National Minimum Wage: Motion (Resumed)

The following motion was moved by Deputy Willie Penrose on Tuesday, 14 December 2010:

That Dáil Éireann:

recognising that the national minimum wage is low, providing a full-time employee with less than €18,000 annually (with reductions for those under 18 or in their first job), and that amongst EU states it ranks as 12th highest when measured as a percentage of average monthly wages and 9th highest if measured in terms of purchasing power parity;

accepting that:

the current minimum wage has not kept pace with average growth in wages or been increased since July 2007;

the 2009 income levy has already reduced the real value of the minimum wage; and

the new universal social charge will be payable on wages at this level;

concerned that 116,000 workers, or 6.6% of the workforce, are living below the poverty line, that the working poor make up 24% of all those in poverty and 40% of all households in poverty, and that the minimum wage is especially relied upon for protection by women, migrants and other vulnerable workers;

noting that only 4% of workers, and only 1.2% of industrial workers in export sectors, are on the minimum wage, with no major impact on competitiveness;

acknowledging the role of a statutory minimum wage in protecting against unfair competitive advantage by unscrupulous employers who exploit their workers;

further acknowledging the opportunity available through the Labour Court, which has yet to be invoked by any employer, to plead inability to pay the national minimum wage;

reaffirming that a statutory minimum wage is a statement of core values, providing a threshold of decency under which society agrees that workers' wages should not fall, and that a reduction would signal a race to the bottom in which everyone — low wage workers, public and private sector workers, social welfare claimants and pensioners — will suffer;

believing that a reduction in the minimum wage will only create a disincentive to work, will have no impact on the public debt or on economic recovery and makes absolutely no sense at any level;

condemning the Government's logic that poverty wages will create more jobs and that welfare rates must be below even those poverty wages, which logic will in turn require major cuts in welfare payments; and

appalled that the Government's four year plan has targeted the most vulnerable members of society and convinced that the proposed reduction in the minimum wage of one euro an hour will have the most profound impact on those who are poorest, deepen their poverty and draw more workers into poverty;

condemns the Government's unnecessary, unwise and unfair decision to reduce the national minimum wage and calls for a reversal of this cut.

Debate resumed on amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"endorses the national recovery plan as a strategy for economic recovery with the aim of restoring stability to the public finances, improving Ireland's cost competitiveness, stimulating enterprise growth and job creation; and in particular recognises that:

the national recovery plan identifies how Ireland's national minimum wage, NMW, has increased six times since its introduction and is now 55% higher than its original level — by the end of 2010 the consumer price index is forecast to have increased by approximately 28% since 2001;

research states clearly that a reduction in the national minimum wage will result in an increase in employment in the medium term;

the reduction in the minimum wage is one element of the labour market reforms outlined in the national recovery plan which also includes the review of sectoral agreements, new labour market activation policies and welfare policy;

NMW workers are concentrated in sectors badly hit by the downturn including retail, hotels, restaurants and horticulture;

the State must act to remove any legislative and policy obstacles to job creation;

even after the reduction to €7.65 per hour, Ireland's NMW remains in the top tier of EU minimum wage rates and the new rate will remain about 12% higher than the UK;

individual employment rights in Ireland have a sound legislative foundation, active compliance systems and robust institutions for adjudication on rights and resolving disputes together with broad social support; and

the Government is providing support for lower income families particularly through the family income supplement."

—(Minister of State at the Department of Enterprise, Trade and Innovation, Deputy Conor Lenihan).

Acting Chairman (Deputy Michael Kennedy)

Deputy Paul Connaughton is the next speaker. I understand he is sharing time with Deputy Bruton. There are ten minutes in this slot.

Deputy Paul Connaughton

Deputy Bruton can go first if he so wishes.

Acting Chairman (Deputy Michael Kennedy)

Will Deputy Bruton accept that generous offer?

Deputy Richard Bruton

I will. I thank the Labour Party for tabling this motion and facilitating this timely debate. If we are to have a proper perspective on the decision to cut the minimum wage, we need to reflect on the entire crisis this country is facing. I do not doubt that we have embarked on a hard road that will last many years, as we try to come to terms with the crisis that has been created by the catastrophic mistakes of policy makers. As people make sacrifices, it is important for them to see that the burden is being shared fairly. That is why the Government's decision to cut the minimum wage, as its first act in trying to confront this country's competitiveness problem, is such an affront. Not only is it cutting the minimum wage by €40 a week, but it is also bringing the minimum wage into the tax net. The new universal social insurance contribution will cost a person on the minimum wage €11.10. He or she will also have to pay income tax of €5.07. It is clear that the combined effect of these changes will lead to a devastating 14% reduction in the standard of living of such a person.

I am sure the Minister of State, Deputy Kelleher, will argue that we need to retain the incentive for people to go out to work. Is it not somewhat ironic that on the day the social welfare payment to someone who is unemployed was cut by €8 a week, the take-home pay of someone on the minimum wage was cut by €48 a week? The authors of the Government's literature on this subject have argued that the replacement ratio — the ratio between social welfare payments and payments at work — is most important. In one stroke, the Government has increased that ratio by 10%. It is now 10% more attractive to stay at home, compared to going out to work on the minimum wage, than it was a couple of weeks ago. That makes no sense as an economic policy or as a social policy.

When one examines this country's competitiveness problems, one should not focus on the least organised section of the workforce, which comprises approximately 3% of those at work. One should focus on the powerful interests that are sheltering huge areas of uncompetitiveness. However, one does not hear a word from the Government about what it intends to do about costs in areas like power generation, legal services or rents. It suggests such areas are out of reach while legislating to sting people on the minimum wage. A recent survey in The Irish Times compared pay levels in the major professions on either side of the Border. It found that there is a huge gulf between what is paid in the North and what is paid in the South. According to the newspaper’s figures, there is a difference of €100,000 in the earnings of consultants on either side of the Border. The differences in the earnings of workers in all professions - The Irish Times surveyed nurses and doctors, etc. — were generally in the order of €10,000 or €20,000. The Government is not introducing a legal stroke to cut rates of pay in those instances, however, because the groups in question are powerful.

I would like to conclude by speaking about the continuing rip-offs in this country. People are being charged more here than in other countries for the same services. Many of the problems that are undermining this country's competitiveness are managed by the Government. I refer to water and waste charges, for example. There is an issue about trying to create more work at low pay. Fine Gael has made two concrete proposals to that end. First, levels of employers' PRSI should be cut by 8.5%, thereby making it cheaper to employ people. Second, VAT should be cut by 1.5% in labour-intensive activities. Those steps would open employment opportunities. People who are on social welfare would have the real alternative of going out to work at low pay. That is the way to deal with it. The introduction of legislation that targets the most vulnerable people in society serves to undermine the social support for the difficult adjustments we are having to undertake.

Deputy Paul Connaughton

I thank the Labour Party for bringing this motion to the floor of the House. I have been here for many budgets. Until a few years ago, one could always rely on Fianna Fáil to do the clever thing — it might not be the best thing, but it would be the clever thing — but it has now lost that ability. I will explain why what the Government has done to the minimum wage is neither right nor cute. I will not refer to the Government's outrageous conduct with regard to the blind, the disabled and the carers, as tonight's debate relates to the minimum wage.

