I wish to share my time with Deputy Roche.
National Minimum Wage Bill, 2000: Second Stage (Resumed).
Is that agreed? Agreed.
I am delighted to have the opportunity to speak on this Bill which responds to the many challenges facing a changing Ireland. Our economy has grown dramatically in recent years. The predictions of forecasters have been way off the mark. The country has seen record employment growth and rising living standards, and incomes per head of population have reached EU levels. This is good news for a country whose economy has had more than its fair share of struggle and strife. Unemployment and emigration were the norm for too many people for too long. The levels of unemployment have changed dramatically since 1987. There are now 500,000 more people in work than in 1987. Unemployment has dropped from 17% to less than 5%.
Recently the Government concluded negotiations on a new social partnership agreement. Such agreements over the past 12 years have proven to be the basis of our economic success. Since 1988 take home pay has increased by 35%. However, a number of people have not benefited as much as others from our economic progress. This Bill, along with a number of other measures, is designed to ensure that all workers partake in the economic boom.
In three budgets the Government has removed 135,000 people on low pay from the tax net. This compares to the removal of just over 30,000 during the lifetime of the rainbow coalition Government. It also did little to move people on modest incomes out of the top tax rate. During its administration, those on low incomes remained in the tax net. The history of Fine Gael-Labour coalitions shows their record on taxation has always been defective. In the mid-1980s, when emigration was at its highest since 1950 and unemployment reached 16%, the Fine Gael-Labour response was to raise personal tax rates to 40% and 65%.
When this Government came to office a single person entered the tax net at £77. However, this has now been increased to £110. Under the Programme for Prosperity and Fairness, people earning less than £200 per week will not have to pay PRSI. As a result, almost 500,000 low paid employees will gain up to £5.67 per week from April. The Government's objective is to remove from the tax net all those who earn the minimum wage. The investment of £40 billion under the national development plan will improve people's standards of living in all sectors of society. These measures are significant in the move towards social inclusion.
A minimum wage of £4.40 per hour will encourage long-term unemployed people to join the workforce. Low rates of pay and high taxation have often been a barrier in this regard. Businesses which may have difficulty finding staff will welcome the availability of extra workers. A statutory minimum wage will encourage people not only to enter the workforce but also to remain there. It will also be instrumental in helping people to move from welfare to work.
I welcome the provision which allows the Labour Court to grant a temporary exemption to businesses from paying the minimum wage. This provision will be necessary to secure jobs at a critical stage for a company. The Labour Court will make the decision so the provision is not abused.
Some employers' representatives have expressed opposition to the £4.40 rate and have stated that 15,000 jobs could be lost. A responsible Government could not introduce measures which would result in such job losses. The Government, through agencies such as IDA Ireland, Forfás and others, has begun to implement policies that will ensure a move from a low to a high wage skill economy. Trade union leaders have agreed that job losses will be absorbed by other sectors of the economy. Policies developed by this Fianna Fáil-led Administration have created a climate which makes this country a desirable and sought after location in which to do business.
Business is doing well out of Ireland and Ireland is doing well out of Irish business. The introduction of a minimum wage is a very small price to pay for the continuation of such a climate. The Government has a good record in terms of encouraging and promoting business. Major investment continues to be made in roads, ports and airports and in our technological and telecommunications infrastructure. Supports and services to businesses from State agencies are generous.
I compliment the Government on the introduction of the National Minimum Wage Bill. It has been introduced at an appropriate stage in this country's development and it will help to consolidate our economic progress even further.
I thank Deputy Johnny Brady for sharing time. The introduction of the national minimum wage is a momentous step forward in the life of the nation. It represents a break with the iron laws of supply and demand as a means of determining the rates at which a worker must be paid. This Bill is, therefore, a historically significant development in the life of the nation because it marks a new departure.
The arrival on the scene in the past 150 years of the trade union movement helped overcome the weak position held by workers vis-à-vis the strict application of the iron law of wages. However, notwithstanding the existence of trade unions and the good work the trade union movement has done in balancing the rights of powerless workers against the prerogatives of powerful employers, there remain areas, even within a tiger economy, where real wage exploitation still exists. For example, after a recent national lecture from a spokesman from the hotel industry I received a telephone call from constituents in Wicklow with experience of that industry who indicated the existence of near Dickensian conditions and a certain meanness of spirit. I do not suggest that these are universal in that industry, but there are pockets within it and other industries based outside the main urban areas where workers are exploited.
No industry has the right to prosper from exploitation and there is an understanding among members of the workforce that the State has a responsibility to protect them in this regard. In spite of our new-found national wealth and our new confidence in some areas, we have not progressed far beyond the days of the unique Irish humiliation of the hiring fair. However, the Bill helps to dispel that nightmare once and for all.
The Bill is welcome because it marks an important point of principle. The weak and the vulnerable workers will be given a right which will ensure that they will receive a minimum hourly rate of pay and which will be enforceable in law. We can quibble about the level of the rate or the manner in which it is being introduced, but the reality is that a right is being created and that is a welcome development.
The Bill provides for the investigation of complaints where the rate is not paid. It creates an offence for employers who refuse to meet the rate and it affords protection to workers against victimisation by an unscrupulous employer who offends against the minimum rate principle. The Bill is also welcome because it represents yet another delivery by the Government of an important undertaking in the programme for Government. Moreover, it represents an effort by Government not only to honour a commitment it gave in the programme but to honour it at the earliest possible date. That is an historic first in many ways.
The National Minimum Wage Commission recommended that Partnership 2000 should be allowed to run its course before the minimum wage legislation was introduced. The Government's action reflects the letter and the spirit of that recommendation. The envisaged commencement date of 1 April is the first possible date on which this important principle can be enacted. The Government, particularly the Tánaiste, and all concerned are to be congratulated on that.
The Government's action in respect of this matter is in stark contrast to that of the previous Administration which considered the minimum wage rate but failed to introduce it. It is ironic that the Labour Party spokesman, Deputy Rabbitte, should wring his hands and complain about the level of the minimum pay rate when he failed to deliver any such rate. The Deputy held office a few short years ago in the Ministry which could have effected the very change about which he is now posturing. That is ironic but not surprising – Deputy Rabbitte has always been long on rhetoric and short on delivery, he talks a good game but he fails to deliver.
The idea of a minimum wage rate is not new, it has been abroad for many decades. The great advantage envisaged for the introduction of the rate is that it will provide a statutory floor for wages. In so doing it will provide a right, enforce able by law, for weak and vulnerable workers who are frequently outside the protection afforded by union membership. It has been argued by those who oppose a minimum rate of pay that the introduction of this legislation could be detrimental to economic progress, could damage smaller firms, could be inimical to specific industries and could lead to labour market displacement. This would mean that low skilled or inexperienced workers would suffer.
The first of these arguments belongs to the past. Ireland is no longer a low wage economy and there is no reason that we should hanker back to the days when such an economy existed. We now have a developed modern economy, one of the benefits of which is that the wealth created should be shared through decent wages. The argument that smaller firms or specific industries, such as the hotel and catering industry, will be damaged is equally bogus. No industry has the right to plead that it should be allowed to exploit its workers in the interests of survival.
The argument that minimum wage rates could displace labour encouraging capital displacement of labour may have given cause for thought in an economy with a surplus of labour and a shortage of work. That was certainly the case when this debate started 20 years ago. In such circumstances, Governments had to be cautious not to introduce measures which would unduly tip the balance. However, such arguments no longer have the primacy they once enjoyed. All one need do is walk around the city of Dublin to realise that there are many work opportunities available and that the time to introduce a minimum wage has arrived.
There is a fear that another form of labour displacement will come about, namely, that employers will not be willing to take on low skilled workers, young or inexperienced workers or trainees and will demand higher skills and more experience. Again, this argument belongs more to the past than the present. Given that employment opportunities are not evenly spread geographically across the country, some residual validity to this argument might exist in some pockets of the economy. The Bill, however, makes prudent provision in this area.
There are two specific cases where sub-minimum rates are permitted. In the case of trainees and job entrants, the setting of the rate at 70% is prudent. It will also help to overcome another danger, namely, that wage rates might encourage young people to leave school in search of some short-term gain. However, that is not an issue to be solved through minimum wage legislation or the establishment of an artificially low floor.
The setting of the minimum rate of pay at £4.40 has been criticised. Deputy Rabbitte, for example, suggested it should be £4.90, but when he was in power he made no such suggestions. So much for his argument. There is an arguable case that a flexible approach will have to be adopted in respect of this issue. Deputy Johnny Brady correctly referred to particular circumstances where the Labour Court will be able to intervene to ensure that an argument cannot be put forward for artificially low rates. Where workers are prepared to accept a lower rate they should have a right to participate in the long-term and they should be rewarded in some way, perhaps in the form of capital participation.
I welcome the legislation without caveat. Many items of legislation have been introduced in this House which have been well intentioned but which did not carry the requisite strength in terms of enforcement. In the general area of labour law, the labour inspectorate has been woefully under-supported. For the past 15 years, only ten inspectors have been operating in that area. It is extraordinary that labour law has expanded at a time when the inspectorate is being kept at a minimum. I commend the announcement by the Tánaiste that seven additional inspectors will be immediately employed and that they will be given additional support staff. Although seven inspectors represent an increase of 70%, we still do not have enough.
This legislation marks, in many ways, a coming of age. I mentioned the old days and the hiring fairs. All the old arguments should be left in the past. I am surprised when I see chambers of commerce or people representing major industries wringing their hands about this issue. As I said, no industry has the right to build its strength by exploiting its workers. Most industries that have progressed have a progressive attitude towards wages and their workers. Since the beginning of the 20th century, all the research, indications and experience in this area have shown that employers who treat their workers decently, who accept they are part of a partnership and see their true value are the ones that prosper, while those who employ Dickensian and mean spirited methods inevitably fail.
This is good legislation. I commend the Tánaiste and her staff on its introduction.
I wish to share my time with Deputy Caoimhghín Ó Caoláin.
Is that agreed? Agreed.
I welcome the Bill. It is not before time that we are providing a legislative framework for a national minimum hourly rate of pay. The Bill will ensure an employee must be paid by his or her employer at rate of pay not below the prescribed minimum hourly rate of pay. The Bill has been long awaited. Along with the other equality legislation introduced by the rainbow Government – the Equal Status Bill and the Employment Equality Bill – it will help to protect those who are most vulnerable in our society. Any legislation that will help create a fairer society and give everybody a chance of a decent living and quality of life is to be welcomed.
The reasons for the Bill are clear. The main need for its introduction is to address the exploi tation in the labour market. That exploitation is confirmed by a report in today's Irish Independent of a court case yesterday where businessmen were fined for not paying the legal basic wage. That confirms the necessity for this Bill and that, unfortunately, exploitation is continuing to happen in the labour market.
It is sad that people are being exploited in the labour market. Women will be major beneficiaries of this Bill. Sadly, many women, who were perhaps forced to leave employment because of the marriage bar and were unable to keep their skills updated due to caring for their families, were forced to accept positions which were not permanent and did not have a basic salary structure. As a result, many women worked for a pittance. The only way they could help their families was to work extraordinarily long hours. Thankfully, the provisions in the Bill will protect them from having to struggle to work long hours to maintain a decent income for their families.
Examples of this are those who work as home helps and provide family support. I met a group of those women some months ago. I was astounded and embarrassed to find they were being paid as little as £2.20 per hour by our health boards. They are expected to do very difficult work which demands physical strength and a strong mental attitude to cope with some of the environments in which they work. In addition, they were being paid 10p per mile for travel expenses incurred in getting to their places of employment. How could anyone afford to run a car and pay for insurance on 10p per mile? That is an example of what was happening without the protection of national minimum wage legislation.
Their situation was raised in this House on several occasions. I raised it on the Adjournment and it was mentioned in many Second Stage debates. It is amazing that nothing was done about it. Unfortunately, we had to wait for the introduction of legislation to protect these workers.
