Joint Committee on Enterprise, Trade and Employment díospóireacht -
Wednesday, 18 Oct 2023

Low Pay Commission Recommendations on the National Minimum Wage: Discussion

An Cathaoirleach

I remind members who are participating in the meeting remotely that they must do so from within the Leinster House complex only, as they are aware. Apologies have been received from Senator Róisín Garvey.

Today we will look at the work of the Low Pay Commission and its recommendations in respect of the national minimum wage. The Low Pay Commission was established in 2015 as an independent body, the statutory function of which is to make recommendations to the Minister for Enterprise, Trade and Employment on the appropriate rate of the national minimum wage. The Low Pay Commission annual report for 2023 recommends an increase in the national minimum wage of €1.40 per hour bringing it to €12.70 per hour. The recommendation was accepted by the Government and will be introduced from 1 January 2024. I am pleased that we have the opportunity to consider this and related matters further with the representatives from the Low Pay Commission. I welcome: Mr. Ultan Courtney, chair of the Low Pay Commission; Dr. Frank Walsh, member of the Low Pay Commission; Ms Claire Pyke, assistant principal officer with the Department of Enterprise, Trade and Employment; and Mr. Oisín Gilmore, administrative officer with the Department of Enterprise, Trade and Employment.

Before we start, as I always do, I will explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to another person in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if witnesses' statements are potentially defamatory in relation to an identifiable person or entity, they will be directed by me to discontinue their remarks. It is imperative that they comply with any such direction.

The opening statements have been circulated to members. To commence our consideration of this matter, I invite Mr. Courtney to make the opening remarks.

Mr. Ultan Courtney

Good morning Chair and members of the committee. I thank members for the opportunity to meet with them all again, following our meeting last September, and to discuss with the committee the Low Pay Commission’s work and our recent report and recommendations on the national minimum wage. I am chair of the Low Pay Commission. I am joined today by Dr. Walsh, who has served as a member of the Low Pay Commission since 2019. He is an independent expert on the commission, with expertise in labour economics. He is also a lecturer in the School of Economics at University College Dublin. I am also joined by Ms Pyke and Mr. Gilmore from the Department of Enterprise, Trade and Employment, who form part of the secretariat to the Low Pay Commission.

Before I begin, on behalf of the Low Pay Commission I would like to pay our respects to Professor Dónal O'Neill who sadly passed away last week.

Professor O’Neill served as a labour market expert on the inaugural commission from 2015 to 2018. More recently, he co-authored the Maynooth University research report on the introduction of a living wage in Ireland, which played a major role in informing the Low Pay Commission’s deliberations on the living wage last year. Dónal made major contributions to our understanding of various labour market issues. His research examined unemployment, inequality, the gender and racial wage gap, education and intergenerational mobility, and was published in some of the world's leading economic journals. He will be sorely missed.

Regarding the Low Pay Commission and the national minimum wage, when we met last year, I outlined the role and function of the Low Pay Commission. It is important to again set out our role and the parameters of our work in order to provide context to any discussion on our work and our recent report and recommendations.

The Low Pay Commission was established in 2015 as an independent body. Our statutory function, pursuant to the National Minimum Wage Acts, is to make recommendations to the Minister for Enterprise, Trade and Employment on the appropriate rate of the national minimum wage. It is important to reiterate that the commission’s role is to recommend a national minimum wage, but it is Government that decides on the rate. The National Minimum Wage Acts include a provision whereby Government can choose not to accept the commission’s recommendation and opt to implement a different rate, although heretofore, the Government has always accepted and implemented the commission’s recommendations regarding the rate of the national minimum wage. Our key focus, and what we see as our main responsibility and mandate, is to ensure that in making research-based recommendations on the national minimum wage we seek to find a balance between a fair and sustainable rate for low-paid workers and one that will not have significant negative consequences for employment and competitiveness.

The Low Pay Commission comprises eight members and me as an independent chair. The Commission has equal numbers of employee and employer representatives, and independent members that have particular knowledge and expertise in relation to economics, labour market economics and statistics, like my colleague Professor Walsh who has joined us today. This ensures that we have a wide spectrum of expertise and experience available to us, allowing us to take a more balanced view when making our recommendations.

As I outlined at our last meeting, the National Minimum Wage Acts provide clear parameters for the Low Pay Commission in its consideration of the appropriate rate of the national minimum wage. These include the cost of living, earnings and income distribution, competitiveness and the likely effect that any proposed recommendation will have on future levels of employment. Statute requires incremental adjustment to the national minimum wage.

The Low Pay Commission’s remit has changed slightly since I met with the committee last year, as it now also has the responsibility to make recommendations to ensure the Government decision that the minimum wage will be set at 60% of hourly median wages by January 2026 is fulfilled. This decision was made on the recommendation of the Low Pay Commission which included a number of other recommendations on how best to implement the main recommendations on the rate.

On moving towards a national living wage, since its establishment, the commission has each year recommended an increase in the minimum wage. This has resulted in the minimum wage increasing from €8.65 in 2015 to €11.30 today. When we met last year, we awaited a Government decision on the living wage. Last November, the Government agreed to the introduction of a national living wage, with no regional or sectoral variations, set at 60% of hourly median wages by January 2026. This will be achieved through incremental changes to the national minimum wage over a four-year period, unless otherwise agreed by the Government on the advice of the Low Pay Commission. This Government decision was based on the recommendations of the commission.

The first step towards reaching a living wage was the 80 cent increase to the national minimum wage that came into force on 1 January 2023 and increased the minimum wage to €11.30 per hour. Last week, the Government agreed to accept the Low Pay Commission’s recommendation to increase the national minimum wage by €1.40 to €12.70 per hour from 1 January 2024. This significant increase of 12.4% is the largest increase in the minimum wage since its creation in 2000. This increase represents the next step in the progression to a living wage.

As it now has responsibility to make recommendations to ensure the Government decision that the minimum wage will be set at 60% of hourly median wages by January 2026 is fulfilled, a central focus of the Low Pay Commission is what is called the “bite” of the minimum wage, that is, the minimum wage as a percentage of the median wage. The Low Pay Commission estimates that the current €11.30 national minimum wage is 51.8% of the forecast median wage for 2023. To get from 51.8% of median hourly earnings to 60% by 2026 in the space of three years requires significant change in the minimum wage. The Low Pay Commission has discretion to recommend speeding up or slowing down the transition to the 60%. Therefore, the commission considered a range of options for increasing the minimum wage in 2024.

Due to the minimum wage being forecast at 51.8% of the median hourly wage in 2023, well below the 60% target, and the fact that Ireland is experiencing strong economic growth and very low levels of unemployment, the commission recommended speeding up the transition to the 60% target. For these reasons, the commission recommended that the national minimum wage be increased by €1.40, or 12.4%, from €11.30 to €12.70 on 1 January 2024. The commission has estimated that a national minimum wage of €12.70 will represent 55.1% of median wages in 2024. This recommendation was supported by eight of the nine members of the commission. One of the issues that featured in the discussion was our recommendation about potential supports to employers to assist with the transition to the living wage.

The Low Pay Commission estimates that 148,100 people earned at or below the national minimum wage in 2022. Therefore, it is expected that at least that number will see an increase in their wages arising from this increase in the minimum wage. For someone on the national minimum wage working a 39-hour week, this translates to a pay increase of €54.60 per week, or more than €2,800 per year. It is estimated that a full-time worker on the minimum wage will see an increase in their net take home pay of approximately €2,300 on an annual basis.

On protecting employment and national minimum wage employers, it is a legislative requirement that the Low Pay Commission gives consideration to the likely effect that any proposed order will have on levels of employment and unemployment. That is something that the Low Pay Commission has given a great deal of attention to. Since its establishment, through its research partnership with the Economic and Social Research Institute, ESRI, the commission has produced numerous studies on the employment effects of changes to the minimum wage. These studies show that increases in the national minimum wage have had little effect on employment. While this is encouraging, the commission is always seeking up-to-date data and research to inform its recommendations and to closely monitor any findings on this issue. We have also paid close attention to the international evidence of the employment effects of changes in the minimum wage.