Before these changes were made, if those on the minimum wage worked for 40 hours they would be paid €350 a week, give or take one or two euro. That is what they would get for their week's work. When the Government took €1 per hour from them, it reduced their yearly income of €17,500 by €2,000, which is a huge chunk of a small wage. That is what actually happened. Given that the Taoiseach and the various Ministers lost just €10,000 or €11,000 from their salaries, which can rise as high as €250,000, it is clear that there is no fairness in the system. Regardless of how one examines such a concept, high up or low down, one will not see any fairness in it.

I would like to speak about another huge problem with the minimum wage. I agree with Deputy Bruton that we have to ensure we get the people of this country back to work. While I accept that concept, I do not understand the argument that the reduction in the minimum wage will cause more people to want to get out of the social welfare system and back into work. It must be borne in mind that one encounters many hidden costs when one is in work. As most jobs are not created in one's back yard, one usually has to drive to work. Therefore, one has to pay one's insurance and one's tax. One has to pay for meals and all that kind of thing. I think the Government has forgotten all of that. Those who are earning just €350 a week have no room for manoeuvre.

It is against that background that the 3% of the working population who are on the minimum wage consider themselves to be terribly unfairly treated. Having gone out to work in the first place, as they should do, they cannot understand why the Government is coming along with its hatchet to take €2,000 of the €17,500 they earn each year. The Government should be good to this cohort of workers. If we are to overcome the poverty wedge we are always talking about, we need to ensure those who are on social welfare might take a job if they got an opportunity to better themselves. I suggest the Government is striking the wrong balance with this proposal.

I would like to refer to something else that is worth mentioning. Countless numbers of highly qualified graduates have been coming out of our colleges over the past year or two. Most of those who have jobs, as opposed to being on social welfare or having emigrated, are on the minimum wage. People with such qualifications might find it all right to be on the minimum wage for a couple of months or a year, but they will get extremely sour at some stage. They will leave the country and we might never see them again. That brain drain will be exacerbated by what the Government is doing with the minimum wage.

I have always heard about how important it is to take a rounded view of all of these matters. It has been suggested that sum of the various parts makes for an overall policy that can stand up to scrutiny. That cannot be said of the recent budget on several fronts, which we do not have time to discuss. The reduction in the minimum wage is another aspect of the ongoing race to the bottom. I cannot see it doing any good for the people involved or the employers for that matter because, as Deputy Bruton said, there were 101 other ways to reduce costs that were within the remit of the Government. However, it hit the easiest target, which is what Fianna Fáil seems to want to do all the time.

Deputy Timmy Dooley

With the permission of the House, I wish to share time with a number of colleagues.

An Leas-Cheann Comhairle

They are Deputies Collins, Power, O'Brien and Blayney. Is that agreed? Agreed.

Deputy Timmy Dooley

I welcome the opportunity to discuss this important matter. We debate on a daily basis the economic crisis in which the country finds itself. This is very much to the fore in national issues and in the international circumstances that have brought about the economic crisis.

To an extent, during the various debates on individual topics, we can lose sight of the real issues. We focus a good deal on the banks, the bonds and the various bondholders and on whether there will be senior or subordinated debt, interest rates, coupon values, non-recourse loans etc., while losing sight of the impact the current crisis will have on the lives of individuals and families. Most Members of the House hold clinics on a weekly basis and meet the people on the street. The overriding aspect of all this for me, and I believe for most Members, is the level of unemployment and the scourge that is associated with being out of work.

People can countenance a reduction in pay. We have all had to do it, and rightly so. People can countenance trying to reorientate the architecture of their household budgets, difficult as that might be, but it is being done, in some cases more successfully than others. Some clearly are under considerable strains because of their stage in life relative to the living costs with which they have to deal. There is real pressure on people in that regard, but the overwhelming scourge I see concerns people who are used to a reasonable level of income, with the associated costs, and who now find themselves on the basic level of social welfare, just able to remain outside the poverty trap. At the same time they have the burden of the significant debts associated with house purchase, education, car loans and private indebtedness.

We talk on all sides of the House about job creation and stimulating the economy. Some have various plans, but I do not want to get into this tonight or to be political. However, some of the statements are incoherent and I do not believe anybody has a monopoly of wisdom in this regard. There is a view to the effect that it is not the role of the Government per se to create employment, but rather to have a framework and conditions within which employment is created. I believe the Government is trying to create the appropriate framework, as I am sure its successor will also try to do. Difficult political decisions have to be taken and I do not believe there is anybody on this side of the House who would want to reduce the minimum wage, unless it was being prescribed as an obvious way to deal with the crisis.

I take on board what the previous speaker has said. Deputy Connaughton is a very shrewd politician and a man who has worked extremely well having been successfully elected on many occasions. He is a man I respect. He made a telling point in talking about Fianna Fáil's cute approach and the way we did business in the past. The simple fact is, however, that it is neither politics as usual nor the politics of the past. We are faced with a crisis we never had before. Sadly, we have to countenance methodologies and solutions to problems we did not want, but they are being put forward as necessary for regaining our competitiveness and the creation of jobs in certain sectors. If sectors in the economy are saying a reduction in the minimum wage will allow them to create more employment, then I do not believe any of us has a choice other than to try it out.

Of course, there are issues regarding the so-called average family living on 40 hours a week on the minimum wage. Deputy Connaughton has outlined the impact this would have on such a family. It is worth noting, however, that the family income supplement scheme is in place to protect those poverty traps, and it is a very useful mechanism for addressing such issues. People on the minimum wage are in second jobs in some cases, some of them as casual labourers, others just entering the workforce for the first time. For that reason it may not have the same impact on the family structure. I would argue, however, that the costs associated with remaining outside the poverty trap are addressed through the provision of the family income supplement scheme, which exists to protect the vulnerable family unit.

The overriding concern, however, is to get our competitiveness right. It is not just a question of the minimum wage. There are other escalatory clauses in place through joint labour agreements, EROs, etc. that have to be addressed but nobody wants to do it. However, we have addressed this in terms of public sector pay which was clearly set out as being problematic. We now have the Croke Park agreement which offers some protection for a period of time and, hopefully, that can be maintained. It is a question of recalibrating the cost structures within the economy. I would like to believe this could be done through reducing the cost of electricity, fuel, etc., but labour is a very significant component, and regardless of the electoral consequences, if we are not prepared to do what is right, we are casting a shadow over the lives of the population for years to come.

Deputy Niall Collins

This has been a very interesting debate on the minimum wage. In a way it mirrors a debate we had as regards the €10 travel tax at airports. The reaction, too, is similar. We heard from Ryanair in relation to the airport travel tax that a reduction to €3 was not good enough and would not make any difference. When it was put up to it, it still was not happy, and the reaction to the dropping of €1 from the minimum wage is similar in terms of the reaction from the Opposition parties. I believe we need to see how it works out.

To draw another parallel, no member of the public has ever contacted me to say he or she was opposed to the €10 travel tax. My experience differs slightly as regards the minimum wage. I got one phone call, from a SIPTU official in Limerick. When I was asked to vote against the reduction in the minimum wage, I asked why. I was told, "All the unscrupulous employers in County Limerick will start abusing their employees with the drop in the minimum wage". I replied that this was a serious charge and asked who all those alleged employers were as I would like to take it up with them. Needless to say, there was much huffing and puffing, but nobody was offered up as an example. I told the official I was supporting Government policy on this and that, in fact, I agreed with the reduction in the minimum wage.