It is alarming to learn at one's clinics and from meeting constituents that very profitable institutions often have unacceptable pay rates. I know of people who are stacking supermarket shelves for £1.90 an hour. Our banks, despite the millions of pounds they make per day, employ what are known as "yellow pack workers". These are profitable institutions but the profit goes to the owners and top level employees. Those at the lower end of the scale, who do not have skills but are a very important element of the workforce, carry the can and are paid scandalous wages. I am glad this Bill will end that exploitation.
Students are also suffering without the protection of a national minimum wage. Sadly, many students cannot survive on the maintenance grant and are forced to take part-time work. A huge increase in the maintenance element of the student grant is needed because it does not cater for the alarming increase in accommodation costs. The grant will not help students in Dublin to pay for their accommodation and other costs, such as transport, survival, books and equipment needed for their courses. Many of these students, while trying to cope with their courses, are forced to take part-time work to survive because their families cannot help them. They almost inevitably earn unacceptable hourly rates of pay. Unfortunately, they have no protection and they need the money. In many cases, perhaps because of their age, they are not strong enough to stand up for their rights. They are glad to have a job and to be able to supplement their incomes while they are pursuing third level education. I am glad this Bill will make life a little easier for them. If we are serious about education, however, students who are entitled to the higher education grant should not be forced to take up part-time employment. They are not using that money to fund a social life because they are at work during the socialising hours, while their comrades are going out and taking breaks. They are working to survive.
As I said, the Bill will help to create a fairer society and to protect those who do not have the skills or qualifications necessary to get a better standard of employment. However, now that we reached the point of introducing this Bill, it is a pity it is not as near as possible to perfect.
I do not accept the definition of pay in section 2. It states that pay "includes the value of any benefit not in the form of money that is allowed by an employer to an employee in respect of the employee's employment". This is an unfair and unrealistic definition of pay and I am glad Deputy Owen will table an amendment to this section. How will this provision work in practice? If someone who works in a home has their meal with the family, could a mean employer class this as a benefit? If someone stays overnight could that also be defined as a benefit, thus giving an employer scope to reduce the hourly rate of pay? The Bill should be clear and precise and should leave no scope for abuse. However, the Bill's broad definition of pay will be abused and those who will suffer are the people we are hoping to protect.
This Bill applies particularly to those working in service industries where, because of the definition of pay in the Bill, tips will be considered as pay. All Members recognise that a tip is an individual gesture of appreciation and thanks and I cannot understand and will never accept that a tip is part of the salary paid by an employer to an individual worker. Leaving a tip is a decent and acceptable practice whereby people reward someone who has been extraordinarily helpful, who has done a good job or has put themselves out to accommodate them. The anomaly in the Bill is that if a tip is given directly to the worker it will not be considered as part of their pay but if it is left in a pool it will be considered as part of pay. I hope this anomaly will be corrected on Committee Stage. I would like to make many other comments on the legislation. I welcome the Bill as it provides protection for those workers who need it and are unable to protect themselves.
I thank Deputy Theresa Ahearn for sharing time. My first reaction is that at last we have a minimum wage Bill. This is one of the most overdue Bills to come before the House but, sadly, it is also the most obvious attempt to water down a measure which would rightly have had the widespread support of the general public. We have a minimum wage Bill but we do not have a fair minimum wage. We do not even have one minimum wage but a wage structure filled with caveats and conditions which create a series of lesser, paler imitations of a minimum wage.
The joint labour committees have exposed the central weaknesses in the Bill and have pointed out that the definition provided in the Bill includes 13 elements in the calculation of reckonable pay. They also contend that reckonable pay should consist only of basic pay and that the inclusion of other elements could serve to drive down basic pay to an amount considerably less than £4.40 per hour. The committees also point out that the public expectation of the minimum wage is that it is a basic hourly rate and that there is no perception that it includes other elements such as various premia.
This latter point is worth emphasising and we as elected representatives of the public have to conform with the public's expectation that we are looking at a basic hourly rate. However, sadly this Bill does not legislate for that understanding and interpretation. We have received no promises to take low paid workers out of the tax net, there is no inflation proofing of the rate and the criteria for its review are massively skewed in favour of employers.
Many of the thousands of low paid workers believed that this Bill would right a wrong but how will they judge a Government which balked when faced with the decision of guaranteeing workers a basic first step on the road towards a dignified standard of living? This fact must be at the core of our consideration of the Bill.
This legislation glosses over an important principle. Minimum wages are being set by central Government because employers were paying hourly rates below the so-called competitive level and penalising workers on the first step of the employment ladder. It is worth noting that workers were not seeking recompense for the years of subsistence wages they have received. They were prepared to start afresh buoyed by the promise of Government action on this injustice.
Many low paid workers are at their posts hours before many of us get out of bed. They are cleaning, fixing and servicing and they are at work when many of us have long gone to our beds. These people work at weekends and on bank holidays. What does this Bill say to these workers? It suggests that there is an understanding of their problem and that expert opinions have been commissioned to deliberate on the issue, but – there is always a but – the proposal is to introduce a watered down version of what is needed.
The National Minimum Wage Commission published its report for the Minister over one year ago but her first action was to delay implementation of the proposed £4.40 rate until April 2000. The ICTU had sought a minimum rate of £5 per hour which I and Sinn Féin supported. Under the Programme for Prosperity and Fairness the £5 minimum hourly rate, which is needed now, is to be delayed until October 2002. Hundreds of businesses, particularly in Dublin city, are already paying rates above the £4.40 minimum rate. It must be obvious to the Minister and all concerned with this Bill that it has clearly failed when the market it set out to regulate has already moved on. Now the relatively low hourly rate could have a retarding influence on wages, which is the opposite of what the legislation set out to achieve. I have no doubt that there are unscrupulous employers who will seize that opportunity.
Why is the wage rate not indexed to the rate of inflation? According to the legislation, it is up to the Minister to review the national minimum hourly rate of pay. The conditions listed are the effects any new rate would have on unemployment, employment, inflation and competitiveness. Is it not strange that there is no allowance for setting a wage rate that allows a worker a decent standard of living? Citing inflation and competitiveness in the criteria for reviewing the minimum rate is grossly unfair. The recent rise in inflation has been shown to have been driven by rising oil prices and other non-wage costs, including budgetary changes in taxation on certain commodities such as cigarettes.
Why are workers being penalised for rising inflation? How does the Minister propose to measure the national competitiveness aspect of the criteria? I would like an explanation of that. The cynical observer might think it is just another excuse for not setting a just wage rate, and he would be right. How many times have we read over the past decade of double digit wage increases paid to company executives who already enjoy six and seven figure salaries? Why do we never hear of the effect of these wages and salaries on inflation or competitiveness? There is a clear double standard at work. Executives are paid the market rate for their work while low paid workers have their wages drip fed through the mantras of market competitiveness and inflationary pressures. The records show that the only group of workers which has earned wage increases above inflation over the past decade are the State's higher professionals and executives.
The amount of tax paid by low paid workers is an important factor in this legislation. A range of expert opinion and lobby groups, including the Combat Poverty Agency, recommended removing the low paid from the tax net altogether. The Government, however, has refused to do this and has thus created another crack in its minimum wage strategy.
When the current deliberations on the minimum wage began three years ago, a report by the Revenue Commissioners showed that the top 400 earners in the State, through the use of what are described as legitimate tax avoidance schemes, paid an effective income tax rate of less than 10%. This is the level of inequity over which this Government presides. The reality is that the low paid are paying proportionately more income tax than the highest paid in society. That is a statistic which will hold up under the Minister's scrutiny.
Why are there opt outs in the legislation for workers under the age of 18 and employees in their first and second years of work? These opt outs further water down legislation which is already extremely weak.
This is progressive and enlightened legislation which is long overdue. It is simple enough but it must be recognised that the complex work behind the scenes to get around difficult areas took a long time. The changing social patterns in the State make this legislation timely. There is no doubt the Minister and the trade union movement deserve particular credit. They indicated maturity, a clear vision of where we should be going and a recognition of the social injustice which existed before there was legislation as forthright as this.
This legislation attempts to deal with marginalised workers. Many have been marginalised because of the nature of their employment and where they work. Surprisingly enough, many of them were marginalised by people who should have known better, who exploited those who had less clout than others. It is only proper that we recognise that and deal with it. It is surprising that legislation is always required to make things happen. It shows the importance of foresight in Government and the need for Ministers with a clear understanding of management of employment affairs.
Some sectors have not given recognition or fair working conditions to their employees. Two such sectors which have grown significantly over the years are the tourism and catering industries. It is necessary to highlight areas where people suffered. Those people must have felt seriously aggrieved. Many of the skills involved do not require exhaustive training. In recent years, however, the catering and tourism industries have recognised that skills are necessary. It is not possible to survive with unskilled labour. There must be a clear understanding that these workers are here to serve people and to serve an industry and thus contribute to the opportunities in these growing industries. Their success is a recognition of the quality of the people who work in them.
It must be acknowledged that people worked in the background, in the kitchens and bedrooms, for low wages. That was regrettable. It happened at a time when it was much easier to exploit workers than it is today because there was high unemployment and beggars cannot be choosers. In those circumstances these people had to work extremely long hours and engage in very heavy work in the knowledge that someone would step into their place if they were not prepared to accept that.
Many of the professional services – the legal profession, accountancy, supermarkets and other industries which thrived in this State – should be mentioned. Many people worked in those areas and while their jobs may not have been skilled, they made a vital contribution to the employer's profit margin and to the public service. It is regrettable to comment on this issue, but we should be mature enough to recognise our mistakes and drawbacks. We should also recognise that change is inevitable and is being made in this legislation.
Most comment on the Bill has been on how it will affect the position of women and young people. Other categories of people will be affected, including those involved in home help – Deputy Theresa Ahearn referred to this. Carers are another category of people who have made an outstanding contribution to the health and social services, often on a vocational and voluntary basis. They did not do it for the money because it was not there. Over the years they have kept large numbers of people out of expensive institutions where services are in short supply. Despite this, they have generally been badly paid by State institutions. That is regrettable, but it must be acknowledged and it must change. I hope this legislation will correct their position because people cared for in the home can be given a quality of life in familiar circumstances that are congenial to recovery and stability. These circumstances can be seriously eroded if support services are not available.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
I thank my colleagues for their support and I thank Deputy Stanton for ensuring I have an appropriate congregation.
The Deputy was wasting his sweetness on the desert air.
Section 5 sets out the categories of people who are not covered by the legislation. They include the spouse, father, mother, grandfather and grandmother as well as the half-brother or half-sister of an employer, employed by the employer. Some of these people may be engaged in caring and may have had to give up their jobs to return to employment within the home. Are they equally recognised and provided for in the legislation as persons giving service? Their circumstances may be more painful where they are related to the person requiring care. Given that they may have to forego employment elsewhere, they should be recognised as carers, regardless of their relationship with the person in receipt of care.
Section 5 also excludes from the terms of the legislation a member of the Defence Forces under the Defence Act, 1954, in respect of his or her service as such. The Minister should examine the appropriateness of the inclusion of the Defence Forces. Much has changed since the 1954 Act. Light has been shone on some of the dark areas of Defence Forces activities. It is not good enough that the modern Defence Forces should continue to be left behind. I hope peace in the country, in Europe and the world will continue and that our future contribution will be to maintain and support it. However, given the modernisation of attitudes, it is essential we deal with a matter which we did not address previously for many reasons. Recognition of this by the Minister on later Stages of the Bill would be appreciated.
The Bill includes a considerable number of good legislative provisions and is very well thought-out, researched, planned and complex. The review under section 12 provides a wonderful opportunity for national agreements to continue as a feature in the economy. The section provides for one method to review the national minimum wage, with certain obligations on the Minister while section 13 provides for a second method of review based on the involvement of the Labour Court. This is fair and reflects mature thinking and justice being done in a special way.