The Maynooth University report on the introduction of a living wage in Ireland examined this international evidence. Significantly, it stated: "Based on our reading of the international evidence, we believe there is some evidence that a statutory wage floor set at 60% of the median wage of all workers could be implemented without substantial effects on employment." It must of course be acknowledged that increases in the national minimum wage affect some employers more than others. While the commission recommended that the living wage should apply equally across sectors and regions, we also suggested that consideration should be given to how employers with a significant number of low-wage employees can be supported during the progression to a living wage. This was an important recommendation of the commission and a significant component of the transition to the living wage.

The issue of the introduction of supports for vulnerable businesses was an important part of the Low Pay Commission’s deliberations this year. The employer representatives on the commission in particular saw the introduction these supports as critical to their continued support for the transition to a living wage. Therefore, I welcome the announcement of the increased cost-of-business grant, which has funding of €250 million to provide a targeted refund to businesses who are ratepayers and will be paid through local authorities, and will benefit up to 130,000 micro and small businesses. However, I am aware that the detailed terms and conditions attached to the grant are to be finalised. This is something that the Low Pay Commission will continue to pay attention to.

I will now turn to recent and forthcoming reports and research. Following acceptance by Government of our recommendations for the 2024 minimum wage, the commission is now focusing on the issue of sub-minimum or youth rates. Last year, the Low Pay Commission was asked to revisit the issue of sub-minimum rates. We have received a research report authored by ESRI, under the terms of the commission’s research partnership with ESRI, on youth rates. This summer, the commission held a stakeholder consultation on these rates. We are currently examining the issue and we intend to submit a report to the Minister for Enterprise, Trade and Employment, Deputy Simon Coveney, before the end of this year.

Before I conclude-----

An Cathaoirleach

I ask Mr. Courtney to be brief.

Mr. Ultan Courtney

Yes. I would like to briefly outline the Low Pay Commission’s research activity. Primarily, in the past year, this research resulted in the publication of two reports, A Universal Basic Income for Ireland: Lessons from the International Literature, which was published last December, and Job Quality of Minimum Wage Workers in Ireland, which was published in August. We are going to have two further studies. These include a study entitled Different Approaches to Categorising Minimum Wage Workers, which will compare evidence from administrative wage data and data from the labour force survey.

In 2021, the commission awarded research bursaries for two independent pieces of research, including Low Paid Older Workers: a Quantitative and Qualitative Profile of Low Pay Among Workers Aged Over 50. In addition, in December, the Low Pay Commission published a Report on Piloting a Universal Basic Income. We also published another report on labour market concentration. We awarded four further bursaries this year on low-paid young workers; on work in the home care sector; on how organisational practices, strategies and environments shape low pay; and on the effect of national minimum wage hikes on interregional commuting and employment.

The Low Pay Commission’s research activity makes a significant contribution to the provision of more knowledge and information with regard to low pay and labour market economics in Ireland.

I am happy to take any questions members may have on the commission's work and on the recent report and recommendations.

An Cathaoirleach

I thank Mr. Courtney. I invite members who would like to discuss the issues to indicate. Anybody who is attending online who wishes to speak can use the raise hand function.

Deputy Louise O'Reilly

If I can, I will share my time with my colleague, Senator Gavan.

An Cathaoirleach

The speakers will have 14 minutes between them.

Deputy Louise O'Reilly

We will just share it between us.

Senator Paul Gavan

I thank Deputy O'Reilly for allowing me to go first. I have a meeting to go to afterwards so I apologise if I have to leave straight away.

It is great to see Mr. Courtney again. If I may, I want to start by taking up an issue that arose the last time he appeared before the committee. I will quote from the transcript of the meeting where he said to me: "Some actually say to us that they do not want to be put in a situation where if one increases their wages or their living wage to a certain amount, that it costs them hours or their job." I then said: "Mr. Courtney is saying that he has had submissions from workers asking not to get a pay increase." and he answered "Yes".

That then sponsored some work on our side. I am indebted to Ms Pyke because we did a freedom of information, FOI, request on the issue and she forwarded all the submissions the commission had received. It was very clear from the submissions that the commission had not received submissions from workers on the minimum wage asking not to have their wages increased. The committee wrote to the commission and the commission then wrote back saying they got the requests through informal channels when meeting workers. I was intrigued by that. Could Mr. Courtney please tell us more about who these workers were who were demanding not to get a wage increase and when he met them?

Mr. Ultan Courtney

I think it is important to refer to the transcript. First, I wrote a detailed letter of clarification to the committee, which is on the record. I presume you do not want me to read it into the record, Chair.

An Cathaoirleach

No, we have it.

Mr. Ultan Courtney

It is important. There was a short exchange on an issue, which we are discussing, which is a central part of what the Low Pay Commission does, that is, it has to balance between fair and sustainable increases and employment and competitiveness. That is a function we carry out. There was a short exchange on the issue in that debate. I was asked a question in that regard and I made it quite clear that some people actually say to us – I did not say anything about written statements – that they did not want to be put in a situation where their wages were increased by a certain amount or to a living wage. That is important.

Senator Paul Gavan

I am sorry but I have to interrupt Mr. Courtney. I am reading directly from the transcript. When I say to him: "Mr. Courtney is saying that he has had submissions from workers asking not to get a pay increase." he replies "Yes". Was that not correct?

Mr. Ultan Courtney

If I am allowed to answer this, Chair, I am trying to answer this question because I think it is important. Selectively quoting from the text is not going to help the debate in any way at all.

Senator Paul Gavan

Selective?

An Cathaoirleach

To clarify, is Senator Gavan quoting exactly what-----

Senator Paul Gavan

I am quoting verbatim from the transcript. It is not selective. I have not left any words out.

An Cathaoirleach

I have read the transcript myself recently as well. I remind Mr. Courtney that when he made those comments at the time there were exclamations from a lot of members not just Senator Gavan.

Mr. Ultan Courtney

That is fine.

An Cathaoirleach

It was from members across the parties.

Mr. Ultan Courtney

That needs to be clarified. That is what I did. That is why I sent the committee the letter in regard to it. That is what was said to us. Senator Gavan went on to ask me about submissions about getting a pay increase and I said: "Yes, people would very simply understand the impact of getting an increase in pay that is not sustainable in their job. Many people understand that at the end of the day". That is what I actually said. That was the balance of what was said. Our submissions are given to us orally and in written form and we have to consider them. A cohort of people that we deal with are in vulnerable employment and they are vulnerable. They have made submissions to us in regard to it, so it is not correct to say that no submissions were made in relation to it. That is what I said. I never said anything about written submissions. I am quite clear about that.

Senator Gavan took the view that I was talking about written submissions. The discussion stopped, but if it had gone on, we would have been able to clarify that. The normal accepted practice at these kinds of committee is that one is asked to clarify something immediately. I would have done that immediately but Senator Gavan decided to put in an FOI request without seeking any clarification in regard to it. We could have had the debate and discussion about the matter, in that I think it is important to understand that people do have these concerns whether we like them or not. If Senator Gavan wants to put it in this particular context, that is fine, but that is not the context in which it was meant. I thought I clarified that in the letter but obviously it has not satisfied the relevant Senator.

Senator Paul Gavan

So we will just close this off. Is Mr. Courtney now confirming there were no written submissions?

Mr. Ultan Courtney

I did not say that.

Senator Paul Gavan

I am asking him now-----

Mr. Ultan Courtney

There are written submissions, which we supplied. My reading of those submissions is that a number of people, who were workers, were making representations on whether or not there should be increases in the national minimum wage.

Senator Paul Gavan

That is simply not correct.

Mr. Ultan Courtney

We can disagree on that.

Senator Paul Gavan

I do not think so.

Mr. Ultan Courtney

That is fine.

Senator Paul Gavan

These are matters of fact.

Mr. Ultan Courtney

That is fine.