As a public representative, however, I also stand for the protection of workers' rights. It has to be put on the record again that over the years — many parties are responsible for this — successive legislation has been introduced to protect workers' rights, for example, the Employment Equality Act, the Health and Safety Act, the organisation of working time legislation, maternity protection and unfair dismissals legislation, protection of employment laws etc. I could list some 40 items of legislation in this regard and it is right that they are on the Statute Book. At the same time, however, we have had other debates in this House in relation to business, its over-regulation and the red tape that is placed in its way of survival on a day to day basis. The people who represent business have been telling us the minimum wage has been a barrier, and we have to strive to remove the barriers from businesses to allow them to remain competitive.

We have made serious strides in terms of improvements in energy and communication costs and infrastructure, and we now have to examine labour costs. I met earlier with a group from the Dell Redundant Workers Association. We discussed Dell in this House. Dell moved to Poland for many reasons, including our uncompetitiveness and labour costs. At the end of the day, if the cut in the minimum wage results in the creation of extra employment for people in the service industry and for students at weekends, it will be a good measure.

The point has rightly been made that a cut in the minimum wage does not mean that those currently in receipt of the old rate of €8.65 will have to take a €1 cut because they have been employed at a previously agreed rate. We must look at other issues that affect small businesses because it is they who are facing the biggest challenges and are paying the minimum wage and local authority charges. In this regard, there is a responsibility on the Fine Gael and Labour parties who control almost all of the local authorities. How many of the local authorities will, at a time when they are drawing up their annual budgets for next year, reduce their commercial rates and waste and water charges, which are hugely critical for business? We are not in charge of the local authorities but Fine Gael and the Labour Party are.

Deputy Jack Wall

We support small industry.

Deputy Niall Collins

We can continue this debate when the House resumes in January, at which time we can review how many of the rates have been significantly reduced. We have to take everything in context. The Government has introduced measures to reduce other barriers to competitiveness. We cannot do all of that and not address our labour costs. I would be happy to come back into this House in a year's time and be proven wrong but I do not believe that will be the case. We had to take the tough decisions. The minimum wage rate issue is addressed in the four year plan.

We also had a debate in this House on zombie hotels. In this regard, I note what Mr. Paul Gallagher, president of the Irish Hotels Federation said, namely, that the proposal to reduce the minimum wage would be a major help in that sector. We cannot on the one hand be asking what will be done to help the tourism sector and on the other not listen to those involved in that sector when they say that the minimum wage is a barrier.

Deputy Seán Power

Deputy Collins said he would be happy to come in here in 12 months' time to debate this issue again. Like many others, I would be delighted to be here in 12 months time——

Deputy Paul Connaughton

I am sure Deputy Power will be here.

Deputy Seán Power

——to debate this or any other issue. I note Deputy Connaughton will bid us farewell in a few weeks time. I take this opportunity to acknowledge his contributions in the House over a long number of years, for which the Deputy has been rewarded by the people of Galway in successive elections. I wish him well.

Deputy Paul Connaughton

Thank you.

Deputy Seán Power

We all accept that we are living in difficult times and that difficult decisions have and will continue to be made for the foreseeable future. The way we do our business here must reflect the change that is taking place outside. Opposition for the sake of it is no longer acceptable. We are discussing the reduction in the minimum wage, a matter in respect of which I have received correspondence, some of it from people who are upset about its introduction. I do not believe for one moment that all Members on the Government side are fully supportive of what has been introduced. Equally, I do not believe everyone on the Opposition side is totally opposed to a €1 reduction in the minimum wage. However, that is how the debate will go tonight, with everyone on this side of the House supporting it while those on the Opposition side who speak on it opposing it and setting out the reasons we should not introduce it. This decision was made by Government following much consultation. As I understand it, this was a big issue during the discussions on the EU-IMF deal a few weeks ago. There is no guarantee that the decision taken by Government will create extra jobs, although I strongly believe it will.

Fewer than 450,000 are currently unemployed. We must come up with imaginative ways of creating opportunities for employment for these people. A colleague told me that the day after this decision was announced he received a telephone call from a man who owns a restaurant telling him he would be a in position to create two new jobs as a result of the cut. I am sure this will be replicated throughout the country. There is no reason people who are currently in receipt of the minimum wage should be affected by this change. I believe this reduction will create opportunities for people. It will allow people to get their leg on the first rung of the ladder or to get their first job. While as I stated earlier, no guarantee comes with the decision, like Deputy Collins, I am confident that in 12 months people will look back on this and say that we made the right decision at the time.

Like many colleagues, as part of my constituency work I meet with people who find themselves on social welfare. In many cases, these are people who have worked all their lives and who have never dealt until recently with the social welfare system. These people tell me they would prefer to work for the same amount they are receiving on social welfare if they could only find employment. It is important that all able-bodied people are given the opportunity of employment. We are all familiar with the difficulties experienced by people who are unemployed, including from a health point of view. Long-term unemployment can eat into a person's self esteem, with people feeling unwanted and like they do not make a meaningful contribution to society. Apart from the money it provides for people, employment gives confidence and a feeling of self worth. Rather than knock this decision for the sake of it, people should analyse it for what it is. The intention was not to victimise people who are unemployed but to create opportunities for employment, thus giving to many people the opportunities so many of us have.

The minimum wage rate of €8.65 was set three years ago. However, it cannot be ignored that the cost of living here has reduced significantly in recent years. This decision was made for the right reasons. This is not an attempt to victimise anyone, either those who are unemployed or those currently working for the minimum wage. I got involved a few years ago with a number of people in establishing an organisation for stable staff. This group of people make an important contribution to an industry which Deputy Wall and I appreciate is important to Kildare and the rest of the country. It was clear to me that what they do is not all about money and that there are many other aspects to their employment which show the contribution they are making.

I support the measure, which I believe was introduced for the right intention. It is hoped it will succeed in creating more opportunities for those people who are currently unemployed.

Deputy Darragh O’Brien

I welcome the opportunity to make a brief contribution to this debate. I firmly believe that during the past few days in particular there were a great many untruths and misinformation in regard to this measure have been put into the public domain. As Deputy Power said, this is about trying to regain competitiveness in our country so as to bring about opportunities in employment. Some of the campaigns on this issue, in particular those run by SIPTU and the bearded ones run by ICTU, have sought to tell people currently in receipt of the minimum wage that their salaries will decrease, which is not true and everyone knows that. I heard many contributions in that regard last week. It behoves all of us in the House to be at the very least straight with people in regard to the situation.

When I left school in the early 1990s I was unemployed for a period. I know what it is like to be unemployed. Who knows what will happen after the next election. I know from talking to people in my constituency and beyond that what we must do is create opportunities for people to get back into the workforce. Opportunities have to be created for people to get back into the workforce. Thankfully, over the past three months, we have witnessed a significant drop in unemployment month on month. There are reasons for that, including emigration, unfortunately, but new jobs have been also created. In north Dublin, more than 3,500 new jobs were created this year. We have rightly had many debates on support for the indigenous SME sector, the cost of business, local authority rates and so on. Local authorities have an important role in this regard. Fingal County Council reduced the rate multiplier by 10% last year, yet this was opposed by Fine Gael. The reduction passed by only one vote, 12 to 11, at the time. Many of the Labour Party and Fianna Fáil councillors supported it and it has made a significant difference.

