not think is an outcome he would recommend to anybody. The share of workers on the minimum wage in Ireland has also fallen consistently since the establishment of the Low Pay Commission, reducing from 9.3% in the fourth quarter of 2016 to 6.8% in the fourth quarter of 2020.

The Low Pay Commission is made up of an equal number of employer representatives, employee representatives and independent members which helps to provide a balanced view when determining an appropriate rate for the national minimum wage. In addition, the establishing legislation requires the commission to give consideration to a range of issues when arriving at a recommendation for the appropriate national minimum wage rate. These issues include the cost-of-living, competitiveness and the likely effect that any proposed recommendation will have on future levels of employment.

When considering increases in the national minimum wage during a period of inflation, the Government must be conscious of the need to avoid second round effects or a wage-price spiral. That being said, we have been clear in my commitment to improving pay and terms and conditions for everyone, but particularly for those on lower pay.

In 2021, the Low Pay Commission was asked by the Tánaiste to examine and make recommendations on the best approach to achieving the programme for Government commitment to progress to a living wage over the lifetime of the Government. The Low Pay Commission commissioned and received background technical research on the concept of a living wage. The commission is currently evaluating this research and is due to report its findings and recommendations to the Tánaiste in the coming months. These recommendations will inform the Government on the best approach to progressing to a living wage. In relation to the minimum wage, they generally will report to us in July and decisions are made after that.

Deputy Barry will recall that yesterday, during the debate, I discussed with him that we do not necessarily agree with his mechanism. We did not vote against the Deputy's proposal but the mechanism he put forward is a predetermined outcome of the work that the Low Pay Commission was set up to do. That is not necessarily the best way for the commission to go about its business.

The Government is ignoring a decision of the Dáil.

The cost-of-living package that is being reported in media this morning and watched carefully by low-paid workers involves increased electricity credit, an extension of fuel allowance and the bringing forward of the working family payment by two months. Of course, groceries are up €800 a year, petrol is up €500 a year and electricity is up €800 a year. That is more than €2,000 before we get to the rent. Putting the Government proposals in that context, they not only fall short but very far short of what working people and ordinary families need.

I put it to the Minister of State, Deputy English, that bolder measures are needed, such as the scrapping of the universal social charge, USC, which was meant to be gone by now. If the Government is concerned about the cost that might have to the State, we would have no problem if it brought in a higher income service charge of 10% on incomes of more than €90,000 a year. What does the Minister of State have to say on the proposal to abolish the USC?

The Government is finalising a package of measures to respond to the inflationary measures which are putting significant pressure on families and individuals, and have been doing so over the past couple of months. They build on the changes announced in the budget, where there was a tax package and there was a social welfare package. There was a minimum wage increase recommendation accepted, which kicked in last month. We are recognising that people are under pressure out there right across the system. We also recognise that some of these measures, in relation to energy prices, Brexit and Covid, are outside of our control. We expect them to be short term but they are having a significant impact this year. Naturally, the Government is responding with a range of measures to assist individuals and families during this difficult time. The announcement of that will be completed in the next couple of days.

In relation to Deputy Barry's calls on the USC and other charges, I do not recall in the Deputy's budget submission that he wanted to completely abolish that tax but I must look again at it to be sure.

The Government must.

We must be careful in relation to taxes and jobs as well. Much of the time, the changes Deputy Barry puts forward in relation to the tax system are in our view anti-jobs and anticompetitive. That will not help us as we try to drive a recovery from Covid through a jobs-led recovery.

If the Government will not provide real relief for working people and ordinary families, unfortunately working people will have no alternative but to seek real relief themselves. We are calling on working people to organise in the workplace to submit pay claims which at least match the cost-of-living increases and to fight to achieve them. In the UK, the Unite trade union has won cost-of-living increases in 25 workplaces by balloting for industrial action and by taking industrial action where necessary. In many cases, the threat of industrial action was sufficient. That is an example that should be followed in this country. If workers go back and delve into the best traditions of the labour movement - the traditions of the 1960s and 1970s and the traditions of the founders of the movement, Connolly and Larkin - to fight for pay increases, we can achieve the cost-of-living increases that the Government seems set to deny us.

I have nothing more to add bar that the Government is responding to this.

I listened to Deputy Barry, yesterday and again today, with his call for action. I have listened to the Deputy in the past on other disputes and other issues as well. People who followed Deputy Barry's advice previously often got bad advice from him and were misinformed or brought down the wrong path. I would ask anybody to look at what the Government is doing. We are engaging through the mechanisms we have always had - our response to the Low Pay Commission, the living wage and our work with the union representative bodies and employer bodies - to try to get the correct balance in relation to job creation, jobs recovery and jobs protection, and to recognise the need for increases across the various mechanisms of wages and supports to businesses and families. However, Deputy Barry has a particular drive and a particular aim of what he wants to do.

So does the Minister of State. The Government cut the minimum wage.

I would ask anybody who wants to follow Deputy Barry's advice to look at his record over the past two years and the advice he doled out.

Look at their record. They cut the minimum wage.

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