Senator Paul Gavan

To clarify, the people who wrote in had an ideological objection to the idea of a minimum wage. They did not identify themselves as minimum-wage workers at any point.

Mr. Ultan Courtney

Several people identified that they had worked for the minimum wage.

Senator Paul Gavan

Several?

Mr. Ultan Courtney

Nobody said there were large numbers of people. That is something Senator Gavan decided was his impression of what I had said. He never asked me to clarify.

Senator Paul Gavan

I am really surprised at Mr. Courtney's responses here today. I have to be very frank with him.

Mr. Ultan Courtney

Senator Gavan can read them. They are there.

Senator Paul Gavan

I did read them. I went through each and every one of them.

Mr. Ultan Courtney

Yes, and I have read them too.

Senator Paul Gavan

There was no written submission from a minimum-wage worker asking not to have a pay increase. There was not one. Mr. Courtney should at least acknowledge that today.

I am going to move on. I apologise as I am taking up way too much of my colleague's time.

Mr. Ultan Courtney

I am sorry, Chair, but I need to answer. This is not fair to me. One submission said: "I share with you this viewpoint having worked for €7.7 an hour part time for a year when I was in college, at which point the minimum wage was over €9.5. This job in question provided myself with great experience and the necessary funding for my college fees." That was submission No. 6 and there were others.

Senator Paul Gavan

That is not a minimum wage worker.

Mr. Ultan Courtney

How does Senator Gavan know the person is not a minimum wage worker?

Senator Paul Gavan

Because there was a reference to when the person was in college.

Mr. Ultan Courtney

If a person was working for the minimum wage, the person is a minimum-wage worker.

Senator Paul Gavan

Mr. Courtney is really reaching here. He is really stretching this one.

Mr. Ultan Courtney

No, Senator Gavan is stretching it. I do not know what the agenda is here. I have tried to clarify the situation.

An Cathaoirleach

Could we just clarify something? If Mr. Courtney has the submissions he might give them to us later or send them on to us so that we can clarify the situation.

Mr. Ultan Courtney

Yes, I thought we had.

An Cathaoirleach

Is Senator Gavan happy enough with that?

Mr. Ultan Courtney

Have we not shared them?

Ms Claire Pyke

We can arrange to share them with the full committee.

An Cathaoirleach

Senator Gavan has them.

Ms Claire Pyke

They were sent to only one individual.

An Cathaoirleach

They did not come to the committee.

Senator Paul Gavan

I will hand over to Deputy O'Reilly at this point.

Deputy Louise O'Reilly

For the purpose of the record, I have never met a low-paid worker yet who did not want a pay increase and I would be shocked if such a worker exists. We have seen no evidence that they do. It is quite the hill to pick but Mr. Courtney has chosen it, not us. It beggars belief that low-paid workers would write or ask not to have pay increases. It is not my experience. I have some small amount of experience in the area of industrial relations and there is a fair amount of it within my family. Having spoken to people within my family with a lot more experience than I have, they too are quite baffled by Mr. Courtney's statement but it is his hill and he has chosen it.

Could I ask him briefly about sub-minimum rates of pay, whereby we know workers are paid as little as 70%. They pay the same tax, PRSI and USC. I do not see any reason for the discrimination but obviously it was put in by people who felt it was necessary. The Mandate trade union has stated that its belief is this is outdated and old fashioned. I know that the commission has been tasked with doing a piece of work on this area. Could Mr. Courtney just give us a brief update? I am conscious that my time is tight so if it is necessary to share documents with us afterwards that would be helpful, but a brief update would be appreciated.

Mr. Ultan Courtney

I do not know if members have seen my letter but I think it is important.

Deputy Louise O'Reilly

I have and I have read it.

Mr. Ultan Courtney

I think it is necessary to read it into the record.

Deputy Louise O'Reilly

There is absolutely no need. I have seen it.

Mr. Ultan Courtney

It does particularly-----

Deputy Louise O'Reilly

As I said, this is Mr. Courtney's hill.

Mr. Ultan Courtney

That is okay. I am quite happy to do that.

Deputy Louise O'Reilly

I have no idea why, but I have asked him a question about sub-minimum wage pay. I can confirm that I have read his letter.

An Cathaoirleach

Could Mr. Courtney answer Deputy O'Reilly's question? To clarify, we did try to get him into the committee again after the last meeting and he was not available on a number of occasions when we requested that.

Mr. Ultan Courtney

Yes, but-----

An Cathaoirleach

Could Mr. Courtney send on the letters?

Mr. Ultan Courtney

That was for a different meeting.

An Cathaoirleach

Yes, but we wanted to clarify that issue as well because it was raised. Could Mr. Courtney respond to Deputy O'Reilly's question?

Deputy Louise O'Reilly

Thank you Chair.

Mr. Ultan Courtney

The sub-minimum wage rate is something that we are looking at. We have done reports in regard to it. There is a small cohort of workers who are on that. We are at the stakeholder stage at the moment. We are consulting with people in regard to it, with a view to issuing a report on it in due course.

Deputy O'Reilly is quite correct, there are those who believe it is outdated and should not be in place, and those who believe it still has a function. Until the consultation is concluded I have no opinion to offer on it other than that we want to listen very carefully to anything anyone has to say in relation to it. I do not think I can add anything more in response to the Deputy at the moment. That is where the debate is at.

Deputy Louise O'Reilly

I thank Mr. Courtney. I want to ask him a question about his submission.

The second last page referred to supports for vulnerable businesses in transitioning to the living wage and the Low Pay Commission has issued a welcome for the announcement of the increased cost of business grant of €250 million for 130,000 microbusinesses. The Low Pay Commission might have more detail on this than we do. That is €1,923 per business, which is about €1,000 short of the position of a 39-hour per week worker. I am not certain there is any targeting in this and there is no evidence that some, all or any of those 130,000 microbusinesses are paying their workers the minimum wage. In terms of how the Low Pay Commission thinks this fund is going to operate, it obviously has an opinion that this is going to be targeted but there is no evidence to support that, unless the commission has such evidence. It is just to go to 130,000 micro and small businesses.

With regard to the supports, a proposal has been floated whereby a PRSI rebate could form part of it for each of the workers who are below the 60%, and there have been other proposals. In light of the fact the section in the minimum wage Act for employers to go to the Labour Court to prove they cannot pay has never been used, would the Low Pay Commission stick by the notion that a move to the living wage, even a quick move to the living wage rather than a stepped-in one, would not damage employment? My belief is that this is the view of certain economists. Does the Low Pay Commission see there is a threat here? In that regard, how does it envisage €250 million spread over 130,000 businesses making that level of difference to businesses?

Mr. Ultan Courtney

I welcome the €250 million as a start. To be honest, there was a big debate at the commission at the time in regard to having some support, and we are glad to see it. I do not know what it means in reality because I have no more detail than the Deputy and I have not been provided with any. Obviously, when it is provided, we will see what impact it has but whether it is big, small or indifferent, I do not know. We will continue to make that point in regard to it, if it is necessary.

Deputy Louise O'Reilly

How is it necessary? There is no evidence that this is going to be targeted in any way, shape or form at workers on the minimum wage or the employers who employ them. It is curious that the commission chose to welcome it. Any supports for businesses to transition to the living wage will, of course, be very welcome but that is not what was announced. There was just a fund for ratepayers. If someone pays the minimum wage to their employees but does not have a rateable premises, they are still not going to get it.

Mr. Ultan Courtney

It is a reasonable point to raise. What I am saying is that the principle of employer support is good in practice. What it will actually translate to at the end of the day and how it is actually going to operate, I am not sure.

Deputy Louise O'Reilly

That is why I could not understand how it has made its way into the Low Pay Commission submission. In light of the fact that section 41 has not been used, does Mr. Courtney feel that those supports are necessary? I know it took up a considerable amount of time and discussion and several proposals have been floated. I wonder if this is in the context of the retention of employment.