We have debated reducing the cost of energy but we have to get real and discuss the cost of employing people as well. Many forms of assistance are provided with more than 100,000 on the employment subsidy scheme, which involves the Government directly supporting jobs. The cost of living now is the same as in April 2007, according to the ESRI and independent observers, not the Government. The minimum wage is still the third highest in Europe and it has been increased by 55% since it was introduced, while inflation increased by 28% during the same period. These are cold hard facts, yet some Members say that people's salaries will be cut and the reduction in the minimum wage will be a disincentive to work. The wage for a 40-hour week based on the new minimum wage rate will be €306 compared to a social welfare payment of €188 per week. We must be aware of the social welfare trap in this regard.

The measure will generate nothing for the Exchequer and it is not about the Government trying to make more money. We are trying to make sure we support the businesses employing people in every town and village. We had debates about the restaurant sector and the Sunday premium rates, which have to be changed. This provision is killing businesses, particularly in rural Ireland and rural parts of my constituency. We must address these realities. Regardless of the composition of the next Government, if my colleagues in the Labour Party are in government, they will not reverse the decision because it would be seen as anti-employment, which it would be because it would mean an increase in costs for employers.

The intention is to get people back to work and this measure has been portrayed negatively in the media and political circles. I received text messages from SIPTU, which ran a round robin campaign on this saying we were robbing from the working poor. This change does not affect existing contracts. If anyone in the public gallery wants to discuss this, he or she should put his or her name on the ballot paper and run for election and we can debate it in the Chamber. That is a fact, whether anyone likes it or not. Approximately 1.8 million people are at work. Too many people have lost their jobs in the past two and a half years. It behoves all of us and any future Government, whatever its composition, to provide opportunities to get people back to work. Whether we like it or not, one of the issues is wage costs.

Deputy Niall Blaney

I am delighted to have the opportunity to contribute to the debate on the reduction to the national minimum wage. The Government has received a great deal of criticism for the difficult decisions it has taken in next year's budget. The decision to cut the minimum wage was not easy nor was it simply about saving money for the State. The reduction is about job creation and, more important, job stability while ensuring we have a more competitive labour market. Let us not fool ourselves by playing politics in this Chamber.

I welcome the measures taken in the budget that work towards keeping people in employment and reducing unemployment, especially among young people. I am pleased we are tackling the jobs crisis and taking steps to ensure Ireland becomes more competitive. Deputy O'Brien referred to the fact that 1.8 million people are working. This measure affects only 3.2% of those in employment. SIPTU can forward all the e-mails it wants but it needs to get real and deal with the facts on the ground. We are asking everyone to play a part and I am fully confident we are taking necessary measures to ensure growth and stability in the labour market in the coming years.

Our policy to make the adjustment in the minimum wage is part of our plan to create more jobs. Ireland has been criticised over its high labour costs and we have priced ourselves out of the market. The cut to the minimum wage is not a popular action but it is necessary. The current rate is acting as a barrier to job creation in many sectors. We have witnessed reductions in wage rates across the board in the public and private sectors. Following the adjustment, the rate will remain in the top tier of EU minimum wage rates and it still will be considerably higher than in Great Britain and Northern Ireland. I know all too well about that, given I am a Border Deputy.

I am aware of the problems that people are facing in my own constituency, including unemployment among those under the age of 25, small businesses struggling to pay their workforce week in, week out while, at the same time, trying to remain competitive, loss of custom across the Border and decreasing tourism figures. These issues must be dealt with and, in doing so, we have to get real and do what we can to make the market more competitive. The adjustment to the minimum wage can offer hope to the 4,586 people in County Donegal aged under 25 who are currently on the live register. It can help lower the costs of those hundreds of small businesses operating across my constituency and the rest of this country and bring the economy closer in line with our competitors.

We have experienced massive job losses in the retail, tourism and hospitality sectors and I have been contacted by local businesses about their concerns for the future and their constant struggle to keep their heads above water in the current climate. Our research clearly shows that a reduction in the national minimum wage will reduce the cost of doing business and support an increase in employment in the medium term. The Government is working to support small businesses and those working in labour intensive industries.

I have spoken to many people in my own constituency who are very angry, concerned and worried about their futures and, in particular, the futures of their children. The vast numbers of those aged under 25 leaving Ireland to find work elsewhere is not seen by the Government as a solution to our economic and jobs crises. I strongly believe the decision to reduce the minimum wage, along with a solid plan comprising new initiatives to help those in receipt of unemployment benefits, is a credible solution. The Government is taking the correct measures to create jobs for the future and to protect sectors that are particularly vulnerable during these difficult times.

There is no doubt about the need to make our economy more competitive. Reducing the minimum wage by €1 will ensure we have a more competitive economy. With the labour market beginning to stabilise, this offers us a great opportunity to show we are open for business and that we continue to have a highly skilled, flexible labour force. This reduction will help us maintain our reputation as an excellent destination for businesses. The Opposition has heavily criticised the Government parties for its decisions. However, we are offering realistic solutions that are in the public's interest. The debate on the minimum wage is not new with many groups calling for a cut, including some Opposition parties. This measure has been widely welcomed by groups including the Restaurants Association of Ireland, the Irish Hotels Federation and Chambers Ireland. IBEC also agreed that cutting the minimum wage will help avoid further job losses and loss of competitiveness and the OECD referred to the minimum wage as a structural issue that needed to be addressed.

To conclude, we must get real about the issues involved. Are we serious about getting our economy back into a competitive position or will we just play the usual politics across the floor of this House? I support the Government's amendment.

Deputy Jack Wall

I wish to share time with Deputies Upton, Ciarán Lynch and Jan O'Sullivan.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Jack Wall

I thank my colleague, Deputy Penrose, for putting down this motion on the minimum wage. As he stated in his well-researched contribution, the Labour Party in government will reverse section 13 of the Financial Emergency Measures in the Public Interest (No. 2) Bill if it is enacted. The Labour Party recognises the penal charge that this Fianna Fáil-Green Party Government has imposed on one of the most vulnerable groups in our society.

It is easy to say one wants to create employment. Nobody in this House or outside it wants to do otherwise. However, in this case the Government is using the most vulnerable and least well paid in our society to counteract the number of people who are unemployed, a total of 435,000. One has to wonder how that idea came to the Government. Today, we discovered another situation where the Minister for Finance, who has praised the work he has done to the world, has allowed bonuses to be paid to staff in his Department. In the last few days, he said the bonuses for the AIB workers could not be reversed, yet that was done. I can see where savings could be made that could be put into an impetus package to create jobs, rather than hitting people on the minimum wage.

Consider what has happened in the budget and the taxes that have been put in place by the Green Party in the context of energy services, school transport, fees and so forth. Everything is on an upward spiral. People on the minimum wage must budget their money but if there is a constant strain on them one can see why the moneylenders become involved and why there are so many claims on the Society of St. Vincent de Paul and other such organisations who are working at the coal face. People simply do not have the money to ensure their families survive.