It is only proper that provision is made for employees of 18 years of age. Section 14 recognises sub-minimum and training payments, providing for the first time special recognition of the need to acknowledge people in certain areas of activity and the age below which the minimum wage will be paid.
We must also take account of enforcement. An essential pre-requisite of enforcement is record keeping which is provided for in sections 22 and 23. These sections impose obligations on employers to keep records, with significant penalties for non-compliance. For the first time employers will have to record what is necessary for each employee. This will contribute towards the proper management of the relationship between employers and employees. To achieve the results which the Bill seeks, it is equally important to ensure employees are satisfied in the knowledge that enforcement will be possible where there are breaches. In this regard I congratulate the Minister on making provision for increased numbers of inspectors and administrative staff in the area of enforcement. I am sure that as the provisions are monitored whatever is necessary will be provided for. At the end of the day people will have no faith or confidence in the legislation unless they are satisfied its provisions will be enforced.
Reference is made to disputes in section 24, and I am delighted that special provision is made under section 33 whereby a complaint can be pursued by an inspector rather than by the employee who could, in certain circumstances, feel the victim of the employer or in some way marginalised, or worse. It is commendable that provision is made to pursue a complaint on behalf of an employee, and it warrants recognition and acknowledgement.
Much reference has been made to what is reckonable. I hope the Minister might consider the deletion of "unsociable hours premium" as a reckonable component in the Schedule. In fairness, unsociable hours result in considerable stresses, and we are talking about minimum wage employment where people have more difficult employment positions to pursue and more difficult tasks to undertake. Essential as they are, unsociable hours should not be a reckonable component in terms of the minimum wage.
Another issue is that of tips and gratuities. In the US, where sometimes there are no service charges, tips are a traditional form of showing thanks or gratitude. Here, there is a service charge and tips are not necessarily as widespread, although with more disposable income, changing habits and different attitudes there is an increasing recognition by customers of service provided. People who are excellent and exemplary in their performance and who often give leadership to their contemporaries should not have the opportunity of receiving a few pounds or a few pence destroyed.
The exemption of one year for employers who will experience difficulties in this area should be considered a recognition by the Minister that the legislation, while described as essential, good and enlightened, will pose difficulties for certain categories of people. The exemption period will allow time to address these difficulties.
I welcome the fact that belatedly the National Minimum Wage Bill is before the House, but it is fatally flawed in many respects. Deputy Doherty outlined many of the huge gaps in the Bill which my colleague, Deputy Rabbitte, will address through extensive amendments on Committee Stage. The Bill has been overtaken by events. In recent years average industrial earnings have been approaching £9 per hour. This party through its history has argued for a national minimum wage, but it is disgraceful to present a Bill with a minimum wage of £4.40 which is barely 50% of average industrial earnings.
Just three and a half years ago the Taoiseach, in a banner headline, stated he was totally opposed to the concept of a national minimum wage. To attract votes in the 1997 general election he went back on that outrageous statement and gave a vague commitment to introduce a national minimum wage. The result is that we have had to wait almost three years for this most basic and fundamental promise to be kept by the Government. In that time we have had the national minimum wage commission, the interdepartmental working group which produced an interim report, an ESRI study and a host of smaller studies and submissions by the trade union movement and employers. Finally, almost three years into the life of the Government, a fundamentally flawed Bill is before the House.
In contrast to our Labour Party colleagues across the water, it is deplorable that we have taken so long—
What is the rate there?
The current British Government introduced a national minimum wage within months of taking up office.
What was the national minimum wage rate?
Please allow Deputy Broughan to proceed without interruption.
I am happy to deal with your interruptions because I must also do so at city council meetings.
Deputy Broughan, this is not the city council. We do not allow interruptions and if you direct your remarks through the Chair, you might not provoke Deputy Ahern and be interrupted.
I very much doubt it.
He is easily provoked. Minister Margaret Beckett, within months of the formation of the current British Government, outlined plans for a detailed Bill to adopt a national minimum wage. In the interim we have had to cope with a mean spirited campaign by elements in IBEC, ISME and the Small Firms Association and it was only because of the actions of the trade union and labour movement over the past three years that this legislation has been introduced. The Programme for Prosperity and Fairness would not be before us if the Government had not belatedly caved in and sullenly brought forward this Bill.
One of the greatest scandals in our economy over past decades has been low wages. Detailed studies carried out by the ESRI and many international bodies in OECD countries have highlighted the existence of a national minimum wage. The United States first set a national minimum wage of 38 cents or 40 cents per hour in 1938. Our disgraceful record is due to the fact that conservative parties dominated by business have been in the ascendancy in this House. A study was carried out a number of years ago on the number of employees falling below a threshold of 66% of median weekly income throughout OECD nations. A total of 5.2% of employees fell below the threshold in Sweden while the figure was 5.9% in Finland; 7.2% in Belgium; 16.9% in New Zealand; 19.6% in the UK; 23.7% in Canada; and 23.9% in Ireland, second only to the United States.
Joint labour committee reports have also dealt with low wages over the years in the areas in which they operate. According to a survey conducted by the Dublin Council of Trade Unions a number of years ago, hairdressers earned £142.29 per week; hotel workers, £156.08 per week; retail/grocery workers, £97.69 per week; and agricultural workers, £152.25 per week. These appalling low wages are in evidence in many sectors of our economy and it is appalling that it has taken the Government and the House so long to even introduce outline legislation. Throughout many service industries, including, unfortunately, the tourism industry, there has been a long and sad history of low wages.
While the powerful development of the Celtic tiger economy over the past five years has demoted Ireland to the middle of the league table of low wages, 13% to 15% of workers in Ireland still probably earn less than 66% of median weekly income. This ongoing problem was highlighted again in an article in today's Irish Independent. Cooke's family-run restaurant was fined in court yesterday having received 15 summonses under the Industrial Relations Act, 1946. The restaurant's minimum hourly rate for workers was £2.68. The defendants' solicitor pointed out that his clients had decided to pay only £3 per hour. This highlights a profound problem in our economy. It is a sad reflection on the House and the Government that it has been so long in office before it addressed this important problem and did something fundamental about it.
In European economic circles and research institutes, it is reckoned that Ireland's informal-black economy remains one of the biggest in Europe. I asked the Minister for Enterprise, Trade and Employment a number of years ago about a famous study carried out at Linz University in Austria which showed that Ireland's black economy involves 10% to 12% of the workforce. Wages will always be low in such an economy.
I am proud that the labour movement and the Labour Party throughout its history has bravely and adamantly called for a national minimum wage in conjunction with tax reforms and the abolition of welfare poverty traps. In the early 1980s in England, Frank Field conducted a famous study on the potential dangers of the minimum wage, which demonstrated conclusively that low pay was the primary cause of poverty for between 30% and 40% of those below pensionable age and that low pay and a low tax threshold were a disastrous combination if one sought seriously to eliminate poverty.
I was privileged to run for the first time as a Labour Party candidate in the 1989 general election. Our party leader at the time, Deputy Spring, argued strongly for a minimum wage of £135 per week or £3.77 per hour, which was 68% of average earnings. That was almost 12 years ago.
What did Deputy Spring do about it?
He put it forward. Fianna Fáil and journalists that supported that party rub bished the proposals. My colleague, Deputy De Rossa, when he was Minister for Social Welfare, also set out a programme to introduce a national minimum wage. In recent times as spokesperson for the Labour Party, I conducted an outline study for the Oireachtas Joint Committee on Enterprise and Small Business and attempted to draft a minimum wage Bill to force the Government's hand. The difficulty lay with the fact that elements of the Bill which would have resulted in a cost to the Exchequer would have been ruled out of order.
I congratulate the Irish Congress of Trade Unions, and, in particular, Peter Cassells, Patricia O'Donovan and Des Geraghty, for their campaign over the past four years which has led to this legislation. Their slogans were "Fair Pay is Fair Play" and "Real Jobs Pay Real Wages" and they sought a minimum wage rate of £5 per hour. They played a key role in getting us to where we are. They outlined many arguments, which are evident in the legislation.
Many aspects of the Bill are fatally flawed, particularly section 19. I do not envisage that the legislation will be operational on 1 April given that many important provisions were not teased out before it was introduced in the House. The Minister appears to have made an appalling error of judgment in section 19 by including shift premia under reckonable components of pay. Given the history of low pay in Ireland, an opportunity will be given to unscrupulous employers to run a coach and four over the major part of the legislation. The Minimum Wage Act, 1998, in the UK deliberately excluded premium pay and incentive payments. Therefore, there is a problem with one of the most fundamental aspects of the legislation. Reckonable components also include service pay, unsociable hours, productivity related-pay, allowances for special or additional duty, board at lodgings, etc. That will give great scope to unscrupulous employers, such as the one referred to in one of today's newspaper reports, to include all these things in basic pay rates to the detriment of employees. The second aspect of the reckonable components relates to unsociable hours. Non-reckonable components include overtime premia. There will be grave concerns in the trade union movement and among workers generally as to whether this area can be policed and whether a rogue employer could bring overtime within the unsociable hours premium, particularly given the nature of the part-time work which characterises work in the services area.
Enforcement and anti-avoidance measures should be a key aspect of the Bill but it does not contain a single section on employers' obligations to maintain current working hours. The Worker Protection (Regular Part-time Employees') Act, 1991, includes a provision whereby the Employment Appeals Tribunal can investigate a deliberate attempt to cut back on working hours as a basis for greater productivity at lower pay rates. The omission of a similar provision in this legislation leaves a huge gap. Deputy Rabbitte stated yesterday that the Bill is full of holes and that, in many respects, it is one of the worst Bills which has been introduced in this House.
We are deeply concerned about section 24 which refers to rights commissioners. Section 23 provides that unless an employee has sought a written statement in regard to his or her hourly rates and has asked to see the records, it is impossible to initiate a case to the rights commissioner. At one stage in the past we had 1.1 million workers but the figure has now increased to 1.7 million. It seems that the majority of the additional 600,000 workers are not unionised and so do not have access to a skilled negotiator who can act on their behalf.
I was proud to introduce the Labour Party's trade union recognition Bill in this House which I understand will be reintroduced as a Government Bill in the near future. We argued that if top businessmen could count on a professional negotiator and representative, workers should be able to do the same. There appears to be a conflict in regard to the role of the rights commissioner in relation to how employees may proceed with cases.
Section 32 provides that a rights commissioner cannot carry out an investigation unless an inspector has already investigated the matter. There is a fundamental conflict here, which does not appear in the English legislation, in terms of the investigative process, the process of the rights commissioner and the Labour Court. Most observers would ask why it is not possible to have the two investigations by the rights commissioner and an inspector running simultaneously. Why must these processes be mutually exclusive?
Many people in the labour movement would be very concerned about the size of the inspectorate. The Minister will agree that our past record on health and safety has been appalling and I commend the recent efforts made to provide a comprehensive health and safety system. Major problems have been experienced because the resources available to the Health and Safety Authority were so paltry. The financial memorandum states that seven more inspectors are to be appointed in addition to the existing ten. Those 17 people will be responsible for invigilating an economy of 1.7 million workers. That is very unfair to the workers concerned.
The other extraordinary aspect of the financial memorandum which I wish to raise is that there is such a high level of low pay in the public service. A special provision has been made in regard to health board employees. Many workers in this House receive very low rates of pay for the heavy workloads they carry. Some people would say Deputies are in the same boat.
I am concerned about section 25 in regard to legal representation whereby employees would not be entitled to legal representation at the first stage on the route to determination. We are accustomed through the Employment Appeals Tribunal to representation of employees by their trade union officials, professional representatives, legal representatives and sometimes public representatives. All of us have probably represented constituents or friends at some stage. I do not understand why this issue cannot be addressed in this legislation.
The possibility of victimisation is a further issue of concern in regard to the necessity for one year's continuous service. Why should this basic service requirement be necessary if there is a genuine feeling that the law has been broken and that the national minimum wage has not been adhered to? We would also be concerned about potential defences for rogue employers and employers who may find themselves in financial difficulties.