Mr. Ultan Courtney

The Deputy is correct. There is a belief that it is required. We in the commission have articulated that belief to the Government and the Oireachtas but we do not have evidence as to whether it is going to pan out or not. We do not know and we will have to wait and see. There is this notion that by increasing the minimum wage, you damage employment prospects or change the balance between the hours that people work, but the evidence does not seem to be there to support that. As long as that is the case, we are happy to progress in the direction we are going. Certainly, in the case where we have full employment and a lot of growth in the economy, it is reasonably okay and we are content. If things change, we will have to look at it. That is why we took the view to go for a much higher increase this year because we thought that was something we should do. The evidence was in our favour and it is where we are at. Whether the employer supports are needed or not, and effective or not, is something that only time will tell.

Deputy Louise O'Reilly

That is exactly why it was curious that the Low Pay Commission welcomed it. There is nothing amusing about this, by the way. In terms of the move that is proposed now and coming next January, does the Low Pay Commission think that section 41 will be invoked and does it have any evidence it has worked? It has not up to this point.

Mr. Ultan Courtney

We do not know.

Dr. Frank Walsh

It is worth saying that when we recommended introducing the living wage, we commissioned a detailed report by the group from Maynooth, including the late Professor Donal O'Neill, who will be greatly missed by the academic community. The basic view that came out from that review is that we should proceed to 60% of the median wage and perhaps, based on evidence, we can even go further than that but it has to be evidence-based. The nature of the research is not so much that we know for sure that we can increase the minimum wage to any level and know exactly where the level is that is not going to damage employment. I do not think it is black and white. It is more that there is good reason to think we can increase the minimum wage without damaging employment, but we have to continuously do it, as we committed to do in our recommendations based on the living wage. We need to increase the minimum wage to the 60%, then review it and see if there is a case, based on the international evidence, for increasing it more. I do not think it is black and white or that we can say for sure. Some firms could be affected in a negative way and other firms could have increases in employment. If we are concerned about the overall level of employment, there is a reasonable case for trying to identify the most vulnerable firms - maybe the firms with the biggest share of minimum wage workers - and targeting the supports at those. That is certainly what we recommended.

Deputy David Stanton

I welcome the witnesses and thank them for the work they are doing. The reports of the Low Pay Commission are interesting and I would like to see publication of the other work that it has commissioned and that was mentioned in the submission. The submission states that the Low Pay Commission estimates that 148,100 people earned at or below the minimum wage in 2022. I am not sure whether it has up-to-date figures for this year. It also stated that for someone on the national minimum wage working a 39-hour week, this translates to a pay increase of €54.60 per week or €2,800 a year. Has the Low Pay Commission looked at relativities? Some employers have been talking about relativities, that is, if someone on the minimum wage gets an increase, then the person above them has to get an increase, and so on. Has that been looked at or factored into any of the deliberations?

Dr. Frank Walsh

Yes, there have been several reports which are all on our website. One is by Karina Doorley and Paul Redmond and there was also an earlier report. This work tries to trace out the impact of the minimum wage not only on minimum wage workers, but on workers just above that. There is certainly evidence in Ireland and internationally that there are knock-on increases for workers a little above the minimum wage, and members can guess that themselves based on their experience. These are not huge increases but are substantial, notable increases. I do not want to give a figure from the top of my head as to exactly how high up the wage distribution they are but they have certainly been documented. It is certainly not all the way up to the median wage or anything like that.

Deputy David Stanton

That is useful to know. The submission also states that consideration should be given to how employers of a significant number of low-wage employees can be supported during the progression to a living wage. Can the witnesses outline the areas and categories of employment that it is referring to in that sentence? Are we talking about retailers or other kinds of employers?

Dr. Frank Walsh

In the report, we have the sectoral breakdown and also a lot of detail on occupations and sectors. They tend to be the ones we would expect and, for example, food, accommodation and retail tend to be the sectors with the highest share of minimum wage workers. What happened in the commission with regard to the supports was that we initially asked that the Labour Employer Economic Forum, LEEF, group would look at specific supports that might be made to target this. More recently, it has been decided that the commission itself is going to try to make specific recommendations or is certainly going to make an effort to make some recommendations. Obviously, we can just give advice and we have no official role, but we are certainly happy to try to do that.

Deputy David Stanton

That is interesting. How soon would those recommendations be available?

Dr. Frank Walsh

It was just at the most recent meeting that we discussed doing something like that. It is fair to say we are happy to be involved in trying to give advice, but we have no official role in doing so.

Deputy David Stanton

There is a section on board and lodgings in the commission's report. There are maximum rates of €1.01 per hour for board only and €26.70 per week for lodgings only, or €3.91 a day. They came into effect on 1 January 2023. The report referenced that these are reviewed annually. In the context of the commission's current recommendations, where do these figures stand? Are they part of that?

Dr. Frank Walsh

We do not have any evidence that I am aware of regarding the number of people who take up those supports. The rates are just updated. We do not have a lot of evidence to work with on how many people use accommodation allowances and so on.

Deputy David Stanton

My question related to the report's statement that, "These rates came into effect from 1 January 2023 and are reviewed annually in the context of recommendations on the National Minimum Wage rate." Are those rates part of the current recommendations we are talking about?

Mr. Ultan Courtney

They are usually examined on a pro rata basis annually, as I understand it. That is the normal practice.

Deputy David Stanton

Are these the current rates? Do we expect reviewed or revised rates to be produced?

Ms Claire Pyke

There will be revised rates.

Deputy David Stanton

When will those be available?

Ms Claire Pyke

Very soon. We will have a statutory instrument we can share with the committee. The rates are revised on a pro rata basis in line with the increases. I can share that, I hope in the coming days.

Deputy David Stanton

The report also mentions that one in six older people is in low-paid employment. The other issue is that of the youth rate. What is the commission's thinking with respect to the youth rate? It is preparing a report for the Minister on that, but where does it stand at present? What is the commission's thinking on the youth rate? Should it be abolished completely and brought up to the minimum rate? Is that what we are looking at?

Mr. Ultan Courtney

The Deputy will have to excuse me. Unless Dr. Walsh has a different view, we are in the middle of a consultation on that matter. I do not want to prejudice that consultation by giving any view that might be considered mine or that of the Low Pay Commission. We are doing an important piece of work at present. Many people are interested in what the outcome will be in that regard. I do not want to say any more than that until we get the considered views of our stakeholders. I do not know whether Dr. Walsh has anything to add to that, but I think that is where we are at.

Dr. Frank Walsh

We commissioned a report from the Economic and Social Research Institute, ESRI, which it submitted. Again, as Mr. Courtney said, we have not discussed this with other commission members. I do not think the report is even published yet but we have read it and-----

Deputy David Stanton

I respect the commission's position. When does it expect this issue to be presented to the Minister?

Mr. Oisín Gilmore

By the end of the year.

Deputy David Stanton

By the end of this year?

Mr. Oisín Gilmore

Yes. We should have the report submitted to the Minister by the end of this year.

Deputy Richard Bruton

Does the commission have any data on who is on the minimum wage and the make-up of that group? In particular, how does migration bear on the composition of that group? One of the very good reasons for bringing in the living wage is to make sure we do not find people who are very vulnerable concentrated on the minimum wage, which creates a problem in itself. I am interested in having an idea of that.

One of the areas that has posed difficulty over time has been roles such as au pair, or people who work overnight in caring situations, including carers who stay overnight. There has always been an issue as to whether those arrangements are in breach of labour law. This overnight rate was one of the ways of trying to bridge the gap between what had been a practice and put it in line with proper employment conditions. Has that been resolved at this stage? Do we have clarity on what is and is not permissible in those arrangements? These can become very exploitative arrangements but they can also suit people if they are properly overseen.

Deputy O'Reilly asked whether a support to rates for smaller employers was a good way, or was sufficiently targeted, to reach people who are likely to have a high concentration of minimum wage or living wage earners. Did the commission identify any alternative mechanism? I recall that when the energy subsidy was introduced last year, which looked like a very well-designed scheme, it in fact had a tiny take-up because of the administrative burden of trying to get all the data together. Many people did not take it up and there was a much lower take-up. Is there a preferred route the commission's study came up with as to how one might balance moving to the living wage and not exposing certain sectors or employers?