It is easy for Fianna Fáil and Green Party Members to claim that we are anti-employment. That is not true. We want jobs, but we also see daily in our constituencies the hard cold fact that the poor are getting poorer and the rich are getting richer. This Government is doing nothing to counteract that. The people who come to us have problems with their mortgages and all other aspects of life, yet the Government is seeking to reduce their income by another €40. That sum means nothing to a rich man; he might throw it on the table in the church on a Sunday. However, €40 means a great deal to the people who are trying to balance their budgets at the end of the week and trying to ensure they give their children the best possible education and opportunities and that they have a standard of living to which we in the Labour Party believe they should be entitled.

However, the Government decided to hit them, and did so because it believes they will not fight back. They will fight back through the Labour Party. We will reverse that decision and ensure these people are given an equal opportunity to educate their children and ensure their families and communities survive. Together we can move forward in a positive manner rather than with the negative attitude displayed by the Government and some of its speakers this evening.

Deputy Mary Upton

I welcome the opportunity to speak on this motion. The Government's measure makes no social or economic sense. There is no social argument, based on fairness or anything else, that justifies cutting the incomes of the lowest earners in society. Instead, it has been framed as an argument about competitiveness that is influenced by a certain ideology, which believes that those on the lowest pay in our economy are making it uncompetitive.

This move will not create jobs or reduce our deficit or debt burden. It will increase inequality and trap more working people in poverty for the sake of an ideology. That ideology ignores the enormous social costs associated with poverty and inequality, which cannot be measured on a competitiveness index. The argument about competitiveness implies that we all benefited from the economic boom and consequently we must all share the pain. It also implies a belief that lowering the pay of the lowest earners in our society will remedy a decade of spiralling prices for everything from utilities to household essentials. It is noteworthy that competitiveness was not of much concern to the Government when it inflated a housing boom that drove up prices to such unsustainable levels.

Competitiveness has only recently become a concern for this Government but it has long been a concern for the minimum wage earner. The people on the lowest incomes understand competition better than anybody and they certainly know how uncompetitive our economy is. They know that the relative prices of essentials such as the contents of the weekly shopping, health care, transport, electricity and housing are all vastly more expensive here than in comparative countries. These people are also the most sensitive to price increases. When prices were rising faster than their wages, their living standards declined. Now their pay is to be cut ahead of the decline in prices, causing a similar decline in living standards.

They know how competitive the labour market is too, because if they have a job, they are told how lucky they are to have it. If they are unfortunate enough to lose their job, the social safety net of the dole is also being cut to "make work pay". Where are all the jobs going to come from to make work pay for the hundreds of thousands on the dole? How will work pay when one's basic wage is cut, yet the prices one pays in the shops stay the same or barely fall?

Consider something as fundamental as health care. Unlike Britain, with whose pay and welfare rates ours are commonly compared, we do not have a national health service. We have a two tier system, encouraged by this Government's policies of tax breaks on facilities and free transfers of State land for building, that reinforces a system of haves and have nots. In Britain one is not required to pay between €40 and €70 for a general practitioner visit, fees for a repeat prescription or €100 accident and emergency fees. Without an acknowledgement of this context, it is simply disingenuous to suggest one is comparing like with like.

If the Government was serious about competitiveness, it would do something worthwhile about the real costs facing business. In the past ten years there have been runaway increases in electricity, gas and waste costs, yet nothing of substance was done to tackle them adequately. There is still nothing of substance being done. Instead of making the difficult decisions in these areas, pay cuts are being imposed from the bottom up.

This decision has been described as another hard decision that had to be taken in the national interest. This Government appears to revel in its self-imposed role of hard decision-maker. It seems to believe that if a decision is hard, it is fair. It speaks constantly about hard decisions in the national interest, as if cutting the wages of the lowest earners will help those same low earners. There is no social justification for this move and the economic argument is hollow. A race to the bottom on wages serves nobody. We cannot compete on cost in a range of globalised industries, and the Government knows this. Indeed, it has framed its economic policies around this fact. How many times have we heard the Government state that our economic future lies in the smart economy, where we will compete in the fields of innovation and ideas, rather than a race to the bottom that we cannot win?

Finally, can a smart economy be based on inequality? Is reinforcing inequality smart? Is trapping the working poor in poverty smart? The answers are clearly "No", yet the Government is determined to make another decision that makes no sense and cannot be justified.

Deputy Ciarán Lynch

I thank my colleague, Deputy Penrose, for bringing this important motion before the House. The decision by Fianna Fáil and the Green Party to reduce the pay packets of minimum wage workers in this country by 12% is ill conceived, is badly thought out, and is detrimental not just to the future of minimum wage workers, but of all workers in the country. It is saying something to say that this is one of the stingiest decisions ever made in this House, considering the decisions the Government has made in recent times.

Many Members have referred to the direct impact it will have on people who are currently earning the minimum wage. I would like to look at this from a different angle. The measure cannot be examined in isolation, when we look at some of the finer details included in the EU and IMF documentation. If we look at that document and at what is happening to the minimum wage, then we see the greater strategy falling into place. Among the structural reforms we have signed up to in the IMF document is the movement towards the elimination of a cap on the size of retail premises, "with a view to enhancing competition and lowering prices for consumers", as the plan puts it. If we take these two measures together, namely, the reduction in the minimum wage and the change in the existing retail planning guidelines, we cannot avoid the conclusion that the Government is preparing the ground for international multiple chains like Walmart to come into Ireland, by slashing the prospective wage bills of these companies and easing the regulatory framework in which they will work. Of course, we should not ignore the fact that many of these companies will be acquiring lands that are in NAMA and will end up being a bailout to the type of friends that Fianna Fáil acquired over the last decade.

Not only is the reduction in the minimum wage a step too far, it is also a step in the wrong direction. It will have seriously negative ramifications for the existing retail sector, workers in the retail sector, and the broader community. A Goodbody study that was published in recent times shows that the economies of scale in food retailing are exhausted at 2,000 sq. ft. The research also shows that moving towards hypermarket formats inevitably lead to job losses. It is curious to see that the minimum wage provision included in the IMF deal was in there at all. It is unclear at whose behest it was included . The Minister for the Environment, Heritage and Local Government states that Ollie Rehn insisted upon it, the Taoiseach stated it was a Government decision, but the fact is that it is in there.

The Government's amendment to the Labour Party proposal this evening refers to the minimum wage being good for the retail industry. However, workers did not want to see a reduction in the minimum wage and employers did not want to see a reduction in the minimum wage. In its own submissions to the Government, the retail industry stated that it did not want to see any change to the minimum wage, rather reform in the area of the JLCs. However, it has been put on the table by the current Government. The biggest issue facing the retail industry is the tyranny of upward-only rent reviews. That is what is causing jobs to be lost in this country. Thirty thousand jobs have been lost in the retail sector in the past two years because of the Government's choice not to deal with the tyranny of upward-only rent reviews.

No doubt we will hear this evening that the slashing of the minimum wage will create more jobs, more competition and will lead to cheaper products, but at what price? Any proposed move to cheap labour and out-of-town retail hypermarkets will sound the death knell for small and medium shops in towns, villages and high streets across the country. How on earth will local companies be able to compete with cheap employment, cheap rents and unregulated planning guidelines that allow companies like Walmart to create a devouring mechanism within the retail sector? This will drive sustainable and good employers out of the industry, and create greater unemployment levels.

The decision by the Fianna Fáil Party and the Green Party to reduce the minimum wage this evening is not just an attack upon existing jobs and working conditions in those jobs, but also an attack upon existing businesses that are struggling against the tide to stay afloat in these tough economic times. We are seeing a softening up of the existing workforce — not just those on the minimum wage — for lower wages in the future by the type of deregulation that has got this country into the mess it currently finds itself.