I welcome this belated and flawed Bill to which I will urge my colleague, Deputy Rabbitte, to table extensive amendments. The Labour Party will introduce its own Bill if necessary in order that the national minimum wage will benefit Irish workers.
That was a typical Deputy Broughan contribution, all moan, no credit and no acknowledgement of a job well done.
I welcomed the Bill.
The Deputy did so after 20 minutes of negative comments. This is not a fundamentally flawed Bill, nor is it belated.
What is it then?
Deputy Ahern, without interruption.
I will outline my own valid criticisms of the Bill in due course.
We would not have the Bill at all were it not for the ICTU and the national pay agreement.
The Deputy should not fool himself. All one hears from some of those groups is rhetoric. The Government has drawn up a plan which is to be implemented over five years. It set up a commission to examine this issue in July 1997 within days of taking office. That was practically the first decision it made. If I recall, Deputy Broughan's idols across the water followed the Irish Government, announcing their intention to introduce a national minimum wage after the Irish Government set up the commission.
This is March 2000, the English legislation was published six months ago.
The English rate is less than the Irish one.
Perhaps Deputy Ahern would like a copy of the English legislation.
The hourly rate is £4.68 when converted from sterling.
The Deputy should not bother with conversions. I agree with Deputy Broughan on certain matters. I am proud of the trade union movement and the valuable work it has done. I was an active trade unionist for many years.
The Deputy joined the wrong party.
Many Fianna Fáil members were part of that movement which is why, historically, more trade unionists vote for us than the Labour Party. Deputy Broughan said the Taoiseach gave a vague commitment. That is a vote of thanks to some extent.
Why does the Deputy attack Deputy De Rossa?
Deputy Broughan is saying that not only are we fulfilling the promises we made, but we are also delivering on our vague promises. Coming from Deputy Broughan, I regard this as a compliment.
I welcome the Bill which is interesting, although perhaps it is not as earth-shattering as some people would like. However, it is significant legislation, the introduction of which has been discussed for some time. This Government is introducing it. This is what politics is about – it is easy for representative bodies to get up on their high horses and talk about what should be done. I congratulate the Government, the Minister and the Departments involved in the introduction of this Bill. Many people might see the Minister as someone who is not, from her party's point of view, sympathetic to the cause of the trade union movement.
She filibustered on this for three years.
It is significant that this legislation is being introduced and I am glad to be associated with the Government doing so.
There has been a great deal of rhetoric about this issue from trade unionists and politicians who pretend to have a tendency towards the left. I acknowledge the good work done by the constructive trade unions who have achieved a great deal for the working class and have lobbied on this Bill and the other fundamental changes in legislation to protect workers' rights. There is another group of trade unions who make a fuss without having a constructive thought in their heads. They talk about the issue but never advance it in a constructive way, unlike some of the leading trade unions in ICTU. They are to the forefront in opposing the new programme for—
Prosperity and Fairness.
It is a mouthful.
Partnership for Peace.
Do not get them confused.
The words do not seem to flow. The same trade unions who voted against every other wage agreement are voting against the new programme. By and large, they do not represent the low paid as they all work in well paid trades. They are negative and destructive. They pretend to be interested in the low paid. However, the trade union movement is about brotherhood and looking after the less well off and those who are vulnerable in employment. It has always been thought that national wage agreements are good for the low paid. Those in well paid jobs and trades could demand more and get it under free collective bargaining. However, the vulnerable fall by the wayside. This is the value of a national wage agreement and it puts to the test the rhetoric of many trade unionists as to whether they are interested in their progression or that of their weaker colleagues.
I am concerned that some employers' bodies have lobbied against this measure in recent years. While we would all like the economy to result in better jobs for all, we must realise many sectors are still struggling. However, many of the complaints are not being made by employers in these sectors. I am suspicious of some of the campaigns. Some employers are engaged in unfair competition. One of the advantages of a minimum wage is that it results in more competition and helps to create a level playing field. Employers in certain industries have been paying wages under the counter and abusing the family income supplement to pay their employees what they deem to be a fair rate.
A minimum wage will result in more balance because the rate of pay will have to brought over the counter. I worked in CIE and it was known that small bus operators were paying wages under the counter. According to their pay packets, men with families were receiving what appeared to be a ridiculous rate of pay. Many of them had worked for Dublin Bus and Bus Éireann and their friends still working there knew their official rate of pay was false and the family income supplement system was being milked. The minimum wage will be more fair and equal. There are many fair-minded employers who value their workers and know the way to retain them is to pay them well and offer them good conditions.
It is proposed in the Programme for Prosperity and Fairness that the minimum wage will be increased to £4.70 next year and £5 after that – as a minimum rate of pay, £5 has a nice ring to it. Many people would like this to be the introduc tory rate. However, it will be achieved in two years, which I welcome. I am concerned about how the average hourly rate is determined. I am glad the Minister said the minimum wage will be introduced on 1 April. I cannot understand the employers' organisations who want it to be delayed further. They were given a couple of years' notice and they knew it would be introduced. Times are good – if they are complaining now, what would they be doing if the employment position was not so favourable?
I am suspicious of some employers. The enforcement of this measure will have to be supervised. Some employers' organisations are taking a liberal stance and allowing asylum seekers to join their workforces. It is not because they have any humanitarian interest in asylum seekers but because they want a cheaper source of labour. We must monitor this. There are rules regarding work permits but we all know there are people who should not be working who are in jobs in the black economy and are being exploited by employers. I am not against people earning a few pounds from menial night work. I am not preaching, but I am concerned that some employers who will be unable to exploit our workers will exploit this other source.
They will have to move to this other resource, as they would call it, to exploit them. We have to monitor that and ensure it does not happen. Certain employers are always on the lookout for ways to manipulate their employees to make more money out of them.
I have certain other concerns. We are introducing a minimum rate of pay, but is there a downside to that? The home helps have been mentioned by other speakers. They will get a considerable increase on 1 April this year, which is welcome, but people in that category will have to realise that if they are paid a proper rate for that job in the future, it will be regarded as a salary. If people were local authority tenants, their income from home help work was inclined to be ignored and not regarded as legitimate money. If the rate of pay for a job improves, people cannot continue to have all the concessions that might have been provided in the past.
I am concerned also about community employment schemes. I have complained previously in this House about what I see as an unfair practice in that some people can participate in a CE scheme while keeping their FÁS money and their social welfare payment, be it lone parent's allowance, invalidity pension or whatever. Everybody on a CE scheme should be treated equally. They get £30 or £40 per week over and above their social welfare payment for doing the 20 hours rather than the current system where some people get £18 extra while others get £90 extra. Will this anomaly now be extended in that people who get their FÁS and social welfare payments can say they get the minimum rate of pay for their FÁS job? Is that covered in any of the sections? I have not noticed it but if it is, that will increase the anomaly that currently exists. If that is happening the whole CE scheme should be examined and perhaps this is a time to reform it. It would be extraordinary if, in introducing this welcome measure, we extended an anomaly and did nothing about it. If that potential problem is ahead of us, we should address it now and perhaps reform the whole CE scheme in the process. It is under the remit of the Department of Enterprise, Trade and Employment and I ask the Department to take a broader view and realise that what it is doing has resulted in certain pitfalls which should be eliminated.
Many people have expressed concerns about what is and is not reckonable income, but that does not mean the Bill is flawed. The reference to tips in the Schedule is ridiculous. I am inclined to think that the Minister will withdraw or change that on Committee Stage.
Does the Deputy have the inside track?
No. I work on my own sense of fair play and logic.
We will put down the amendment and the Deputy can support it.
That does not stand up at all or else we should mount an information campaign to inform people that there is no longer any point in giving tips, that they are subsidising the employer and not the employee.
I understand the reason for including the measure on bonuses, etc. but it will cause a problem with motivation in some industries. There is a danger that employees will say they are entitled to their £4.40 per hour for sitting in their place of work all day and might demand a bonus if they are asked to do something. This will cause individual problems and I hope that workers and employers will act sensibly in this regard.
On the question of the unsociable hours premium, a narrow unsociable hours premium should be excluded but people now get shift payments and unsociable hours premiums even if they only work the unsociable hours once in every four weeks, or something like that. The definition of "unsociable hours" is rather generous in some workplaces – it starts at 6 o'clock, 7 o'clock or 8 o'clock at night. If a person was working from 11 p.m. until 5 a.m. the next day, perhaps that rate of pay should be excluded.
I would have a concern about public holiday, Saturday and Sunday premiums, perhaps not about Saturday premiums because that is a work day for many people. I am concerned about the way the public holiday and Sunday premiums might be implemented. The Minister of State, Deputy Kitt, who is in the Chamber, has been dealing with the question of Sunday trading in the retail trade. Is it possible that this measure will be used and abused and that the same young employees will have to work every Sunday? They might get £4.40 an hour on average but in reality they might only get £3.40 for the other hours they work during the week. There is a slight danger in that unless we can take it that every employer would be fair and reasonable, and that this would only refer to the odd Sunday. I can see this being abused and there should be some provision whereby it could not refer to the person who is working every Sunday because that is what is happening in the retail trade. Many of the people on the higher rate only work five or six days per week and do not work on Sunday, whether by their own choice or that of their employer. This measure should be tightened in some way.
What is the necessity for the public holiday premium when they only arise now and again? We are all legally entitled to the public holiday premium. Most of us do not work on public holidays but if a person works, it is his or her right to be paid the premium. I can envisage employers having young, vulnerable workers working on those days and it will mean that their normal rate of pay would be less than the £4.40. Some of those reckonable components need to be tightened up. There might be another explanation for the way they appear in the Bill but as I read them, they are open to abuse.
I hope the Minister of State, Deputy Kitt, listened to the wise comments of his colleagues, Deputy Ahern—
I always do.
—and Deputy Doherty. If he did, he will know this Bill will have to be substantially amended on Committee Stage. I will come back to that in the course of my contribution. It is clear that the Government has introduced legislation, the substantive sections of which relating to the Schedule do not find favour with the Members who support it. The amendments which will be tabled in the name of my party and other parties will have the support of Government Deputies on Committee and Report Stages. I look forward to that.
It is wrong to divorce the issue of a national minimum wage from the issue of tax reform. Colleagues are currently debating Committee Stage of the Finance Act. They are looking at ways it can improve the working conditions and lives of people on low rates of pay. It is wrong to divorce the issues of pay from those of tax reform and conditions. If one is serious about doing something for low income earners, there are only two ways to improve their lot. One can either give them more money or reduce their tax burden. On the latter issue this Government has done virtually nothing for people on low pay. The proposal in the Finance Bill for taxing low income earners has given them an extra tax allowance of just £10. The tax allowance increase from £100 to £110 gives little relief to people in the lower paid sectors of the economy.
What about last year?
This is an important point. Despite this being a time of great opportunity, in the budget the Government gave a paltry increase in the tax allowance for low paid workers. My party published its tax strategy late last year in which we proposed that people be allowed to earn the minimum amount of £170 before they should have to pay tax. The best way to improve the living conditions of the low paid is to take them out of the tax net altogether.
It is wrong, from an economic and moral point of view, that people on the basic minimum wage of £170 per week should have to pay tax. The Fine Gael position on this is clear. There was an opportunity in this year's budget to substantially increase the tax allowance so people earning £170 per week or less will not pay tax. What did the Government do? It proposed a paltry tax allowance increase to £110 per week. I am aware of the commitment the Government has entered into under the Programme for Prosperity and Fairness. However, the period of time over which it will be implemented is too long. It should be implemented in this year's Finance Bill. It is wrong that people on the minimum wage of £170 per week are paying tax; it is wrong that they are paying tax on £60 of their salary. We have an opportunity now to do something about that.