Mr. Oisín Gilmore

On the question of the composition of minimum wage employment, quite a bit of detail on that is in chapter 3 of the report. Specifically on the question of immigration, we have data on employees earning the national minimum wage, or less, divided by nationality. Previously, it was found that people who did not have Irish nationality earned the minimum wage at a significantly higher rate than Irish nationals. In 2016, approximately 20% to 25% of non-nationals were earning the national minimum wage whereas slightly more than 10% of Irish nationals earned it. This has changed since then. Both numbers have converged and today very similar numbers of Irish nationals and non-nationals earn the minimum wage or less. That is visible in figure 3.2 on page 32 of the report.

With regard to the question of the caring professions and people working in that type of environment, it is a very difficult sector of the economy to observe. It is something that has arisen in the Low Pay Commission's deliberations on a number of occasions, including in the oral submissions made to the commission. It is a matter the commission has repeatedly had difficulty with precisely because there is not the evidence base on which to make decisions or recommendations. It is quite limited. One quite positive thing that came out of the commission's work last year is that we have awarded a bursary to Dr. Maeve O'Sullivan and Dr. Áine Ní Léime from the University of Galway, who will do a piece of research on work in the home care sector. The title of their proposed research is "Work in the home-care sector –low-paid, dead-end job or decent work?" It is hoped that will provide a stronger evidence base for us to answer those types of questions in future.

Mr. Ultan Courtney

I am not able to help the Deputy too much on the second part of his question. The important thing for the commission, and the point we are making, is that the principle of supports specifically targeted at helping employers in relation to the minimum wage is good. Deputy O'Reilly asked a very pertinent question, namely, whether a support will be appropriate, will fit and will work, if it is not targeted and so on. At the end of the day, we have to see how that pans out and whether it works. The acceptance of the principle, however, was very important. It caused a lot of important discussion at the Low Pay Commission. There have been well-designed schemes in the past. Our recommendation and view in respect of it is that supports may be necessary - time will tell whether they are or not - and the Government should design a scheme that is appropriate, works, and has sufficient funding to make sure it works. At this stage, that is about all I can say regarding it. It may not be sufficient but it is probably all I can do.

Dr. Frank Walsh

To reiterate, initially, we passed this off to LEEF. Our view was that this was the most effective way because we do not have any direct input into the budget, not that LEEF does either. We thought that was the most effective way to progress it. At our last meeting, we said we would try to formulate more specific ideas about how we could target the supports. It is difficult. There are issues about targeting it but also you do not want to design a support where there is a lot of dead weight. We will certainly try to do that.

Senator Marie Sherlock

I thank Mr. Courtney, Professor Walsh, Ms Pyke and Mr. Gilmore for attending today. I want to add my voice to the condolences to Professor Dónal O'Neill. He obviously made a very significant contribution to labour market economics in this country.

My first question - and I am conscious this has already been raised - is about the subminimum rates. I have a huge difficulty with treating adults like children for the purposes of pay. It is important to say that, last year, the Low Pay Commission was asked to consider the issue of subminimum rates. The public consultation happened in June of this year. To my mind, there is an element here of the commission dragging its heels in coming forward with recommendations. This should be a relatively straightforward answer, and it is taking until the end of this year to come back with an answer. I do not think that is acceptable.

Dr. Frank Walsh

We commissioned some research on the central issues of how many people are on subminimum wage rates and how many people within those age categories are paid the higher rate and so on, and breaking it down by age. We only got the final draft of that report in recent months. It is not published yet. I would imagine it will all happen fairly soon but I would be slow to make a recommendation without the commission considering the research.

Senator Marie Sherlock

Okay. To my mind, it is a poor reflection on the commission that it is taking this length of time. I appreciate what Professor Walsh is saying.

I want to ask about the recommendation regarding the reduced rate of PRSI. What precisely is the commission recommending? Is it the removal of the reduced rate of PRSI or something different? I am not clear on it from the wording. My question then is whether the commission has discussed with the Government the removal of the reduced rate of PRSI. We have seen the recommendation by the Commission on Taxation and Welfare. The Low Pay Commission's recommendation is there, although I am not entirely clear what precisely it is asking for. Has the commission discussed it with the Government?

Mr. Ultan Courtney

We have not discussed it with the Government. We have made recommendations to Government, and they have not been engaged upon. The Government has considered it but it has not decided what it is going to do.

Senator Marie Sherlock

Has the commission looked at the impact? I might ask Professor Walsh about this. I am particularly interested in the transitions out of minimum wage. We know that 46% of all workers on minimum wage are on the wage for a year or more. There are a lot of workers on the minimum wage who work only up to 19 hours per week. What kind of research has the commission undertaken to understand the impact of a change to the abolition of the reduced rate of PRSI, if that is what the commission is proposing on work?

Dr. Frank Walsh

Specifically on the abolition of the PRSI rate, we have not undertaken anything specific. What you would have to do to do that is look at the ESRI's microsimulation model, where you could ask it to simulate different tax proposals. I know we have asked the ESRI to do that, and it is very difficult to get it to do that. There is a long queue for that model.

The main issue that has come up over the years is the commission's basic worry that minimum wage workers, as the Senator said, would reach thresholds where there is a big jump in the tax they pay for 20 or 30 hours, and so on. Every year, we put in a recommendation that the PRSI thresholds be moved so that there are none of those kinds of cliff edges. Generally, what we have been recommending over the past year or two is a more comprehensive solution where all of those cliff edges would be removed. That is broadly what we want.

Senator Marie Sherlock

What I am specifically interested in is that we know that some employers target the reduced rate of PRSI. They organise their rosters around that. If that research has not been undertaken, then I would very seriously suggest it should be undertaken to understand the impact of that abolition. To me, it would have a transformative effect, especially on certain sectors like retail and hospitality, with regard to quality employment within those sectors.

Dr. Frank Walsh

All the survey on income and living conditions, SILC, can do is look at, based on existing rates, what would happen given the existing employment pattern and so on. It could not predict what is going to happen but we could certainly ask the ESRI.

Senator Marie Sherlock

I know, but when there is stakeholder consultation, it is to commission the research and get the perspective of both business and trade unions on that impact. I would certainly support that.

There has obviously been some discussion around the package for supporting business. What research is the commission undertaking with regard to supporting business? We are looking at increases. I think it is €1.15 the commission is proposing for next year, and some other similar type of figure for the year after, if it is to meet the living wage criterion of 60% of median earnings. I do not want to see where we are having this dead weight loss of money being thrown at business with no real targeting. Is the commission undertaking any research on supporting businesses?

Dr. Frank Walsh

It is fair to say that one weakness in the research record of the commission is around the impact on business. The reason is one we have pointed out every year. It is in this year's report, and it was in the report on the Living Wage Commission, and what we have pointed out in detail is the need for firm level data. We have no data on that. There are very limited data in the earnings, hours and employment costs survey, EHECS, where people were asked about the proportion of workers. We have certainly utilised that data to look at what share of costs there is. However, we do not have a lot of detailed data to do anything other than look at the international literature, and based maybe on international evidence and the composition of sectors, to try to speculate about what might be an effective policy. That is the kind of work we will try to do.

Senator Marie Sherlock

Sure, and I very much support the call with regard to profitability level data. That is hugely lacking in this country. I would also urge the commission to take into account that there is a lot of work to be done in the element of procurement, and how many small businesses paying the minimum wage are actually supplying services to the State. We need to get into a place where, rather than just throwing money at businesses as a once-off measure, we are looking at how the State supports small businesses to improve their own margins and support quality employment. I suggest that as something for the commission's research agenda.

Mr. Ultan Courtney

I welcome that contribution by the Senator. It is hugely significant. We look at the effect on competitiveness but, as we are moving from a minimum wage to a living wage, we do not always look at how other issues such as PRSI, tax and everything else impacts on decisions we are making. A more informed research database would be very welcome, and on behalf of the commission, we will discuss it and come back on it, if that is okay.

