Vol. 1026 No. 2
1. Deputy Louise O'Reilly asked the Tánaiste and Minister for Enterprise, Trade and Employment when workers can expect the progression towards a living wage to begin; the estimated timeframe for its delivery; if he will outline the benchmarking which will be used to calculate a living wage; and if he will make a statement on the matter. [43739/22]
When can workers expect to see some serious progression towards a living wage? Will the Tánaiste outline the estimated timeframe for delivery and the benchmarking that will be used to calculate it? We can all agree we are in the middle of a cost-of-living crisis. This is going to have more of an impact on those workers on low pay than on those who are not. They do not have a cushion or savings. They are the people most desperately in need of that protection.
I thank the Deputy for the question. We want to reward work and ensure that work pays more. Minimum wage workers are among the hardest working people in Ireland and deserve to paid more, particularly at a time of rising prices. Yesterday the Government accepted the Low Pay Commission's recommendation to increase the national minimum wage by 80 cent to €11.30 per hour commencing on 1 January 2023. At least 164,000 people will be in line for an increase but the real figure is likely to be much more, given that there will be knock-on increases for those currently earning slightly above the minimum wage. It works out at roughly €30 a week, €120 a month or €1,600 a year if working full-time. As the Deputy is aware I want to move from a minimum wage to a living wage so that work pays more. I outlined proposals back in June after which we started a public consultation seeking submissions from the public on the Low Pay Commission's recommendation and our straw-man proposal. That provides an example of how a living wage might be phased in over four years. The public consultation closed in August. It received 46 submissions. The work of an interdepartmental working group and public consultation results will inform a final Government decision on the adoption of a living wage over a specified number of years. I hope to be able to make an announcement on that this month or next. The new national minimum wage of €11.30 is in line with the living wage straw-man proposal. As such, next year can be considered the first year of a four-year plan to reach a living wage calculated at 60% of the median wage.
The progression towards the living wage is a commitment given in the programme for Government. I acknowledge the advances that have been made by the Department of Enterprise, Trade and Employment, specifically in regard to the straw-man proposal and the public consultation. As the Tánaiste is aware, however, the 80 cent increase in the minimum wage was recommended by some, but not all, of the members of the Low Pay Commission. When are workers going to see a very real move towards the living wage? The Tánaiste has given himself time to do it but events have overtaken the announcement he made in June. People are in a serious crisis at the moment. What they need to see is a step change quickly towards a living wage. Will the Tánaiste also, as in my question, outline the mechanism by which he will calculate that living wage when eventually we get there?
I thank the Deputy. The recommendation was made by a majority vote of the Low Pay Commission. Two members dissented but eight or ten were in favour so a very clear majority was in favour of this recommendation. What we will see next year is a not insignificant increase. It brings us closer to the 60% median, not as close as the Deputy or I would like, but it does bring us closer to the 60% median so we are on the right trajectory. The sum of €1,600 a year is not a small amount of money. It is enough perhaps to pay the rent or mortgage for a month. It is enough, depending on how far a worker travels, to fill the car for several months. It is not an insubstantial amount of money but also it is not the limit of what we are going to do to help people on low pay or on minimum wage. It is just the start. There is going to be a good deal more. This will be seen in the budget, particularly in what we will do to help people with energy bills and welfare increases. We will take other actions as well.
It will not pay the rent in my constituency and I doubt it will in the Tánaiste's constituency either. It is not that I do not acknowledge that there is a move. However it is not adequate. It goes without saying that I agree with the minority report of the trade union representatives. The majority may have voted in favour of the 80 cent but the workers' representatives on the commission did not. That tells a tale in itself.
If the Tánaiste sticks with the timetable as outlined, the commitment given in his programme for Government will not be realised. He has pushed it out to beyond the end of the term of this Government. If he is going to put something into the programme then there should be a realistic timeframe for introducing it and he has pushed it out beyond the term of Government. How can people take seriously commitments given in the programme for Government if those that affect low-income workers and the people who most need it are going to be pushed beyond the end of the lifetime of the Government?
I take the Deputy's point but I have to bear in mind other impacts such as the cost on small businesses. All of the employer representatives favoured the 80 cent increase. That is not to say that all employer organisations do by any means. Many have been very critical of the increase yesterday. All of the independent and academic members favoured the increase, as well as one of the workers' representatives. I always have to bear in mind that I do not want to increase the minimum wage to the point where businesses cannot survive any more and are forced to lay off staff or cut hours. I do not think that will happen with an 80 cent increase by the way. I think we will see a further increase in employment next year but it is something we have to bear in mind. That is why the recommendation is for a four-year introduction period. It can be quicker, I am certainly not ruling that out, but that will depend on economic circumstances. I do not think anybody would say that wages should just go up or down regardless of what may be happening in the wider economy or the wider world. We need some flexibility in that regard.