The minimum wage issue cannot be divorced from fiscal policy. Since this Government came into office, the gap between the wealthy and the poor has widened continuously. There has to be a serious discussion on the effect tax reductions have on people on low pay. The gap has widened in the past ten years because any attempt at tax reform ensures that high earners in the economy do substantially better each year. That is the result of the policies which have been adopted by successive Governments and it is something we must address.
I oppose the minimum wage rate of £4.40 as set out in the recommendations made by the commission. It is unjustifiable that this rate should be set down in law and that it should be sustained in an economy which is currently going through an inflationary phase. The commission set up by the Government made its recommendations in 1998. How is it justifiable that the rate of £4.40 is regarded as appropriate for the national minimum wage two years later? It is nonsensical. The commission was asked to do a job and it did it. However, that recommendation is two years out of date. If it had been made for the year 2000, I might accept it but it was made for two years ago. It is unjustifiable, therefore, of the Government to argue that it is acting in line with the commission's recommendations.
I am aware that, in the context of the negotiations with the social partners, the rate next year is to increase to £4.70 and to £5 in the year 2002. Once again, however, we do not know the inflationary difficulties we might encounter. Anybody with even a small knowledge of economics knows that when inflation increases, the people it affects most are people on fixed incomes, low wage earners and pensioners. Given the new inflationary difficulties in the economy and the fact that the commission's recommendations are now two years out of date, we must seriously consider increasing the minimum wage to at least £5 per hour. If we are serious about doing something substantive for the low paid, the commitment to £5 per hour should be part and parcel of the Bill.
Look at the UK where the minimum wage is at least £4.70 in Irish punts. The gap between the UK and Ireland is already visible and one could argue that it is cheaper to live in parts of the UK than in Ireland. We must increase the rate to at least £5 per hour, a recommendation which has also been made by ICTU.
The Schedule of the Bill deals with reckonable components in determining whether employers are paying the minimum wage. As has been said by other speakers, this is where the Bill is fundamentally flawed. It is wrong that the reckonable components should include shift premia, unsociable hours premia, tips and public holiday, Saturday and Sunday premia. These will have to be deleted from the Bill on Committee Stage. It is unfair that the small amount of tips earned by people in the service sector should be part of determining whether an employer is paying a minimum wage. It is equally wrong that people who give up their Sundays to work, at huge expense to themselves and their families, or people who work on public holidays and earn two days pay for doing so, should have their resulting earnings calculated as reckonable components in determining if they are paid the minimum wage. This provision must be carefully examined to make the Bill more fair and to put it on a sounder footing.
The shift premia, tips and unsociable hours premia mentioned in this Bill are not included in the UK legislation. There is a gap, therefore, between the two labour markets. The UK labour market has a minimum wage, as is now being introduced here, but there are substantial differences in how the minimum wage can be determined on the basis of reckonable components. We will have to follow the UK legislation in this respect particularly in view of the close proximity of the two labour markets. This issue must be dealt with and the Schedule must be amended on Committee Stage.
If the Minister of State is gracious enough to accept Opposition amendments, he will be doing a good day's work.
I know many people in my constituency on low pay. They are people who left school at 16 or 17 and who did not undergo the full senior cycle. They will always be in low paid jobs because they do not have the educational qualifications and training required to find better paid jobs. I know of one case which highlights the problems in the labour market. A 21 year old man I know has had three jobs in the past two years. It is easy to change jobs at present because of the flexibility in the labour market. He has decided to stay with his new employer, a security company, because it was the first to offer him training. He will go on a six month training course in the security industry and his employer will give him the time off for that and will pay for the course. That employer is showing responsibility for that young man. He realises that, if he is ever to get a sense of corporate responsibility, he will have to offer better terms and conditions of work.
The message which must come from the House as it debates this legislation is that employers have substantial responsibilities to improve the working conditions of people on low pay and that it will not be done merely by setting a minimum hourly rate of pay but by other measures such as training opportunities, allowing people time off to be close to their children, affording people opportunities to partake in sports and leisure and providing crèche facilities for their children. It is not just the issue of pay, and employers must face this reality. If a new form of responsibility is to be developed between employer and employee, employers must improve the conditions in the factory-place.
There is a good reference to that in the new programme.
It affords me the opportunity to mention that. The young man I know is staying with his employer because he is being given training and educational opportunities for the first time. Employers will have to go that route in future. Many of the great firms in Dublin went this route. Guinness at the turn of the century provided employees with homes, food, health insurance and proper sports and leisure facilities. That is what we must encourage and, if people are serious about developing corporate responsibility in this area, we will have to encourage employers to provide these opportunities for people.
Other speakers referred to the expansion in the labour market and the fact that the labour force has grown by an additional 600,000 people from 1.1 million to 1.7 million. The best way to deal with poverty is to remove people from social welfare and get them back to work. One of the downsides is that there is a considerable amount of poaching in that young people are being encouraged to forgo their education at 17 or 18, not to proceed with the senior cycle, to leave school and take up a low paid job in the economy. They will be the new poor because if there is an economic downturn in future, which inevitably there will be, these people will quickly lose their jobs and will not have the experience or training opportunities to sustain the type of shocks the economy will suffer. I understand that about 20% of people in schools do not go through the senior cycle. We must track that 20%, provide them with educational opportunities and give them the space for study to ensure they are not poached from the education system because it is the only opportunity they will have of improving their lot. It is an insidious development which has emerged recently in the labour market.
There is also a new problem whereby part-time and low paid work is encouraging more students out of full-time education. We all know of such cases in our constituencies and it is manifestly the case in every school where children of 15, 16 or 17 work Thursday and Friday nights and all day Saturday in supermarkets. How do they find the time for study and recreation? It is a serious issue which must be addressed because employers cannot be allowed to poach children from schools. It is a worrying development. Perhaps the Minister of State will collaborate with his colleagues in Government to see if something can be done in this area.
I welcome the concept of a minimum wage and the fact that we will set a minimum ceiling for wages in the economy. However, the amounts set out are too low and unrealistic given inflationary pressures and they must be negotiated upwards. The Schedule to the Bill must be amended on Committee Stage because it is fundamentally unfair. I hope the Government will be open on Committee Stage to accepting the amendments to which I referred.
I welcome the opportunity to speak on this Bill. It is high time that a minimum wage was set across the board. Minimum wages have been set in various sectors for some time, such as the hotel and catering sector where the wages are especially low. Enforcement of the laws in that sector is haphazard and many employees do not receive the rates of pay laid down. People regularly visit my clinics with various difficulties with tax and other matters. When we investigate their wages, we often discover that they are not aware that minimum wages apply to the sector in which they work. Part of the regulations for those sectors state that minimum wage rates should be displayed where employees can see them. I am not sure to what extent that is complied with. If those rates were displayed where employees could see them, it would go a long way towards helping the situation. It is something which must be addressed and when the Bill is enacted, I hope there will be additional enforcement to ensure employees know the position. The hotel and catering sector is one for which I foresee difficulties.
Another group which receives low pay is shop workers, especially part-time shop workers who work a few hours a week. A new group of people known as franchisers is emerging in the grocery sector. Will they be covered by the legislation? They operate franchises within shops. They are employed by large companies like Coca Cola to stack supermarket shelves and are paid a certain rate for doing the job regardless of how long it takes. Young people who take on such jobs have to work long hours to do the job required. How will the minimum wage be applied in that sector where a great deal of exploitation exists?
While mushroom pickers are entitled to the minimum agricultural workers' wage, many of them are not aware of their entitlements. During a radio interview about 12 months ago I stated that mushroom pickers are entitled to the minimum agricultural wage, holiday pay, and so on, and I was astounded at the response. Very few people working in the industry were aware that they were entitled to a minimum wage and many of them were not receiving it. A system of performance pay, whereby people are paid for the amount of work they do, has crept into that sector. How will the new minimum wage apply to that sector? If mushroom pickers are paid by the quantity of mushrooms they pick and that is below the minimum wage per hour, will they be entitled to a top-up under this legislation? We need clarification on that issue.
We also need to examine the position of petrol pump attendants and car washers. The car washing industry is mushrooming with many young people operating power washers in the evenings and at weekends. How will the Minister ensure such young people are not exploited?
On an unrelated matter, I thank the Minister of State for his initiative in postponing the regulations on kerbside petrol pumps. I hope there will be a worthwhile conclusion to this matter by the end of the year and that those who operate such petrol pumps, particularly in rural areas, will not be put out of business. If the kerbside regulations were introduced as initially intended huge areas of the countryside would not be serviced by petrol pumps. I hope the Minister of State's good work in this area will not be suspended. I am going off on a tangent, but this came to mind while speaking about petrol pump operators.
The State is responsible for low pay to those who provide the home help service. These people are the human face of the Department of Health and Children and society in general in that they provide a service to many housebound people who are unable to look after themselves. The rate of pay they receive is derisory. The Midland Health Board recently agreed that on the introduction of the minimum wage people in the home help sector would be paid accordingly. However, there may be a shortage of money and I suspect the number of hours worked by such people will be reduced to compensate for the increase in wages. That would be intolerable and an insult to the recipients who generally receive the service for only one hour per day. The hours of contact with these people should be extended. The Minister of State should stipulate that there should be not be a reduction in hours worked by home helps because of the introduction of the minimum wage.
The hairdressing sector will also encounter difficulties with the introduction of the minimum wage. I was approached recently by a hairdresser who employs two young trainees and pays them £60 each a week. She is concerned about what she will do when the new rate is introduced. While there is provision for paying reduced rates, from her point of view trainees are of little use to her during the first eight to ten months of training. They can sweep the floor, stack towels, and so on, but their contributions in terms of enhancing the service and bringing in returns are very small. She feels she will have to reduce the number of hours worked by these people and employ them only at busy times. We need to address this area.
One of the great difficulties with people on low pay relates to taxation. We slip into the taxation net very quickly in this country. A single person does so after earning only £110 per week. Fine Gael proposes that people on the minimum wage should not pay tax up to approximately £170.
I was contacted recently by a couple making up their annual returns. The husband runs a small business and the wife is a carer in the home on the reduced rate of £42 per week. She wanted to know if she had to include the carer's allowance for tax purposes. The £42 a week she receives will be taxed which will leave her with £32 a week. The irony of this is that she does not qualify for the PAYE allowance. Even though her carer's allowance is classified as pay for tax purposes, it is not classified as pay for the purpose of a PAYE allowance. This is something the Minister of State might bring to attention of the Department of Finance.
Many Members, including some on the Government side, raised the question of including tips and bonuses as part of wages. That is ridiculous. It is a mean-minded provision and should be excluded from the Bill. It is also unfair to include work on Sundays and bank holidays.
I hope the Minister gets the message that this should be removed from the Bill.
An increasing number of immigrants are getting work here in low paid jobs. What effort will we make to ensure they know the minimum rate of pay? I do not want to see immigrants used and abused by exploitative employers. There must be a concerted effort to ensure that people who work are paid the minimum rate.
I wish to share my time with Deputy Stanton.
Is that agreed? Agreed.
Although it has been a long time coming, I welcome the Bill in principle. For too long people, particularly vulnerable people, were exploited. This was particularly true during times of depression when there was a high level of unemployment. Our competitiveness has led to an improvement but people are still being exploited. Many of them do not have the capacity or the skills to move out of their areas of employ ment. Some people feel trapped, particularly those who are middle aged and close to retirement. Some people, particularly women, in the legal and accountancy professions, who do not have qualifications but have high levels of skills, are not paid a salary commensurate with their skills. They are often paid less than the proposed minimum wage.
I got a telephone call this morning from a woman in employment who was extremely concerned about the fact that special payments are included. A person on the basic pay of £130 who gets a shift allowance of £42 will receive a total payment of £172. However, a person on the basic pay of £130 who does not get a shift allowance will now receive the same total payment as the person who gets a shift allowance because of the introduction of the minimum wage. The Minister must reconsider the inclusion of tips, gratuities and overtime payments because it is unfair. It will also cause difficulties for companies. The solution must be to exclude allowances for working unsociable hours.