Senator Marie Sherlock

I thank Mr. Courtney.

Deputy Mick Barry

I have some questions, perhaps for Mr. Courtney. The introductory remarks state that the commission is focusing on the subminimum or youth rates, and that is precisely what I want to focus on in my time here. The statement says the commission intends to submit a report to the Minister before the end of the year. That is a really important issue that is coming up next on the agenda, so to speak.

Mr. Courtney mentioned that there were a relatively small number of people involved. Will he briefly give us the statistics he has on that?

Mr. Ultan Courtney

Mr. Gilmore has them.

Mr. Oisín Gilmore

We have quite a detailed analysis of that in a report submitted by the ESRI. It is not published yet but should be published by the end of this year. We have some information on the age breakdown of people on the minimum wage in the report. I do not actually have data on whether they are specifically on subminimum rates but that is contained in the ESRI report which was submitted to us earlier this year. The commission is currently deliberating on this report and it will be published shortly.

Deputy Mick Barry

That is fine. The Central Statistics Office, CSO, for what it is worth, has the number at 34,000. I would not regard that as a small number.

Mr. Ultan Courtney

I would.

Deputy Mick Barry

I would not. I am not sure I would regard it as a relatively small number either because what is it relative to? If there are 150,000 people on the minimum wage, in effect it means approximately that for every four people on the full minimum wage there is one who is a young worker on a subminimum rate. What are we talking about with the subminimum rates? Let us project forward to 1 January when the rate goes to €12.70. A 19-year-old worker on the subminimum rate receiving 90% will be on €11.43, an 18-year-old worker at the 80% rate will be on €10.16 and someone under the age of 18 on the 70% rate will be at €8.89. I have listened to what the witnesses have said. I hear that they do not want to get too bogged down in this issue, given that they are deliberating on it at the moment, so for my part I will make the point that the subminimum youth rates are discriminatory. They are unjust and wrong. I do not believe they can be defended because it is a principle in my view - and, I believe, in the eyes of most reasonable, ordinary people - that there must be equal pay for work of equal value. It is illegal in this State to discriminate against people on grounds of race, gender, sexual orientation and so on. It should equally be illegal to discriminate against people on grounds of age where we are talking about a scenario of equal pay for work of equal value.

The idea may be out there that the youth rates are acceptable because the money earned by people of these ages is pocket money or a few bob to top up students. Some young people use that money to pay rent. They are out there renting on their own for a variety of reasons. If they are at home, they may be helping their mother and father to pay the rent. It may be the difference between being able to pay the rent and steer clear of eviction, or not. There are people of 19 years of age who are responsible for children and have a child of their own. Potentially, such people are being paid €8.89 in the case of under-18s or just barely more than €10 in the case of someone who is 18.

There is a higher rate of low pay among young people in this country than there is on average in the EU. The EU's own statistics - these figures are 12 months old so they may be slightly off, but I would not think by much - indicate that whereas 26.2% of young people in the EU are officially low-paid, in Ireland the figure is considerably higher at 33.9%. For all these reasons and more, the deliberations that the commission is engaged in at the moment on the issue of the youth rates, with a report due to be submitted to the Minister before the end of the year, are of particular importance.

This may be my final question, although I have one minute and seven seconds left. Can the witnesses give the committee and the public an indication of when the report will be submitted to the Minister? Will it be this month of October, next month of November or will it run right up to the deadline at the end of December? Will the commission publish it and then submit it to the Minister, or is it to be submitted to the Minister and published after the fact?

Mr. Ultan Courtney

I thank the Deputy for his observations in relation to subminimal wages. Any contributions at this stage in a process of consultation are valued. The report itself is going through an ongoing process. I would like to see it published before the end of the year. That is important. The exact protocol is that we provide a copy to the Government for consideration and the Government makes a decision on what it will do. I do not recall these reports being circulated anywhere else before they go to the Government. We do not normally do it. The consultation process in which we are engaged at the moment is a critical one for people to make observations and for us to listen. It is hugely important because as the Deputy said, it is a very important issue that relates to so many people.

Deputy Mick Barry

As I understand it, the report is presented to the Government and the commission does not independently publish it at that point. That is not an unusual situation. When the report is handed to the Government, is it publicly announced that it has been completed and handed to the Government, and it is in the Government's court? Is the public aware of the moment that the Government receives the report?

Mr. Ultan Courtney

I am not sure exactly what the protocol is. I will come back to the Deputy on that. As a commission, we certainly believe that people should be aware of where we are at in relation to it. The report goes to the Government. I do not see any reason the public should not be aware of that fact.

Deputy Mick Barry

That is helpful. I thank Mr. Courtney.

Deputy Matt Shanahan

I thank our guests for attending and for their opening statement which is quite informative. I will preface my remarks by saying that I brought some data into the Dáil last week about CSO findings with respect to the average disposable income available in different regions of the country. The median spend of people in the south-east region - Waterford, which I represent, is a key economic driver in the region - was basically 40% behind the median spend of people on the east coast. I preface my remarks by saying I wonder how that is taken into account by the Low Pay Commission in terms of research.

I have a couple of questions. I am particularly concerned with small businesses and the challenges to small business. What impact assessment was carried out in terms of the national minimum wage cost for small service businesses as part of the analysis?

Mr. Ultan Courtney

The commission is representative of employers and various businesses, for example in the retail and hospitality sectors, so we have that input straight away. All the organisations representing small businesses make representations to us on the minimum wage and lay out their stall effectively every year. Those in favour and those against tell us in great detail how would it impact on business. The range of options that we are provided with does not change much - there are those who do not wish to make any change, and those who want to make the maximum change possible. Small businesses in particular make a case in regard to the differences that can apply in regions and in sectors. In some businesses the cost of labour is quite high so they find the impact extremely hard. For others it is not such a difficulty. When trying to put in place a one-size-fits-all minimum wage, we accept that it will have different impacts on different organisations. That is why the employer support issue became important for us. We recognise that as we continue the trend towards a living wage of 60% of the medium wage, as the Government has mandated to do, that may become a more significant challenge for the smaller employer and we should take account of that. We are in a learning phase in the sense that we are moving from a minimum wage to a living wage, so the research is hugely important to us. The feedback we get is extremely important for us in trying to decide exactly what is the most appropriate thing to do, to get a fair and sustainable living wage and to get a rate that is reasonable and competitive, the cost of which can be borne by businesses.

Deputy Matt Shanahan

I refer Mr. Courtney to page 95 the Low Pay Commission report.

The report states:

The Low Pay Commission therefore reiterates its recommendation that this issue be discussed between the relevant representative groups and Government – in particular proposals regarding the details and design of such supports.

Mr. Courtney has said that the commission received submissions from small businesses, but I think I heard him say that the commission is looking to engage with the LEEF group.

Mr. Ultan Courtney

Yes, we have asked LEEF.

Deputy Matt Shanahan

As I have said at this committee a number of times, I do not think that SME participation is wide enough on that. I would like to see participation by the Irish Small and Medium Employers, ISME, which I think represents a greater number and probably a greater range of very small businesses, particularly microbusinesses. The commission has considered the matter but I am not sure it has considered enough the impacts on small businesses because that is not what I have heard from representatives of small businesses.

Do our guests agree with the ESRI's findings in January 2022 that some employers, particularly those in manufacturing, might reduce working hours because of the increase in the minimum wage?

Dr. Frank Walsh

As I tried to indicate earlier, in general the research on the effects of the minimum wage on employment and hours has not found that there is never any evidence that any firm reduces employment or hours. There are many reports, and certainly some of the reports that we have commissioned, that have found no evidence of reductions in hours. There was one report we found that showed there was a reduction in hours for temporary workers but it did not last past the first year of the increase. There were other reports. We looked at regional effects and we did not really find any statistically significant effects. It is certainly not true to say that there is no evidence that there is ever any subset that would reduce hours in response to the minimum wage. I think we have to look at the overall impact across firms and look within, as we have done for the temporary workers and so on. Our recommendations are based on a broad reading of the evidence. We are certainly not making a definitive statement that somebody cannot come up with a study that shows some group of workers had reduced hours. There are studies out there that show some other workers had an increase in hours, for example.