2. Deputy Aodhán Ó Ríordáin asked the Tánaiste and Minister for Enterprise, Trade and Employment the actions that his Department plans to take to quantify and address the threat to jobs created by the massive increases in costs for energy-intensive enterprises across manufacturing, hospitality, tourism and other service industries. [45080/22]
I wish to ask the Tánaiste about what is probably the biggest issue the Department will face over the coming months, which is rising energy prices and their impact on small and medium enterprises, SMEs, and the potential knock-on impact on employment. What sort of analysis has the Department made on the potential impact on employment in the coming months? What supports will be put in place to prevent businesses going under and unemployment increasing as a result of that?
It is fair to say that the Government has not been found wanting when it comes to helping businesses to get through difficult periods and indeed saving jobs. The multibillion euro financial assistance provided by the Government during the pandemic was unprecedented whether it was to help businesses with their wage bills so that they could keep staff on, or their overheads, or with the introduction of a cheaper easier way to restructure and survive that examinership. The commercial rates waiver and the reduction in VAT for the hospitality and retail sectors are other examples. I am conscious of how worried businesses are as they go into the winter and the real concern about energy costs. Putin’s invasion of Ukraine is having significant consequences for the whole of Europe and not just Ireland. We are working on new proposals to help businesses with rapidly rising energy prices and I expect to be in a position to make announcements about these in and around budget time.
We will also be looking to raise awareness around energy efficiency, helping businesses to reduce the amount of energy they use in the first place and improving take-up of approximately 20 different schemes we have already have in place for business. For example, in June we announced a new €55 million green transition fund to help businesses move away from fossil fuels and towards more sustainable cheaper alternatives. To date, about 120,000 people are directly employed in gas-intensive manufacturing sectors. That is where 40% of final energy consumption is in the form of gas. Gas-intensive manufacturing sectors include the basic metals and fabricated products subsector, chemicals and man-made fibres subsector, which includes the pharmaceutical plants, food and beverage subsectors as well. This represents 41% of the total final gas consumption nationally in 2020 and the majority of industry use.
While it is useful to consider the numbers employed and the energy intensity of the economic sectors to gain a broad understanding of sectoral exposure to energy, it would be incorrect to imply that all jobs in energy-intense sectors are at risk. It is also difficult to forecast the impact that higher energy costs might have on the staffing of energy-intense firms as any potential job losses would depend on decisions taken at individual firm level and therefore it is very difficult to predict given the unique nature of each firm’s cost base.
We need to see from the Tánaiste’s Department some kind of projections and worst-case scenario as to what sections of the economy are more at risk from higher energy prices and the knock-on effect of unemployment. I am sure that there are senior officials in his Department who can have some kind of an opinion as to what we are facing into in a worst-case scenario and what supports may be needed to be prepared for in such a scenario. Has the Tánaiste spoken to the energy regulator when it comes to energy prices right across the board, but particularly, in this instance, for small and medium-sized enterprises? Could the Department have a scheme that it may be able to roll out which could prevent job losses? It could have some kind of employment support scheme, as it had in the past. As the Tánaiste is aware, some businesses across Dublin, across the country and in my own constituency, did not survive the Covid-19 pandemic and some that did might not survive this crisis. I ask the Tánaiste again about the type of analysis that his Department may be doing as to worst-case scenarios.
We certainly can do analysis, we have and we will do more. We can make projections but, unfortunately, I do not believe that these projections can be particularly helpful. The truth is that no one of us can guess how long this energy price crisis will go on for and no one can say how high gas and electricity prices will go. That is the reality of the situation. One can make one’s projections but they are entirely based on assumptions and those projections essentially, to be polite about it, are going to be guesswork if prices double, treble, quadruple or increased tenfold. One can do it oneself but it will not be particularly helpful for decision-making.
We are developing three schemes that will help a business. One is a loan scheme similar to what we had for Brexit and Covid-19. The second is a grant scheme for manufacturers and exporters who are the higher energy users, again similar to what we had during the Covid-19 period. Then we have a broader measure to help small businesses, in particular, namely, the retailers, hospitality sector and so on. That is what I am trying to put together between now and budget day.