I do not share the concerns expressed by employers about the minimum wage because our competitiveness has already resulted in the minimum wage being paid by many of them. Employers must pay to get staff. People, particularly women under 25 years of age, are still being exploited in some places. It is not acceptable, for example, that home helps, who do excellent work in the community and save our health services substantial sums of money, are paid between £2 and £3.50 per hour.
There is no point in introducing this legislation if it is not enforced. The 1946 Act outlined areas of employment where minimum wages should be paid. However, that was not enforced because the personnel was not available in the inspectorate. It is wrong for anyone to suggest that the 1946 Act was successful in ensuring that people who worked in the catering and hairdressing industries, for example, got a minimum wage. We did not see advertisements informing people of their right to a minimum wage as was provided for in that Act. I hope the Minister introduces amendments and accepts Opposition amendments on Committee Stage which will ensure that the Bill is effective.
Concern was expressed about training courses. Training can be interpreted differently depending on the organisation. I worked for 23 years in training in industry. What is often labelled as training on the factory floor might not be so as the person involved could be performing at the level of other operators, but it is labelled "training" because of a time constraint on the course. For example, it takes 12 months to become effective and efficient in a certain motor activity, whether it be assembly or disassembly, as I was involved in, in the meat industry. By imposing a time for training on something, for example, three years, even though the person might be effective after one year, because the training course runs for three years, the principles of the Bill could be circumvented because under the Bill 75% of the minimum wage need only be paid for the first 12 months, 80% for the second 12 months and 90% for the third 12 months. There should be strict guidelines on the interpretation and evaluation of training.
I wish to deal with the question of people with low skills and those who remain unemployed because they are middle aged and unskilled. People, regardless of their age, can be trained as long as the right area of expertise is chosen for them. Training involves motor skills, but it also involves people's attitudes. Attitudinal training is very important. People who partook in community employment schemes have stated that they did not receive proper skills training in many areas. I do not accept that because the success of community employment schemes often has more to do with attitudinal training than training in motor skills. People who worked on community employment schemes were reintroduced to the workforce and gained confidence in themselves following years of believing that they were unemployable.
I do not accept that people are unemployable. The challenge we face is to bring the people to whom I refer back into the workforce. We should not be saying to unskilled people who reach 50 and who lose their jobs because they have been replaced by machines that we do not need them. We need to encourage these people to retrain for their own well-being and that of the State.
I welcome the opportunity to contribute to the debate on the National Minimum Wage Bill. I agree with the Government's decision to introduce a minimum wage but it is sad that it has decided to tax that wage. I applaud the idea of a minimum guaranteed income – this is probably the rationale behind a minimum wage in the first instance – but it makes no sense to establish a rate of pay and then decide to claw some of it back in order to further stuff the State's coffers. The Government has scored an own goal. I call on the Minister for Finance, possibly on Report Stage of the Finance Bill, to change his approach and exempt people on the minimum wage from paying tax.
My other criticism of the Bill is the haste with which it is being pushed through the Oireachtas. I accept that this is due to the deadline of 1 April which has been set for the introduction of the minimum wage. However, the authorities in Britain have decided to increase the rate of the minimum wage in that country from £3.60 to £3.70 with effect from next October. They have given everyone involved – employers, workers, administrators etc. – almost seven months to prepare for a 10p increase in the minimum wage. Here we will be lucky if we have seven weeks to prepare people for the initial introduction of the entire concept of the minimum wage.
It was about the short timescale involved that the Chambers of Commerce of Ireland, the only national body which initially accepted the prin ciple of a national minimum wage, complained. I accept that the Tánaiste and others have stated that the introduction of this legislation has been flagged for some time. However, the detail of the legislation was not known. We are not even sure when Committee Stage of the Bill will be taken. It was originally to have been taken tomorrow but I understand it may be postponed. Therefore, we still do not know when Committee Stage will be taken. The Government's handling of this vital issue has been slipshod and I wonder how serious it is about the legislation.
Ireland is one of the last countries in Europe to introduce a national minimum wage. What impact will that wage have on employment when it is introduced? We know that different countries have different minimum rates and we also know that the higher the rate, the greater impact it will have on young people and job creation.
The greatest problem employers face at present is shortage of skilled workers and many of them have difficulty attracting suitably qualified people. The Minister of State with responsibility for labour affairs is present in the House and I ask him to consider ways of training older people. We need to start putting in place mechanisms to allow us to train older workers. Perhaps the Minister of State will encourage the Minister for Social, Community and Family Affairs to ensure that the staff of his Department begin treating unemployed people with civility. Such people are receiving letters informing them that their payments are being stopped because they are not available for work. They are given no prior warning and they must undergo a long appeals process before their payments are restored. That is ridiculous. The Government is using a stick instead of a carrot. The Department of Social, Community and Family Affairs should appoint officers who will interact with and encourage unemployed people and identify vacancies in the workforce for them. In the main, these are the people who will be affected by the introduction of the national minimum wage.
There are different types of workers in our society at present. There are those working in high-tech and multinational industries who are earning substantial wages. Increasing numbers of workers are being sucked into companies involved in these industries, and that is fine so long as the sector is performing well. However, if there is a downturn we will be in serious trouble. Indigenous Irish companies are competing for workers with those involved in the sector to which I refer. Whereas in the large multinational sector between 5% and 10% of a company's turnover might be spent on wages, in the small indigenous sector this might be as high as 80%.
In introducing a national minimum wage we must consider the supports we can give to small Irish businesses. There is a danger that small companies might decide it is cheaper to buy a machine than to pay someone the national minimum wage. That is not because they are mean, it is because their survival is based on economic necessity. We must consider the full impact of the national minimum wage. I call on the Minister of State to ensure that a system is established immediately to monitor its impact on all companies in all sectors. That is very important and I see no provision for it in the Bill.
Another step we must take immediately is to ensure that information is readily available to employees and employers in respect of the national minimum wage. Information on rights and entitlements must be made available to every worker who is likely to be affected. We must also put in place supports for workers in the event that they may wish to make complaints. For example, if they wish to bring an employer before a tribunal or a court they must know to whom they can go for advice. Many of these workers who will be on the minimum wage do not have the requisite skills, the wherewithal or the knowledge and they will be approaching the Minister of State and me to seek help.
The other difficulty with the Bill is that the introduction of the national minimum wage will increase the burden of red tape imposed on employers. We must be careful that we do not smother small companies with red tape. Perhaps the Minister of State will indicate in his reply the action he intends to take to ensure that this does not happen.
I am disappointed the Defence Forces are not catered for under the Bill. It is sad there is no recognition of the long hours many soldiers and sailors work. We must remember that these people have families and expenses. Everyone is aware that the Army and Naval Service are experiencing difficulties in recruiting staff because they are also competing with other sectors in terms of attracting employees. That is a major problem.
The inspectorate is inadequate and we need more inspectors than are provided for. While I welcome the increase, it should be monitored very carefully. If there is a need to increase the number of inspectors, it should be done sooner rather than later. These inspectors have many functions under labour law apart from the national minimum wage. This will place a huge additional burden on the inspectorate which is already understaffed. The additional inspectors will only serve to allow the inspectorate to carry out its current functions. However, we are now adding a further burden with this Bill. That must be looked at very carefully and addressed.
I agree with my colleagues who spoke about tips and bonuses, which are excluded. That is mean-minded and perhaps we can look at it on Committee Stage. Voluntary bodies often depend on people who work for low wages. It has been said that they may be particularly hard hit by the introduction of a minimum wage. I am not saying such bodies should pay below the minimum wage. However, we should be aware of the impact this may have on voluntary associations, such as groups working with the disabled and the less for tunate. The Government should look at a way of assisting voluntary bodies to offset the introduction of the minimum wage. Will au pairs be covered by this legislation?
I look forward to Committee Stage. When will Committee Stage be taken?
I am happy to participate in this debate. As the previous speaker indicated, the schedule for delivering the commitment contained in the Programme for Government to introduce a national minimum wage by 1 April 2000 is very tight. However, I have no doubt, particularly with Opposition support for the Bill and its implementation by 1 April, we can achieve that. As Chairman of the Select Committee on Enterprise and Small Business, which will be dealing with Committee Stage, I have been asked when that Stage is likely to be taken. A tentative date was set for tomorrow. If the Bill passes Second Stage today, I have no doubt we can accommodate it tomorrow. If not, it will be taken next week. Let us see how far we can progress today. As Chairman of the select committee, I will do all I can to accommodate Committee Stage. I am sure, with the support of the House, we will be able to deal with any issues that might arise on Committee Stage as quickly as possible.
I place great importance on the Bill. There is exploitation of certain people in the workforce. The Bill will ensure that a large percentage of the workforce, especially the lower paid, will secure a reasonable increase after 1 April in their hourly pay that should reflect the current economic climate and their participation.
We recognise the tremendous transformation of our country and economy in recent years. We have gone from a period of economic struggle when we joined the EEC to the current position. Our efforts have been crowned by a success which was almost unimaginable in those days. Our economic success is viewed jealously by our EU partners.
Many people have gained from that success, but not everybody. Regrettably, some people who never failed to participate have been excluded and marginalised with regard to personal economic gain. The Bill is an attempt to help those low paid workers but, of course, it will not include everybody. The last speaker referred to the position of au pairs. I would be interested to hear from the Minister if any study has been done on people participating at that level in the economy. There are many people working in homes throughout the country who are not earning a reasonable salary or paying PRSI and other contributions, which it would be in their interest to do. However, that matter is for another day. I would welcome it if the Minister of State with responsibility for labour affairs considered that vast issue. I believe there are abuses in that regard.
I am conscious of the huge amount of voluntary contributions made in society, particularly for people with disabilities and the elderly. I pay par ticular tribute to participants in the home help service who have done tremendous work throughout the country. I acknowledge the contribution in my constituency of people who go far beyond the call of duty in giving the necessary support to those in need. I pay tribute to every home help and the organisers of the service in the Dublin North Central constituency. They do a tremendous job.
However, I am disappointed that the funding authority for the home help service is currently proposing to pay the basic minimum rate of £4.40 per hour. This is referred to in other areas in the Bill but I want to focus on home helps. There is no recognition of the important job they do. There is no training or support for such home helps. Some people require the home help service late at night and at weekends. Home helps must work unsocial hours because elderly people, for example, might require assistance in the early hours of the morning to get out of bed or have breakfast at any time between 7 a.m. and 10 a.m. They might again require assistance at lunch-time, tea-time and between 8 p.m. and 10 p.m. That would mean a home help would have to work four or five shifts throughout the day. The home help might also call to such individuals outside those hours to see how they were.
Such an input cannot be costed. A set £4.40 per hour cannot be put on such commitment and unsocial hours because it warrants special recognition. The first move the Minister should make with regard to unsocial hours should be for the home help service. The entire community benefits from such tremendous participation.
There is reference in Part 1 of the Schedule to the public holiday premium. It is unacceptable to make that an ingredient of the minimum wage. I ask the Minister of State to table an amendment in this regard on Committee Stage. It is appropriate that people are given a premium for working on public holidays and other such work, but it should not be included in their minimum wage. The Minister should acknowledge this point and make a public announcement in this regard as early as possible, even before Committee Stage.
Many Members worked in pubs, shops or wherever while studying and the money earned helped them through college. One assessment of how well one did one's job was the level of tips one received and I was shocked to see that tips are to be considered as reckonable income under the Bill. The Minister should look at the effect of such a provision. I do not know how it would be implemented or controlled and it is a farce. Legislation or regulations introduced should be practical, pragmatic and logical. We are taking from the real issue by asking people how much they earn in tips or other benefits. We should look at the hourly rate of pay and strike an acceptable rate but make separate provision for unsociable aspects of work and public holidays. When considering the basic hourly pay we have to protect employment so that we continue to enjoy our current competitiveness. There is a delicate balance to be struck and it is important that we strike the right balance.