Deputy Matt Shanahan

I want to discuss the idea of supports. The commission has said that it recommends where wages should fall but it is up to the Government to determine policy. What do our guests think of the funding announced by the Government in terms of a derogation of rates for small businesses? How will that impact on small businesses that do not pay rates? I ask because they would have no credit to put against their operating costs.

Has consideration been given to the more than 63,000 SME companies warehousing a significant debt of over €2 million? Has this matter entered the thought process of the commission? Has the commission sought to make a recommendation to the Government to consider how this group of SMEs might be targeted?

Mr. Ultan Courtney

The question of how far the commission can take its recommendations, as distinct from the role of Government policy, is always a difficult one. The role of the Government is to try to take all of the issues that are presented - our submission is just one of the submissions it receives - and then to balance them with the financial and budgetary constraints of the country. From our perspective, it is clear that we want the Government to consider our recommendation. It has done so and people will argue about whether it is sufficient or insufficient in those terms. We will monitor to see exactly what impact it does or does not have on the minimum wage because we do not want a situation where vulnerable businesses are made more vulnerable and forced to reduce hours or to close. We do not want workers, who should be getting a legitimate increase in their terms and conditions of employment, to find themselves in a situation where they are put at risk. That is the balancing act. We do not always have the answer but we try to come up with the best estimate we can based on the information we are given, and it does vary and change. One can talk to one person who might have a completely different story and sometimes a very sad story about his or her business, whereas another person may be quite comfortable with the increase and can take it. There are other people who are not bothered by the increase because they are paying way beyond the minimum wage and do not pay minimum wages at all.

It is the old story that if we try to put a one-size-fits-all rate across an entire economy, there will be difficulties. Public policy and the social good seem to suggest that this is the thing we should be doing and we are trying to implement it. Time will tell whether we are implementing it successfully. At the moment we are reasonably comfortable that we are going in the right direction. We are reasonably comfortable that the Government is making the right decisions about this matter. We progress but we keep a very close eye on the data and the research to see if this is working and how well it is working and then we inform people as best we can.

Deputy Matt Shanahan

I thank Mr. Courtney for his reply. As I have mentioned, the commission needs to look at regional analyses in terms of the recommendations it gives to the Government. I have highlighted the disparity in disposable spending between the south east and the Border and midlands, versus the east coast. Unfortunately, a lot of the employers, the heavy-hitting policymakers and those who are able to lobby for policy are located on the east coast. That needs to be examined because a significant number of small businesses, particularly in my region, are going to struggle with the increase and the added cost. I am not saying that the minimum wage should not be increased. I am saying that special supports should have been looked at to support these businesses because they are going to have tremendous difficulty over the next 18 months.

Dr. Frank Walsh

For information purposes, we primarily look at the labour market data. I understand that there are other issues, as the Deputy has outlined, that are very important for SMEs. We have some information in the current report on the breakdown across some minimum wage workers, including information on the south east and regional variations. When we did a report on the employment effects by region a couple of years ago, we did not find what we expected. My memory is that we did not find any big negative regional effects on employment from the minimum wage. These things can be difficult to measure and there are limitations on our ability to measure things with the data but we have done some work on that.

Deputy Matt Shanahan

Please forward any current information.

Dr. Frank Walsh

Yes.

Senator Garret Ahearn

I agree with Deputy Shanahan's request that we examine things regionally. I am from an area of the south east that the Deputy does not represent but it is still the same region.

I thank the delegation for their contributions. I find it frustrating sometimes when we have meetings like this and are told that some of our questions cannot be answered because a consultation is taking place. That is not the fault of the delegation. I believe we should have had this meeting in two months' time rather than today. An important discussion is needed after the next report from the commission, particularly in terms of pay for people who are aged 17, 18 or 19.

A few minutes ago one of the delegation spoke about business representatives on their committee. Like any organisation, there are different views so I suspect that the commission would have predicted the criticism by businesses post budget about the increase in the minimum wage. The commission has welcomed the €250 million in support. It is important that the commission welcomes that support. It is not that the commission welcomes the support as being the only support but that it welcomes it as support. Did the business people in the organisation think there should be other supports provided to them to support them in terms of the impact generated by the increase in the minimum wage?

Mr. Ultan Courtney

I do not recollect from memory, unless somebody else does, any specific discussion about a support. When we discussed this matter before, a range of schemes, which we looked at, were put in place by the Government. It would have been suggested to us that the schemes were appropriate and perhaps nothing more was needed to be done. We made the argument that we would look at it again and make recommendations. I get nervous when I tread into the area of policy on this matter. Maybe it is something that the commission has to evolve into when we are talking about a living wage as distinct from a minimum wage because the minimum wage is meant to be a floor and we are also making a recommendation on the rate as such. Now, as we move towards a living wage, which is more of a safety net, and as we take into consideration other factors, our remit has changed. We want to be conscious that we are independent and we are making a case to the Government that it can stand over, and that the Government does not believe we are dictating policy decisions to it.

It is hugely important to us that the Government be allowed to do its job. We make recommendations and the Government makes decisions. We are on a journey. The minimum wage is on a journey to the national living wage and we are in transition. We are learning too. We accept that. We have research and data internationally and from Ireland. We have copious numbers of people giving us their views. We know we cannot satisfy everybody. In fact, we do not even try. We try to be independent and if that means we have to disagree with people on the employment side, that is fine. If it means we disagree with employers, that is also fine - or agree, as the case may be. We try to be research based and fact based and try to give some sort of recommendations that the Government can draw comfort from. I draw comfort from the fact that the Government has always accepted the recommendations of the Low Pay Commission, even when they have been extraordinarily low and cautious at times, when it did not believe they were justified or like now, when there is a substantial increase in the minimum wage and the Government has gone with that and with us. It is something we will always try to balance out but we know we cannot win. We know we are not here to please everybody and we are not going to try.

Senator Garret Ahearn

Mr. Courtney talked about the recommendations the commission has given and how the Government has always supported them. There have been about ten increases in the minimum wage since 2011. Mr. Courtney talked about the percentage and how close we are getting to 60%. From where we were in 2011, we are at 51% now. Has that percentage consistently increased as we have gone along? Did it decrease in the middle?

Dr. Frank Walsh

There is a graph on page 87. Mr. Gilmore did a lot of work graphing the median wage over time. It went down a lot from around 2018 and there was this big dip. I was on-----

Senator Garret Ahearn

Is that in the living wage or the minimum wage in comparison to the living wage?

Dr. Frank Walsh

If you look at the share of the minimum wage relative to the median wage, which is our-----

Senator Garret Ahearn

It is the percentage.

Dr. Frank Walsh

Yes, the percentage. It goes way down from 57.6% in 2018 to a low last year. As I say, I was there for a number of those years. We were in a bit of a fog in terms of data, in particular throughout the Covid years when the labour market data was just meaningless. I do not think it was our intention that this would happen. Having been there at the time, these were difficult years and our intention was to be in a holding pattern where we would hold the minimum wage relative to what was going on with other workers. It is fair to say that last year when we had better data, when we had the tax data and could get better calculations, is when we started to adjust and realised we had fallen behind.

Senator Garret Ahearn

The fear from a business perspective is about trying to get to 60% but we have been almost there before, at 58%.

Dr. Frank Walsh

We have been almost there before. In 2017 and 2018 we were pretty close. In 2015 we were at 56.8%. We were higher than we are at the moment in those years and then we fell between 2018-----

Senator Garret Ahearn

Is it recognised that the market is strangely and very unusually, an employees' market at the moment, that they can dictate what job they want, where they want it and the terms and conditions? An awful lot of business owners would say that the employee is interviewing the employer rather than the employer interviewing the employee. There is a balance here. You do not want it entirely the opposite way either. Is it being taken into account that there are unusual challenges at the moment for employers in terms of employing people?