I appreciate that we have experience through the Covid-19 period as to what is necessary and we are going to have to do that at least but I hope the Department may be in a position to prepare for that worst-case scenario because it is going to need to have some plans in place that, hopefully, it will not have to revert to. If we have a situation where businesses go under and unemployment increasing, that is a winter that none of us really want to face into. As I have said, many of these businesses have been wounded during the Covid-19 period. Some of them came out of the financial crash ten years ago, Covid-19 has hurt them deeply and now they are facing into this. We do not want to see businesses struggling but, if they do survive, doing so on the basis of laying people off. While I understand that none of us can predict how long this is going to last or how deep it is going to be, we nonetheless need to give some comfort to businesses and to workers that they will not be left alone and stranded by any Government or potential Government scheme.
I do not disagree with what the Deputy is saying. We did not put all of the resources into saving so many businesses and jobs during the pandemic to have those businesses fail now during this energy crisis.
What I have learned from experience from helping to lead the country through a number of crises: the bailout and the banking crisis ten or 11 years ago with the Labour Party; Brexit and avoiding a hard border and no deal; and more recently the pandemic, is that one needs to be dynamic in one’s response. The worst-case scenario, which is highly unlikely, is of gas being unavailable or totally unaffordable, in which case businesses cannot operate. We then would something like the employment wage subsidy scheme, EWSS, or the Covid restrictions support scheme, CRSS. The businesses would be surviving and the staff would continue to get paid but they would not be able to operate. I hope we are not in that worst-case scenario. The more likely scenario is of businesses still operating but having to do so with very high energy bills. That is why one’s intervention would be more linked to helping them with the bills than an employment subsidy. It depends on where we end up and we will need to be flexible and dynamic.
3. Deputy Louise O'Reilly asked the Tánaiste and Minister for Enterprise, Trade and Employment if he will commit to establishing an Irish enterprise agency to assist small and medium enterprises trading domestically; and if he will make a statement on the matter. [45398/22]
Will the Tánaiste commit to the establishment of an Irish enterprise agency to assist small and medium-sized enterprises that are trading domestically? As the Tánaiste will know, this is a long-standing policy of Sinn Féin. Recently, IBEC have publicly backed a similar idea. We believe that this would be a great benefit to our small and medium-sized businesses, micro-businesses and indeed the family business sector.
I thank Deputy O'Reilly for the question. The Government and we as a Department recognise that domestically traded sectors account for a significant number of firms in Ireland and, more importantly, for a high proportion of employment across retail, construction, accommodation and food, play and leisure and many other sectors also. They contribute to the economic and social fabric of towns and villages across Ireland and every region and help us create jobs in all of these areas.
As highlighted during the pandemic, these sectors also provide vital services and ensure the supply of essential products and services and as a Government we want to reach out and support as many as we can. Government policy has ensured a competitive business environment for all firms based on a world-class economic infrastructure; a competitive tax regime that supports start-ups, scaling and investment; and strong institutions that provide access to skills and research and development.
On direct interventions, the local enterprise offices, LEOs, provide various training and consultancy programmes to small businesses, as well as acting as a "first stop shop" or signposting for all firms to find out about resources and programmes available from Government Departments and agencies, such as Revenue, Microfinance Ireland, Fáilte Ireland, the LEADER programme, Enterprise Ireland, Skillnet, education and training boards, ETBs, and many others also.
Over the past number of years, the Government has responded quickly and effectively through these existing State bodies to the challenges faced by domestically-focused firms, whether it is access to finance, supporting firms through Covid-19 or helping firms to navigate the twin transitions of climate action and digitalisation, as well as dealing with the pressures coming from the war in Ukraine.
The forthcoming White Paper on enterprise, which will outline the medium-term strategic direction of enterprise policy, will set out how we can leverage these structures further to improve the overall productivity of this important sector of the economy. We will look towards having that paper published before the end of the year. In this important sector, the local enterprise offices have dramatically expanded their reach over the past number of years. I also have engaged directly with them right throughout the country to see how we can enhance that and increase those limits even further again. They have a new relationship now with many more sectors that they would not have had in the past and we will certainly continue to build on that.
In October 2020, the Tánaiste, in response to Deputy Quinlivan, said that the idea of a new agency is certainly something that he had an open mind on and that many business people he spoke to felt that there was a gap. When business is very small it can get help from local enterprise offices and when it is a bit larger or is an exporter, it can get help from Enterprise Ireland but there is a gap in between. It is that gap that Sinn Féin policy is addressing directly.