Deputy Stanton raised the issue of skills shortages. We need to take stock of the current situation in which we talk of full employment, yet people find it difficult to understand that over 200,000 are unemployed and on benefit. There are thousands of others in different categories such as those on pre-retirement, invalidity, disability and other such benefits.
Employers are increasingly bringing to Members' attention the difficulties they face in obtaining skilled workers. It is time to take stock and make appropriate provision for future years concerning our skills needs. There are some moves concerning accommodating non-nationals in the workforce – I raised this point recently. The current procedures for issuing such permits are not user-friendly and do not accommodate the individual or company making an application. The long delays are totally unacceptable as these people have an important contribution to make. We need appropriate, user-friendly, easily accessible procedures so that we can avail of people with the necessary skills as quickly as possible.
We also need to look at the important issue of training. We need to have appropriate training, apprenticeship and other such courses and the Minister should examine the rates of pay for trainees. I am not sure what consultation has taken place in this regard. I have a vested interest in this issue in that my wife is in the hair and beauty business in which some employees are on relatively low rates of pay. However, most of these workers who qualify acquire a good skill. In the case of my wife's business, she has been able to retain the workers who trained with her.
What consultations have taken place with the appropriate training and apprenticeship authorities such as the Irish Hairdressers Federation and others? Are we satisfied that we are striking the right balance as regards ensuring that those on training courses will not be disenfranchised by the level of contribution required to give them the skills and appropriate supports during their training and apprenticeship so that, at the same time, they can enjoy an appropriate wage which reflects their contribution to the workplace? The Minister and the Minister of State are trying to ensure that we strike the right balance in ensuring that we protect employment and competitiveness, but we must do so across the board. I welcome the Bill and look forward to Committee Stage.
I wish to share my time with Deputies O'Sullivan and Sean Ryan.
Is that agreed? Agreed.
This legislation is a con and is one of the most dishonest Bills to come before the House in a long time. We are being told that it will introduce a national minimum wage which will start at £4.40 per hour. In effect, the Bill does nothing of the kind as the small print takes away whatever benefit there would have been in such a rate.
If a legislative stunt such as this was being pulled on the better off, the Press Gallery would be full, there would be television crews on the plinth interviewing Fianna Fáil backbenchers and the telephones, fax machines and e-mails would be hopping with outrage. However, this stunt is being pulled on some of the poorest in society. These are people we meet every day, hairdressers, shop assistants, petrol station attendants and those engaged in the caring professions. These people are not being told by those who should be telling them that this Bill will not give them a minimum wage of £4.40 per hour but much less than that.
The definition of hours worked includes holidays and any period of sick pay. An average worker gets four weeks holidays and may be sick for one or two weeks in the year. Under the Bill such a worker's pay will be reduced by 10% so the national minimum wage is already less than £4 per hour. The Schedule indicates that the £4 rate will include a range of benefits which most workers consider as extras on top of their basic pay. It includes a shift premium. Such premia can be over 30% in some cases and will be factored in. It will also include unsociable hours so, for example, a petrol pump attendant or someone working in a 24-hour shop being paid extra because they are working nights or on Sundays, will have their premia included in the national minimum wage. It includes productivity payments such as piece rates, incentive rates, commissions and bonuses.
Workers in the clothing or construction industries who are paid piece rates in relation to productivity will see those payments taken into account. The minimum wage will also include any amount distributed to the employee in tips, gratuities and service charges. When we go into a restaurant, if the bill says that there is a service charge of 12.5%, the proceeds of that service charge go toward making up the national minimum wage. When those factors are taken into account, the national minimum wage is a total con. There will not be a £4.40 per hour national minimum wage. The minimum wage provided for in this Bill is at best £3 per hour for most of those workers. It is utterly dishonest for the Government to publicise the idea that it is about to give workers a national minimum wage of £4.40.
I agree with the criticism of the £4.40 figure. It is less than the Minimum Wage Commission recommended some time ago. If one updated the figure it recommended it would be closer to £5, the amount which trade unions and voluntary organisations agree should be paid. The low paid worker will not even get £4.40. That is the ultimate con in the Bill. It is a shameful act on the part of the Government to introduce a Bill that is so dishonest. It pulls the wool over the eyes of those on low incomes who do not get rent allow ance for their accommodation. Those in private rented accommodation face rents of at least £100 per week but they will not be able to pay them on this national minimum wage.
If all that was not enough, the Minister claims the right to set the minimum wage at any level and to take into account a range of factors when setting it, such as interest rates and the effect on employment and industry. She even claims the right to unilaterally vary a recommendation of the Labour Court in setting the minimum wage.
The wage itself is virtually unenforceable. If a worker is not paid it he has, in theory, the right to go to a rights commissioner, but he can only go to a rights commissioner if he has asked his employer to give him a statement in writing detailing his hourly rate of pay. If the employer does not give him the statement in writing he can be prosecuted. If the employer is prosecuted and the matter is taken before the courts, the rights commissioner is prevented from hearing a complaint while it is being processed. The enforcement and dispute processes provided for cannot be enforced.
This Bill is a con. The poorest people in society are being tricked by the Government into believing that a national minimum wage is being introduced when nothing of the sort is about to happen.
Low paid workers have awaited this legislation with some hope, but unfortunately they have been conned, sold a pig in a poke. They will not get the national minimum wage they have been led to believe they would. This Bill must be amended if it is to be effective in guaranteeing the rights of the lowest paid workers.
The debate on the introduction of the legislation has centred on the rate of pay and the date of its introduction. This focus has been too narrow and has avoided crucial points, such as policing the rate and ensuring there is an adequate complaints procedure for those who wish to report breaches of the legislation.
This Bill, which purports to be pro-worker, is fundamentally flawed. It is punctuated by cop-outs and opt-outs for employers and it broadens the definition of a minimum wage to include service pay, premium rates for unsociable hours and productivity based pay such as commission and bonuses. If this Bill is passed unamended, it will create some very hostile workplaces where employers will use every trick in the book to maintain low wages. The introduction of a national minimum wage on this basis will affect the lowest paid sectors, contract cleaners, home helps, restaurant and shop workers and a host of other occupations which are dominated by women and others who have been disadvantaged, such as early school leavers and those with disabilities.
Many of these people's jobs are not just low paid, they offer little security of employment, atypical work arrangements, lack of pension provision and few rights for paid leave. This legis lation is not about making the workplace better for these people.
The Government's record in enhancing conditions for workers has been abysmal. Since the debate on Second Stage commenced yesterday, those on the Government benches have continued to mention that the last Administration made no attempt to introduce a minimum wage. The reality is that the record of the last Government in worker protection was far better and reflected the demands of workers. The Organisation of Working Time Act and the Protection of Young Persons in Employment Act were just two of the major reforms introduced by Eithne Fitzgerald as Minister with responsibility for labour affairs. In Opposition the Labour Party published and introduced the Trade Union Recognition Bill, the Protection of Shop Workers Bill and the Health, Safety and Welfare (Amendment) Bill. This record belittles the Government's half hearted attempts to improve the workplace.
When the Minimum Wage Commission produced its report two years ago, the Labour Party made it clear that the introduction of the wage would only be of real benefit if it was matched by tax cuts for the low paid. Like most workers, the low paid care more about what they take home in their pocket; they are not concerned about the gross payment which they only see on their pay slips. The tax cuts announced in the budget failed to consider the importance of a low tax take from the low paid. The budget had a clear focus, to give more to high income earners and give as little as possible to the low paid. How can the Government tell the House that it is proposing this Bill in the name of the low paid while it is prepared to give as little as possible to low income earners in terms of tax reductions? The effect of the tax changes in the budget was to give a single person on the minimum wage a miserable £3.50 per week in tax cuts. A person on the handsome salary of £50,000 was bought by the Government for £25.60 per week in concessions. Against this backdrop, the will of the Government to help the low paid is questionable.
The provisions for enforcement and policing of the minimum wage are seriously flawed. The policing function is being handed over to the labour inspectorate attached to the Department of Enterprise, Trade and Employment. Despite the decision of the Government to increase the number of inspectors to 16, this remains inadequate. More inspectors are needed to police existing legislation, never mind the minimum wage. A separate minimum wage inspectorate should be established and, given that many of the likely breaches of the legislation will take place in the service sector, which operates at its peak after office hours, this inspectorate should be active during unsociable hours.
The Bill does not contain adequate provision for a complaints procedure. Making it necessary for an employee to obtain a written statement of hourly pay rates from their employer before pur suing a complaint with the rights commissioner is a means of discouraging workers from exercising their right to complain.
The majority of workers targeted by the legislation are in poorly regulated employment with few rights. In the main they are not represented by a trade union and making a complaint in the first instance is very difficult. This requirement should be removed if there is to be an effective complaints procedure. As a way of strengthening it, I suggest the establishment of a minimum pay unit attached to a telephone hotline. This unit could provide workers and employers with information on all aspects of the legislation, as well as being in a position to advise workers on how they could pursue a complaint. I understand that such a unit was established in the UK following the introduction of the minimum wage there and the demands on it underlines its importance.
Other speakers referred to the importance of implementation and policing and the need to let people know of their rights under the legislation. The people who will be covered often do not have access to the kind of information they need to vindicate their rights. We are concerned here with those who have benefited the least from the current prosperity. They should have been given a great deal more than what is on offer in this Bill. It needs to be seriously amended before it can represent a base line of equal rights in terms of wages.
Home helps and other such workers are abysmally badly paid by the various health boards. The boards should be given an appropriate allocation so that they can pay their home helps a decent income without having to take money from other parts of the health service. This is a Government commitment. Allocations should be provided to ensure that those who are currently paid below the minimum wage in public service employment or in jobs paid by the public purse are properly paid without the money being taken from another sector of society.
We are very disappointed with this legislation, which we thought would offer a base line equality measure for people in employment. That will not now be delivered and I urge the Minister to consider the points made in the House and those that will be raised on Committee and Report Stages. This is an opportunity that must be grasped in a way that will ensure some degree of equalisation in our society. While the rich have become richer, unfortunately the poor have been left behind. The tax measures in the budget have cemented the difference in our society and this legalisation, which could have offered so much, has not offered what we hoped for. I urge the Minister to accept amendments that will make the legislation effective in terms of equality.
I welcome the principle of the Bill. The two previous speakers ably pointed out its deficiencies, nevertheless, it establishes an important principle. Given the economic situation, now is the time to introduce it. As recently as five years ago it would have been very difficult to do so, but the economy is now robust enough to take it. I also welcome the commitments to increase the hourly rate over the next two years. Coupled with the increases provided for in the PPF the lower paid will be better rewarded and will be better motivated than previously, when it was as attractive to stay on social welfare.
I addressed the issue of taxation of the low paid in the debate on the Finance Bill. I referred to figures produced by CORI which demonstrated the unfair way in which the budget provisions were skewed in favour of the upper income earners. The Minister made a mistake here. He should have looked first at the lower paid and skewed the tax concessions towards them. The provision of an extra £10 per week in the tax free allowance was insulting in the context of his £1 billion giveaway. We reminded him of this during Committee Stage of the Finance Bill. I hope the Government will make a policy decision in the next budget that all of those earning the minimum wage of £170 per week will be exempt from income tax. That would make this legislation very effective.
I come from the north eastern part of County Kerry, an area that was traditionally the farm belt of the county. Unfortunately, because of the decline in farming the buoyancy in the economy has suffered and we have been unable to rejuvenate it with new industries. The small industries in the region are under pressure to survive. I am very familiar with one company that was threatened with closure two years ago. I was able to put an arrangement in place to save it, but even then the company was only able to break even – that is all it wanted – by paying low wages. I contacted the company accountant before attending the House and he told me it was implementing the minimum wage from 1 March. This illustrates that the Bill is already having an impact.