Deputy Jan O’Sullivan

I am sorry Deputy O'Brien and Deputy Blaney have left the Chamber. What Deputy O'Brien said is not true. Deputy Penrose and Deputy Wall have clearly stated tonight that the Labour Party will reverse this decision. The decision to reduce the minimum wage is a core issue for us. Our motion refers to the threshold of decency and that is what this is about. Deputy Lynch has spoken just now about the agenda that is really at work here, which is not just about the minimum wage. We do not subscribe to that agenda.

Deputy O'Brien spoke about the difference between the person who works for 40 hours per week and earns €306 and the person on welfare who gets €188. That is absolutely pathetic and is not where any of this should have started. This should have started at the top. This is about cutting people at the very bottom of the scale on welfare and on income, and it is not acceptable. Before I came into this Chamber, I had to leave a meeting with the Dell redundant workers group. I said to the people with me that I had to come in here to speak about the minimum wage. The man sitting beside me said: "They want me to work, but I will lose my mortgage interest relief and my medical card to work for €306 a week." On top of that, these people will now be included in the universal charge as well.

This decision is coming from people who are not living in the real world any more. The real world is about people who are struggling to make ends meet. Last night, Deputy Penrose pointed out that electricity prices, bus fares, prices for bread, coal and milk, rent and so-called voluntary contributions for school have all gone up significantly since 2007. These are things on which people spend their money and they will now have to struggle on these lower levels of income.

The Minister for Enterprise, Trade and Innovation stated last night that "According to the latest figures from the CSO for the second quarter of this year, the minimum wage rate now applies to about 3.2% of the workforce and has a disproportionate effect on employers in the hospitality, retail, manufacturing and horticultural sectors." What has so much more of an impact on those sectors, particularly the first two sectors, is the fact that people do not have money to spend. People on the minimum wage and welfare have to spend all their money in the local economy because they have to spend it, otherwise they will not survive. They are not putting money away to go on holidays. They are not the people we saw on "Reeling in the Years" from 2007 who were going off shopping in New York. Deputy Rabbitte made the point that the comparison made with 2007 was at the top of the boom. We are talking about people who are struggling to survive in our economy. Are we saying that the people who work in the backbreaking horticultural sector must do so for a wage of just over €300? As Deputy Shortall pointed out, the actual pay of those workers is less than €300. This is not acceptable in a civilised society.

We are really talking about a two tier society, where we are suggesting that the people in the lowest jobs — often the hardest jobs — are somehow different from hospital consultants and the people at the top of the Civil Service and the private sector, who somehow need all this extra money to survive. It seems we cannot go attacking them, so we have to start at the bottom with people on the minimum wage. We should not be starting at the bottom, but at the top. If the country is in the kind of trouble that it is, which was brought about by Fianna Fáil, then it is the people who can afford to pay who should be paying, and not the people at the bottom of the ladder. The Labour Party emphatically states that we are totally against this measure and we will reverse it when we are in government.

Deputy Martin Ferris

I wish to share my time with Deputies Finian McGrath and Maureen O'Sullivan.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Martin Ferris

I welcome the proposal from the Labour Party. Sinn Féin Deputies will stand with anyone in this House who is prepared to defend the rights of the people most marginalised and discriminated against in our society — those on the minimum wage.

I would like to read a letter from IBEC to the retail grocery and allied trades joint labour committee.

Dear Chairman,

As an employer member of the Joint Labour Committee for Retail Grocery and Allied Trades, I am making a formal request to the Chairman to arrange a meeting of the Committee as soon as possible.

This request has the support of the employer members of the Committee.

The purpose of the meeting request is [. . .]:—

"To seek a temporary deferral of the pay increase due on 1 January 2011 which is provided for in SI 448 of 2010, pending the imminent review of Employment Regulation Orders which is part of the National Recovery Plan, and in the light of the implications of the reduction in the National Minimum Wage."

Deputies can see that already some employers are circling with the intent of further exploiting workers in our communities.

It is difficult to stand here and hold one's temper when one reads that an AIB executive received a bonus of €161,000. A person on the minimum wage who works 40 hours a week will earn around €16,000 per year, so that bonus is the equivalent of ten people's yearly incomes on the minimum wage, plus €1,000. What I find hard to stomach is the support of the Green Party for the Government. Deputies Gormley and Sargent said that the cut in the minimum wage was forced on the Government as part of the IMF-EU bailout. This has been denied by others, but I will not get into the ins and outs of it. What is clear is that measures such as cutting the minimum wage, slashing social welfare, attacking the wages of other workers, decimating the public service and, probably, selling off State assets to its friends are all part of the deal made by the Government with the IMF.

This week a constituent of mine — a single parent on the minimum wage — came to my constituency office. During the worst of the weather over the past two weeks, she had no money to pay for heating oil for her home. She was so desperate that she had scrabbled together €5 or €6 to buy four gallons of heating oil. That is what is happening out there. I listened to Deputy Gormley saying last week that he totally opposed what the Government was doing, but then he voted for it. He voted in favour of cutting the minimum wage and driving people further and further into poverty and depression.

What we badly need is consensus — not a consensus for cuts, but a consensus to defend workers' rights and the minimum wage, to stand against the cuts being proposed by the two parties of the Government, and to stand by the rights of the working poor. Let us take a leaf out of James Connolly's book. I am looking at the Labour Party Members as I say this. Connolly said at one time in his life, "Organise, educate, agitate." It is time we organised against this Government and against the establishment that is part of the consensus for cuts. It is time we educated the people of this State about the wrongs of the system and what it is doing to the ordinary, decent people of this land. It is time we agitated by taking to the streets and defending the rights of the workers. I pledge on behalf of Sinn Féin tonight that this is what we will do. We will defend the workers and the minimum wage and we will defend the working poor. To hell with the €161,000 bonuses for AIB executives.

Deputies

Hear, hear.

Deputy Arthur Morgan

Well done. Good stuff.

Deputy Maureen O’Sullivan

The Minister for Finance informed us a week ago that Irish banks had repaid €68.8 billion to senior bondholders and €1.4 billion to subordinated bondholders as their full debt fell due under the two-year blanket guarantee. Why? They gambled and took risks, knowing that loss was part of that. Yet we are cushioning that loss and, in the same breath, we are reducing the national minimum wage. Those on the minimum wage, the working poor, low-income families with children and people on social welfare are all being hit with tax increases and cuts in child benefit and rent supplement. They will be also affected disproportionately by other aspects of the four year plan, with reductions in funding for education, health care and the community and voluntary sector. Organisations that work with those people are expressing their concern. The Society of St. Vincent de Paul says there has been an increase in calls of up to 50% in certain regions. Figures from the Central Statistics Office for 2009 show that levels of consistent poverty rose in 2008, as did the number unable to afford basic requirements. That was before the impact of the 2010 budget, never mind this one.

While we are talking about cutting the minimum wage, we are also talking about bonuses. Which part of the words "recession", "downturn" or "economic disaster" are not understood by those giving and receiving bonuses? The word "bonus" should not be in our vocabulary for the foreseeable future, and I call again for bonuses to be eliminated. We are told there was justification for a bonus for those whose salaries were cut by 17%, but where is the equivalent treatment for those taking cuts in the minimum wage and social welfare? We were told that those showing exceptional merit in the Department of Finance deserved an extra bonus, but real exceptional merit will be shown by those on low and middle incomes, on social welfare and on the minimum wage in coping with life.