When we speak to domestically trading small to medium enterprises, they continuously highlight to us the lack of an agency to act for them at national level. It is very tough to navigate the world of business. It is especially so for a small or medium-sized family-run business or a microenterprise. With this in mind, Sinn Féin has long sought the establishment of an Irish enterprise agency focusing on scaling existing Irish businesses and providing a strong agency for non-export focused start-ups and established companies. It is that gap which we have identified and, to be fair, I think the Minister of State has agreed with us that that gap exists. We have a policy as to how that would be filled but I would be interested to know what the Department will be doing in that regard.
We are trying to reach all of these companies through our various agencies. A lot of effort has gone in but our focus through the Department in the past couple of years is how we can fix relationships with Enterprise Ireland and the local enterprise offices to capture all of those companies. Very often, the gap that is presented to us and, no doubt, to the Deputy, is that when companies go beyond that ten mark, they can fall between the two agencies. The Deputy will see in the Enterprise Ireland strategy that was published last January the new focus to work with the local enterprise offices and to develop a new framework to make sure we capture all of those companies on their way up, although some of them might come back down, and if they were at 15, they might come back down to eight or nine. I can see that relationship has been greatly enhanced over the last couple of years. The framework, which will be published in the new year, identifies how best we will do that.
In addition, through a range of supports through the local enterprise offices, we are reaching many of those companies that the Deputy has identified. We are engaging with them through the Department in order to find the best way. The White Paper that the Tánaiste is leading out on, which will be published before the end of the year, will identify the best way to address any structural deficits to make sure we reach all of these companies.
The conversation about the third agency has been around a long time and I have heard it many times. Our focus has to be on what is the best way to reach these companies to make sure we can assist them in their journey of competitiveness and productivity, their green journey and their digitalisation journey. We are able to do that through all of the competitiveness offerings through the local enterprise offices and through Enterprise Ireland. Of course, every option is being looked at and we would be happy to take on board the Deputy’s suggestions in our review over the next couple of months.
I thank the Minister of State. While we disagree on a huge amount, there is broad agreement that the gap needs to be addressed. We know the IDA has attracted thousands of multinationals since its establishment. The success can be seen in the results for 2021, where we see more than 275,000 people employed in the multinational sector. Enterprise Ireland is also doing a good job in its responsibility for developing and growing export markets. It is just that gap that has been identified. We see agencies like InterTradeIreland and Údarás na Gaeltachta, which do good work in that area. However, for the non-foreign direct investment, FDI, non-exporting companies, there is that gap. Now is the time to move in. We are talking all the time of reasons why businesses might fail. We have the experience of businesses being supported through Covid and the need to protect jobs, particularly at this time. We would welcome the opportunity to work with the Department on this. As I said, it is long-standing Sinn Féin policy. We have identified that gap and we have some ideas. I would be happy to share those with the Minister of State and work with him.
Again, the ambition and the focus has to be to work with companies and to encourage more and more companies to take on international markets. That is the win-win for Ireland and that is where we can create more sustainable jobs. In any of our policy interventions, and I think most businesses get this, we have to also recognise there is a displacement issue. If there are four or five businesses trading domestically, all beside one another, grant-aiding one with direct financial grants can displace jobs in the other, so we always have to be mindful of that. When we sit down and have this conversation with businesses, they recognise that. That is where the ask is and our response has been how we can help them on the competitiveness journey, the green journey and on digitalisation, working with their skills and with their staff.
That is open to companies of all sizes, so I would encourage any company out there to engage. I often hear that companies regret leaving it too late to engage with the local enterprise offices. I would say that from day one, no matter who they are, what they are or what company they are in, right from the start, they should have that conversation with the local enterprise office. It is the signpost that will direct them to all the various supports across many Departments and Government agencies that can assist business. When we talk to them, many businesses had not realised some of the supports that are there, even through the Departments of Education and Social Protection and the Pathways to Work scheme. There are many supports for companies trading domestically and internationally. We want to work with them and to assist them on that competitiveness journey, and to assist them to be able to upskill their staff and create more jobs, which we need.
To be clear, as a Department, we also recognise that we cannot take this for granted. At this current time, we are at a high employment level. We want to build on that and work on that, and work with those companies in a regime that is supportive of job creation, which I do not always hear from Members in this House.
I am leaving the next Priority Question for the moment and moving on to Ceisteanna Eile.
I am standing in for Deputy Catherine Murphy on Question No. 4.
Somebody has to notify the office. I have just checked and there is no notification. I ask the Deputy to double-check what has happened. I will leave it open. If notification has not been given, I cannot do anything.
That is okay.
I will leave it with the Deputy to check. Perhaps there has been a misunderstanding. The Deputy should check with his office.
Thank you.