There will be job losses following the implementation of the minimum wage. People in robust economic areas, such as Dublin, Cork, Limerick, Galway and Waterford, will find alternative employment. However, if employers in rural areas are forced to let people go alternative employment will not be readily available. This should be taken into consideration by decision makers.
The Minister and other speakers mentioned the ESRI study on the impact of the implementation of the minimum wage which acknowledged that unemployment could increase by 14,000. Since then the economy has become even more buoyant and I hope that will not happen. However, it must be taken into consideration.
Given that income levels per head of population are approaching the EU average, it is important that this legislation be implemented. However, the Government must take account of possible negative factors, such as those pointed out in the ESRI report, and take appropriate action, in the same way as it has created the new BMW region under the national development plan.
According to the ESRI, the average family on low income could gain £30 per week from the implementation of the minimum wage. That is substantial. The Minister said that 163,000 people will benefit. It is clear, therefore, that the legislation will provide a major boost to lower income groups. Given the proposals under the PPF and future budget commitments, the lower paid will get a better deal.
The trend involving school children who go to work is a recent phenomenon. In the US it is natural for people attending high school and university to work two or three days per week. I see more and more of the school going population starting work at 14 years of age in tourism, restaurants, bars and the other places mentioned by previous speakers such as filling stations. Many of these people are working in the black economy. I know there will be supervision, but will it be sufficient at ground level to ensure control of the black economy? Many jobs in tourism are in the black economy and I wonder what assurances can be given in this regard. How can people in the black economy be penalised for not complying with the minimum wage? Is the Minister confident that there will be enough people on the ground to properly implement and supervise the minimum wage and ensure unscrupulous employers do not continue to exploit workers?
This is just one of the many measures we must introduce to address low pay and a workforce which is at times not motivated. Profit sharing, employee share ownership and gain sharing must become par for the course if we are to continue to motivate the workforce and properly reward workers for their efforts. During the bleak periods in the 1980s and 1990s it was the low paid who drove the country forward. In particular, I refer to those working in the tourism industry. At a time when revenue from other sectors was declining, our tourism industry was improving with numbers of tourists increasing. The people involved in the related service industries were the lower paid and it is now payback time for them.
I hope the Minister will respond to the number of legitimate issues raised by Deputy Gilmore. I am sure there is goodwill on the part of the Government, but it is important that people do not see the Bill as purely aspirational or a political gimmick, although I doubt it is. Following three years of consultation I feel this is a genuine effort to address the issue. I think the Government adopted the proper procedures by having the matter examined by an interdepartmental group, the ESRI, etc. Nevertheless, in order to ensure the credibility of the proposal the opt out clauses must be carefully examined. It must not be too easy for an employer to find excuses to opt out. No doubt employers may shorten working times as a way of ensuring they can pay people. Other methods, such as shortening opening hours, might also be considered. Such developments could change the ethos of country towns and the hospitality which we extend to tourists who find premises open at 10.00 a.m. There is a fear that employers may reduce their level of service because of an inability to pay the minimum wage. We must raise these legitimate questions which should be addressed by the Minister.
I thank the Deputies for the broad welcome they have given the Bill. Some concerns were expressed that the time afforded for the debate may not be commensurate with the importance which Deputies attach to the issue. However, at design and drafting stages the Bill was the subject of lengthy consultation, first with the social partners and latterly with the parliamentary draftsman. In the normal course of events I would prefer if Parliament was granted as much time as it wished to reflect on draft legislation, but in current circumstances I intend to ensure that the deadline of 1 April is observed and I thank the Deputies who support that aim.
I wish to express sincere thanks to ICTU, the unions and IBEC whose contributions throughout the preparation stage were considerable. There is no doubt that historically trade unions may have had different views on the merits of a national minimum wage system, but the clamour for action has been considerable in recent years, predating the commitment in the programme for Government. I also totally reject the contention by Deputies Gilmore and O'Sullivan that in some way the Bill is a con job. I think Deputy Deenihan has acknowledged this is not the case. It is a genuine effort by the social partners to deal with the problem of low pay and intensive consultation took place. In such circumstances some degree of compromise is necessary.
Deputy Gilmore also suggested that if it was a different Bill we would have a group of backbenchers speaking and making a bigger effort. I totally reject that. I have been here for the debate today and I note that a sizeable number of my colleagues spoke from considerable experience in their own areas, something I welcome.
Deputies in their contributions identified sectors of the economy where low pay persists despite the existence of a booming economy. Deputy Ring pointed out that women workers suffer low pay disproportionately in comparison to male workers. Deputies Browne (Wexford) and Daly highlighted the fact that young workers are particularly vulnerable to low pay, especially those leaving school. Women and young workers have been identified by the ESRI impact study as the main beneficiaries of the implementation of the national minimum wage. Deputies Doherty and Noel Ahern referred to potential areas of abuse. Deputy McGrath among others raised the issue of immigrants. I wish to confirm that as employees they will have the same entitlements as other employees.
Deputy Joe Higgins described the extent of workers subject to low pay as being of epidemic proportions. The ESRI impact study states that 13.5% of the workforce, some 160,000 employees, will benefit from the introduction of the national minimum wage on 1 April. Deputy Stanton among others also referred to this matter. The ESRI will be commissioning a follow-up survey. The Deputies also spoke about monitoring, which will be jointly carried out from the outset with the involvement of ICTU and IBEC.
Market forces have improved wage levels, but the need for the Bill is still warranted, as Deputy Gerry Reynolds pointed out. The Deputy also said that the cost base for small enterprises has been increasing in recent years resulting in a reduction in margins, thereby eroding the incentive to employ workers. It is important that the economy remains competitive, as has been said time and again in the House, to continue to create wealth and expand employment. The provisions of the Bill and the initial national minimum wage rate strike the right balance to ensure employees are not exploited and that employment and competitiveness are not jeopardised. The ESRI impact study highlighted the potentially detrimental effect on the economy of introducing a national minimum wage. It is because of this potentially negative effect that I have included a provision for employers in financial difficulty, which was welcomed by Deputy Owen among others.
Regarding the initial rate, employment impact was assessed by the ESRI, not on the basis of 1997 data, but on the basis of the 1997 findings being projected to 2000, on assumptions which were valid.
I agree with Deputies Hayes and Stanton who drew attention to the apparent dichotomy between introducing a national minimum wage and levying tax on it. The taxation provisions of the Programme for Prosperity and Fairness provide a response. Over the next two years the Government will introduce changes in taxation which will ensure all workers on a minimum wage will be taken out of the tax net entirely.
It should be done now.
This, coupled with the changes relating to the rate of the minimum wage, will ensure that the low paid will benefit from our economic success.
Deputy Owen referred to section 16 which provides for an employer paying an employee reduced rates if the employee has reached the age of 18 years and undergoes a prescribed course of study or training. The Deputy questioned whether a new employer could send an employee on a prescribed course of study or training if that employee had been paid the sub-minimum training rates by the previous employer. The National Minimum Wage Commission stated that the structure of the national minimum wage legislation should provide encouragement and induce ment for employers to take on unskilled staff and to involve them in training. Section 16 implements that recommendation. Under the section a new employer could send an employee on a prescribed course of study or training, whether the employee had previously been paid sub-minimum training rates. Deputy Owen stated that she has tabled an amendment to this section in order to prevent an employer from paying the sub-minimum training rates to an employee who had already been paid such rates by a previous employer and I will examine that in light of the commission's view on training offered by employers to unskilled employees.
I share the concern of Deputy Hayes regarding the dangers of young people leaving the education system too early and taking up employment. The fear that young people may be sucked out of the education system lies behind the sub-minimum rates for young persons and new entrants. I am already co-operating with the Minister for Education and Science in seeking to ensure that students complete senior cycle at second level under other legislation.
As regards reckonable and non-reckonable pay components in calculating the minimum hourly rate of pay, we have attempted to be responsive to several strands. According to the Minimum Wage Commission, legislation to introduce such a national minimum wage should take account of pay and other forms of remuneration along the lines of practices in employment regulation orders of the joint labour committees. It seemed that the commission wished to ensure that the pay arrangements operating in particular sectors would not have to be changed merely to comply with the particular statutory definition of pay.
Having examined the scenario in the UK and discussed it extensively with the social partners, the interdepartmental group came to the conclusion that any premium paid to an employee in regard to his or her normal or standard working hours should count towards the national minimum wage. Any premium earned and paid to an employee for working hours in excess of such hours should be excluded from minimum wage pay. Thus, shift premium, unsociable premium, Saturday and Sunday premia and any payment in excess of basic pay for working on a public holiday should be included for minimum wage pay if earned in regard to the employees normal or standard working hours but overtime premia would be excluded.
The line adopted in relation to benefits in kind, tips and gratuities and when they should be included was informed by reference to the relevant employment regulation orders. The Bill does not prohibit an employee from retaining a tip paid by a customer directly to him or her. However, if the employer distributes tips from a central fund managed by the employer, such payment is only reckonable if paid through the payroll. I listened carefully to the contributions of Members and I am prepared to consider reason able proposals for change on Committee Stage. Some Deputies noted the exclusion of certain categories, including the Defence Forces. The Bill follows the general line of labour legislation. The working time legislation also deals with this issue. However, I am also prepared to listen to reasoned arguments in regard to this matter on Committee Stage.
Deputies Stanton and Callely raised the issue of au pairs. My advice is that in general au pairs are not employees. Deputies Carey, O'Flynn, McGrath, Stanton and O'Sullivan referred to an information campaign and, in particular, the questions of a help line and website. An intensive information and publicity campaign is planned as soon as possible after the legislation is enacted. It will encompass targeted television, radio and press advertising, a telephone help line, information leaflets distributed to and available from a broad range of sources and locations and a dedicated section of my Department's website will also be devoted to this issue.
Deputies Rabbitte, Owen, Carey, Daly, Reynolds and Deenihan referred to the need for effective enforcement and policing of the national minimum wage. The need for additional resources for the labour inspectorate arising from the national minimum wage was acknowledged by both the National Minimum Wage Commission and the interdepartmental group. The Government has agreed to my proposal that the current number of inspectors should be increased from ten to 17 and three additional support staff are being assigned to the inspectorate, which is currently dealing extensively with the Protection of Young Persons (Employment) Act, 1996. The work organisation and targeting operations of the inspectorate have recently been revised to enable it deliver a more flexible enforcement service which will not be confined to office hours and will match the working hours of those sectors on which it focuses.
Deputies raised the issue of the overtaking of the proposed rate of £4.40 per hour by market forces, given that that figure was first mentioned in April 1998. I remind them that the ESRI study undertaken in early 1999 was based on the impact of a rate of £4.40 per hour on the economy and employment in April 2000. The assumption made in early 1999 on the changes in the economy between then and April 2000 have been broadly accurate and the conclusion of the study in regard to employment, unemployment and inflation effects of the introduction of a national minimum wage are still valid. Some Members implied that a minimum rate of £4.40 per hour would not benefit many workers but the ESRI concluded that 163,000 workers would benefit on 1 April 2000.
Deputies Owen and Rabbitte raised the issue of introducing specific anti-evasion measures. It is a matter of striking a balance between what is aspirational and what would constitute a new labour market rigidity. Above all, we want measures that will work in practice and I will pay heed to proposals on Committee Stage. Most Members raised the question of home help. I was particularly struck by Deputy Theresa Ahearn's reference to low rates of pay and travel allowances for this group. My understanding is that home helps will benefit fully from the provisions of this legislation with effect from 1 April.
The Minister has replied to many of the soft questions that were raised. I promise him a very torrid time on Committee Stage if answers are not found to some of the hard questions that were better than anything we have heard.
I hope it does not take us as long to deal with this legislation as it is taking us to deal with the Copyright and Related Rights Bill, 1999.
Will the Deputies who are claiming a division please rise in their places?
Deputies Higgins (Dublin West) and Sargent rose.
As fewer than ten Members have risen in their places, I declare the question carried. The names of the Deputies who claimed the division will be recorded in the Journal of the Proceedings of the Dáil.