High salaries, bonuses and expenses are alive and well because of the lack of a real social conscience in this House. Sacrifices are being asked of those on social welfare, those on the minimum wage and those on low and middle incomes, but they are not being asked of the corporate sector and the rich elite.

Deputy Finian McGrath

I thank the Leas-Cheann Comhairle for the opportunity to speak on this important motion on the minimum wage. It was a disgrace to cut the minimum wage by €1 and to take €8 from the blind and disabled in the budget. The cuts to social welfare were an attack on the weaker sections of society. This should never be part of any plan to sort out the public finances. The poor and the weak should never have to pay for the actions of the reckless, who have destroyed the economic heart of this country. That is why I am supporting the motion. Imagine the brass neck required to cut the income of someone who is on €18,000 per year. There are 116,000 such workers, and 6.6% of the workforce are living below the poverty line. A total of 4% of workers and 1.2% of industrial workers in the export sector are on the minimum wage with no major impact on competitiveness. It is time the Government came to live in the real world. It should lay off these people. Even setting aside the grave injustice of this cut, it makes no sense at all and will have no impact on the public debt or on our economic recovery. It is "Father Ted" economics, which will drive more people onto welfare. That is the scandal of this debate. These measures will have a profound impact on those who are poorest, which is totally unacceptable. In a recession, or in any dogfight to save our country, the strongest should always pay. Hammering the low-paid should never be the easy option.

Tonight's motion makes reference to core values and decency. It is not fair or decent to slash the minimum wage of low-paid workers, public or private, full stop. Let us not drive a wedge between private sector and public sector workers, as some politicians and media commentators are trying to do. We must all be aware of the new right-wing agendas that are surfacing in this crisis. Let us remind those involved that it was their extreme ideology that caused this economic mess in the first place.

I urge all Members of this House to support the motion and to stand up and be counted on behalf of the 4% of the workforce who are being hammered by the cut in the minimum wage. Enough is enough. Let us support this worthwhile motion.

Minister of State at the Department of the Taoiseach (Deputy Dara Calleary)

I thank the Deputies for their contributions over the past two nights. I reiterate the Government's intention to restore the national minimum wage to a rate more suited to our present economic circumstances and the specific needs of the labour market today. This shows we are determined to support job creation and restore competitiveness to our economy. Unless steps are taken to address labour market inflexibility now, it is likely to inhibit employment growth in Ireland and lead to a further loss of competitiveness in the coming years. We must move now to maintain existing jobs and actions taken by Government and business during the past two years have allowed us to regain much of the competitiveness we had lost. Such action will now provide an essential basis for future growth. The national recovery plan includes structural reforms to sustain this process.

We realise work is the best route out of poverty and that it prevents people from falling back into poverty in the future. Employment allows people to provide for themselves, their families and their future incomes. The fact is where a national minimum wage is imposed at an excessively high level relative to the specific circumstances of an economy, unemployment will tend to be higher than it should be. This is especially the case for younger people, who can be denied the opportunity to work by an excessive national minimum wage.

Our priority as a Government is to encourage job creation and labour costs must be a key consideration in this regard, especially in sectors with high labour intensity. Legislative changes will allow the Minister for Enterprise, Trade and Innovation to set a new national minimum wage and to give effect to the Government's decision to reduce the minimum hourly rate where necessary to alleviate this situation.

Some Deputies have argued that the Government picked the wrong target in reducing the national minimum wage and that the range of sectoral minima determined by employment regulation orders and registered employment agreements should have been tackled instead. However, the national recovery plan includes provision for a formal review to be undertaken of our statutory wage setting mechanisms within a short timeframe to assess the effectiveness or otherwise of the current structures. The proposed review will take into account the views of the parties to registered employment agreements and employment regulation orders, as well as the variety of means through which these arrangements can evolve as a more streamlined, transparent and flexible means of wage-setting. The precise terms of reference for the review will be agreed shortly but it will involve an opportunity for all Oireachtas Members to input directly.

In arguing that the Government should have limited its focus to the wage fixing machinery that sits on top of the national minimum wage, people fail to take into account the analysis provided by Forfás which highlighted how the national minimum wage serves as a floor for wage setting for a wider range of employment through the mechanisms of employment regulation orders, EROs, and that the ERO process delivers a premium of approximately 5% over and above the national minimum wage. This is simply one illustration of the way in which the national minimum wage interacts with other sectoral wage fixing mechanisms and with collective bargaining generally.

The OECD economic survey of last year recommended that action be taken on the national minimum wage to better reflect changing economic circumstances and reduced labour demand. The report stated:

While firms may have been able to sustain high rates of pay when demand was strong enough for high labour costs to be passed on to customers, this will be more problematic when demand is weak.

As nominal wages fall significantly, it is important that the minimum wage is adjusted to maintain its relative value and not add to downwards pressures on employment. Around one tenth of workers earn less than €10 per hour: these low-wage workers are the most vulnerable to the minimum wage becoming binding as overall wages fall. This proportion is around one third in parts of the services industry.

The OECD also urged that such action be complemented by a review of the sectoral minima which I have just outlined.

During the debate in the House last Friday, I stated that a range of protections were in place for workers, among the highest in the European Union, including a range of legislation and the existence of the National Employment Rights Authority. All concerns expressed by Deputies with regard to this issue and the genuine concerns held by every Deputy about exploitation can be dealt with through these fora. The Labour Court will continue to play a central role in the governance of the national minimum wage. However, the measures supported in this House last week also contain a proposal and provision for the Minister for Enterprise, Trade and Innovation to make a direct call on the minimum wage and to do so in a quicker manner. I fully accept that this decision is difficult. However, we must respond to the changed circumstances in the Irish economy and ensure we take immediate steps to encourage the fostering of employment within the economy.

Deputy Seán Sherlock

I wish to share time with Deputy Michael D. Higgins. I propose to take approximately seven minutes. I refer in the first instance to the Minister's speech on budget day. He stated: "In the measures I am presenting today those on the new reduced minimum wage will not be brought into the tax net". If ever there were a case of misleading the House, that was it. Some four pages later, the Minister introduced the universal social charge, which was defined in the financial resolutions that came after the budget speech as a tax. It is a tax of 2% on income from zero to approximately €10,000, 4% on income between €10,000 and €16,000 and 7% on income from €16,000 upwards. Not only have those concerned suffered the reduction in the minimum wage rate of itself but they have been brought into the tax net and must suffer the double whammy of the universal social charge, a tax, on top of it.

To give an idea of the logic and an insight into the mind of the Minister, I refer the House to the debate on the Financial Emergency Measures in the Public Interest Bill of Thursday, 9 December in which the Minister stated:

The Government decided that the pay of the Taoiseach and Ministers should be cut again. When combined with the changes in taxation and PRSI in the budget, their pay will drop by an equivalent percentage amount . . .to the reduction applied to the minimum wage.

Such is the logic that dictates how this Government works. It is the logic of a Government that has thrown out the window the idea of poverty proofing any taxation or budgetary measure. It is high time it was booted out of office and that a Government comprising the Labour Party was brought in so that we can reverse these measures and restore some degree of equity. What the Government has done to people working on the minimum wage is grossly unfair; there is no other way of putting it. It is contrary to any canon of taxation and to any republican ideal that we may hold in terms of how one treats workers in an economy, especially those on the margins and the low paid. It is grossly unfair and it should be reversed.

When the Labour Party launched its budget proposals two weeks ago, reference was made to the impact of the national minimum wage and the Government strategy for job creation. According to the most recently available statistics, 41% of those on the live register have a manual, craft or industrial background. One third of those aged between 15 and 24 years who have remained in the labour force are unemployed. We are concerned that 116,000 workers, some 6.6% of the workforce, are living below the poverty line; that the working poor make up 24% of all those in poverty and 40% of all households in poverty; and that the minimum wage is especially relied upon for protection by women, migrants and other vulnerable workers.

A total of 68% of those earning the minimum wage work in the hotel, catering, retail and wholesale trades. Low or no employment growth is anticipated in these sectors in future because there will be a permanent contraction from boom-time employment levels. Consequently, a cut in the national minimum wage will not lead to any direct job creation. It is expected the primary areas in which jobs will be created in the coming year are financial services, insurance, business and communications services and health and ancillary care services, all of which are non-minimum wage sectors.

The Irish labour force has already proved itself adaptable and flexible. The decline in unit labour costs has exceeded the decrease in consumer prices, producer prices and GDP by 11.2% between 2008 and 2010. In manufacturing, the real effective exchange rate is expected to be down 20% between 2008 and 2011. Lower paid manual and craft jobs have been hardest hit by the reduction in gross earnings of -9.75% between the end of 2008 and the start of 2010.

The Government's strategy is to use supply side solutions such as cutting social welfare benefits and the national minimum wage to address a demand-led problem in a slumping economy. This is an illogical, incompetent and bogus argument for those who rely on the minimum wage.

Deputy Michael D. Higgins

I am pleased to have the opportunity to conclude this debate on behalf of the Labour Party. As the party's president, I am proud it put down this motion defending those on the minimum wage. The Labour Party has also made it clear that when it enters government, the order to reduce the minimum wage will be rescinded. I pay tribute to my colleague, Deputy Penrose, who prepared a researched alternative proposal to reducing the minimum wage. I thank Members of Fine Gael, Sinn Féin and the Technical Group for the support they have given to this Labour Party motion.

There have been some excellent speeches on this motion. I thank all my comrades in the Labour Party for the different views they have presented. No one disagrees the economy has been brought to a point of near destruction by a small group of unscrupulous people in the banking sector. The economy could actually be saved in a relatively short time, irrespective of the Government's proposals, if it were just about deficit.

Since November 2008 and the banking guarantee, however, the consequences of the actions of a small group of bankers, fewer than 100, were joined to the problems of the economy. This is the small group of people who sat on each other's remuneration committees, several of whom were members of five different boards. This group really brought this economy and society to its knees. Now, we see these very same people swanning around the Continent with relative impunity. May that impunity soon come to an end.

The Government repeats a series of allegations and assertions about the minimum wage that are simply untrue. It claims Ireland has the highest minimum wage rate in Europe. It does not. In fact, it is between the sixth and ninth highest minimum wage in the EU. If child care and housing provision, for example, were factored into it, one would find the rate was further down the European ladder. Neither is there any connection between reducing the minimum wage and decreases in unemployment. Reducing the income of those on the minimum wage and taking €150 million out of the economy will actually have a deflationary effect which will, as a consequence, lead to further job losses.

Those on the minimum wage know where every cent goes and are forced to spend their income not on luxuries but to survive. On the other hand, those at the very top, on whom Fianna Fáil and the Greens refuse to put a higher separate tax rate, do not spend all their income to survive. They are the ones who enjoyed the €11 billion in tax escapes for the past several years. Why will the Government not start there?

I am most attracted to the concept of the social floor. We regularly insult language by saying we live in a Republic. We do not. If we had any version of citizenship, there would be a social floor for health and housing for example, a threshold below which no citizen would be allowed to fall. Amartya Sen, the Nobel laureate in economics, claims the test of one's citizenship is one's ability to participate in society without shame. The minimum wage is about the right of people to go about the ordinary things one should be able to do in a free and decent society, be it education, health or housing. Those who cut the income of those on the minimum wage are visiting poverty on those earners and their children. That is a disgrace. Words are like ashes in their mouths when they say "treat all the children of the nation equally". How can a mother on the minimum wage treat her child the same as everyone else when she loses €40 a week out of her basic wage of just over €300.

Who are those on the minimum wage? Up to 60% are women working in the hospitality and retail sector. Many of them are migrants, the very people we have humiliated enough already. They are also caught in that grey and dark area of the home-care industry.

There is a myth that the minimum wage is stopping Ireland coming out of recovery. How dare the Government make such an assertion? As one who has dealt with social statistics all my life, I have seen not one jot of evidence to substantiate this claim. As our economy recovers, one test must be to examine how much more inclusion can be made possible. That is why we must transfer income through taxation. How much exclusion is a consequence of current taxation policy? Every euro taken from those on the minimum wage creates exclusion in spending that will have a knock-on employment effect and will drive them and their families further into poverty.

There is a cynicism in all of this debate. For those who earn over €200,000 a year, the new combined PRSI and health levy will save them money while everyone else pays more. This is cynically referred to as an anomaly. Is it not an anomaly that the Government has gone after the poorest in society?

What kind of a message does this send out? The minimum wage is used as a standard for other wages in other sectors of the economy. The reduction in the minimum wage can be used as a battering ram against all sectors. Once it goes down, everyone else's wages along the scale will come down too. That is why those on middle incomes should stand with those dependent on the minimum wage. If the Government goes after those dependent on the minimum wage this week, next week it will certainly go after the middle-income earners.

The very last people the Government will ever go after, however, are the non-executive directors, the dining club members. These are the people who put the poison from their own little companies into the Financial Regulator's office, the Central Bank and the Department of Finance. They now sit around with their failed version of the economy for which generations will pay.

It is time for a debate on restoring the economy and, more important, putting ethics back into society. It is time we linked the economy to society to insist no child ever goes hungry, that no woman on the minimum wage must worry about how she will compensate for the school trip she promised her child but was forced to cancel because it was too dear. It must be a society in which a father is never forced to go home without anything to offer his children. Those are the conditions of the poor charted by Seán O'Casey. That was Seán O'Casey's Ireland. He, of course, was unlike the Seanie who plays golf with other notables and who could get a public servant to say to him, "Right on Seanie. Fair play to you."

To those who want a debate on reviving the economy, it must be a reasonable one about matters that are above the line of necessary citizenship. Let us agree that is what a real republic would be if we were making a beginning. Let us agree on the line below which no one will be allowed to fall. Let us agree it should be there to protect from birth to old age. Let us do it in the education sector by stating that every child shall be entitled to an education. Let us also do it concerning other things, such as public participation. When we begin to do that, democrats can debate the shape of the Republic. Until we do so, however, the Government will be making one shameful adjustment after another. What is the Government really saying? Those who vote to reduce the minimum wage are saying that the people who are dependent on it are of less importance than others in society. As a republican and as a socialist, I condemn that attitude. That is why I am proud to ask everybody in this House to support the Labour Party's motion.