Senator Sherlock talked about people on the minimum wage. An awful lot of them only do 19 hours a week. There are reasons for that from an employee's perspective. With regard to the goal to get to the living wage, have the witnesses studied that to see if there is going to be an impact on employees wanting to work more than 19 hours a week?

Dr. Frank Walsh

We have done a lot of work on part-time employment and documenting who is part-time and what the hours are. As for how people might respond to the higher wage and labour supply effects, I would guess that people would want to work more. I could not put a number on it but you would expect there would be a positive relationship between people's desired hours and the living wage. The whole idea that firms will be able to attract more workers when the wage is higher is part of the rationale, in the economics literature, for why employment effects are not necessarily seen as negative for modest minimum wages anymore.

Regarding our considerations, we detail these in the report. Each year, we look at the possibility of slowing down or speeding up the progression towards the living wage. On balance, this year we took the view that we should speed up a little bit because unemployment rates are low and we found that we were at this kind of trough and had fallen behind, and for other reasons as well.

Senator Garret Ahearn

When the commission decided that, was it taken into account that businesses have had a very difficult three or four years with Covid, the cost of living and the war in Ukraine? They have faced major challenges.

Dr. Frank Walsh

Absolutely-----

Senator Garret Ahearn

That is not taking into account that we need to increase the minimum wage, obviously, and we have done that. Do the witnesses get the sense that there is a real fear on the part of businesses? I come from Tipperary. Particularly in small rural towns, there is a real fear about survival. A minimum wage increase in Cahir, where I am from, is very different to a minimum wage increase in Dublin city.

Mr. Ultan Courtney

That is an important contribution. I certainly noticed it last year when I holidayed in Ireland. I go down to various little places for a few days. I did notice that and I do talk to people. Our submissions do not just come from oral submissions from vulnerable employees and proper submissions from trade unions and workers. They come from talking to people and listening to what they have to say. I noticed that in certain sectors, and certainly in the restaurant trade, there was something happening and there was something not right. This is anecdotal; it is not research-based, I am afraid. I can only give the Senator my understanding, which concurs a bit with what he is saying. I noticed that a lot of windows had signs up saying they were not open on Mondays and Tuesdays. There were situations where employers seemed exasperated, in the few conversations I had with people directly. "How's business?" is my introduction when talking to people and they would say they were finding it difficult as people were not spending because costs were rising or this kind of stuff. There are definitely difficulties in sectors but when you go to other sectors, you would not get that. People were reasonably okay with things but in that particular aspect, there was a concern in my mind. That is why the debate at the commission became very good as regards the employer supports. We want to make sure we do not leave them too exposed and see what we can do. We do understand. I remember a statistic I saw somewhere stating that about 50% of new businesses do not make it, so it is hard enough as it is. They do not make it for lots of reasons. We did not want to contribute towards that but that is something we are very conscious about. There is a great deal of debate at the commission on the best policy to do that. Just as we know we cannot get everyone to agree with us, we also know that a one-size-fits-all approach is probably the best we can do, understanding that it might impact some worse than others.

Deputy David Stanton

I thank the witnesses again. I just have a few questions. On the final point made by my colleague from Tipperary, is the fact that we are now beyond full employment - I think the term that is being used - putting upward pressure on the minimum wage anyway? Regarding the competition for workers and the fact that many of the business owners we all meet tell us they find it difficult to get workers, is that putting upward pressure on wages, including the minimum wage, anyway?

Dr. Frank Walsh

Internationally, this is a general thing. It has been documented more in other countries than in Ireland but you would certainly guess that it is the same here. Wage growth is fairly strong for that reason. We looked at some data on vacancies and so on in the report. Labour markets are tight. The unemployment rate is 4%, so you would expect that. It has been documented extensively internationally not only that there is wage pressure but that there is wage compression because wages at the lower end are catching up little. I would expect that to be true.

Deputy David Stanton

But there is no research so far on that specific point that Dr. Walsh is aware of.

Dr. Frank Walsh

No, other than just looking at trends in wages and so on.

Deputy David Stanton

In another section of his report, Dr. Walsh referred to compliance and enforcement. He referred to displaying entitlements in the workplace and so on. There is a plan to actually do that, involving the Workplace Relations Commission and the Low Pay Commission. That has been put on hold. Dr. Walsh recommends that post-pandemic work recommences on the promotion of a poster, among other work. Where is that at the moment? It seems a good idea for people to be informed about their rights to a minimum wage. Are there any plans to get that going again?

Mr. Oisín Gilmore

This was a standing issue from before the pandemic, when there was a promotion of a poster by the Workplace Relations Commission. The report this year instead highlighted that the Workplace Relations Commission promotes information on its website and social media channels and that part of an awareness-raising campaign in January was done online and this might be more effective in reaching minimum wage workers and informing them about their rights.

Deputy David Stanton

That makes sense with regard January, so we look forward to some of that happening. We heard that people would be informed and have information available with respect to their rights, and that employers would be informed of their responsibilities with respect to compliance. Will the witnesses speak on enforcement of the national minimum wage? I know a number of enforcement orders have taken place.

Mr. Oisín Gilmore

That is the responsibility of the Workplace Relations Commission. I can tell the Deputy that there were 12,790 complaints to the Workplace Relations Commission over the course of 2022. Of those, only 72 requested an investigation under the National Minimum Wage Act. There were 62 complaints seeking adjudication under the National Minimum Wage Act, which is 136 complaints, or just over 1% of all complaints. Of the 24 employers convicted in 2022, two convictions relate to the National Minimum Wage Act 2000.

Deputy David Stanton

Can the witnesses tell us how we compare with other countries in the European Union?

Dr. Frank Walsh

Non-compliance as we measure it-----

Deputy David Stanton

I refer to the minimum wage level itself rather than non-compliance. How do we compare?

Dr. Frank Walsh

On the level of the minimum wage, I think there are reports on the median wage.

Mr. Oisín Gilmore

The monthly minimum wage in Euro terms in 2023 was the fifth highest in the EU of the 22 member states with statutory minimum wages. Converting it to purchasing power standard, so it takes into account different costs of living and different price levels in different countries, it is slightly lower, at around the seventh highest of the 22 member states with a statutory minimum wage.

Deputy David Stanton

Where will the increase coming in January leave us? The witnesses may not have that information there. Do they expect it will put us higher up the table?

Mr. Oisín Gilmore

I could not tell the Deputy because I am not aware of what decisions other countries are making. I can tell him that Ireland is not the only country to introduce significant minimum wage increases this year and last. If one compares the increases in the minimum wage last year, despite Ireland's increase in the minimum wage being one of the higher increases that the Low Pay Commission has recommended, it was middle of the pack relative to other European countries. My understanding is that this year, again, minimum wage increases across the EU will be quite high.

Dr. Frank Walsh

It is important that the commission spends much time thinking about the appropriate way to measure how high the minimum wage is. We have adopted a standard where it is important to look at the minimum wage relative to the wages in the country itself, rather than comparing the level of the minimum wage in Ireland with that in Latvia or a country that is very different. When we do that, it is a different picture, and we are more in the middle when looking at relative minimum wage.

Deputy David Stanton

The witnesses have done work on the number of people on the minimum wage by gender, by nationality, migrant status and so on. Have they looked or do they intend to look at disability? We have done some work on workers with disabilities. We know we are not doing so well on the European league table in that area. Have the witnesses done any work in the area of people with disability on minimum wage? Is it having an impact? Can we do more from that point of view?

Dr. Frank Walsh

I have thought about how one would go about it. We have limited research capacity and do the best we can. Something like that would involve doing a survey, gathering data and so on. We would not have the resources to do that. There is much evidence from different surveys that ask questions about disability, but once one narrows that down to people on the minimum wage in that survey, the number would be tiny. One just has to go out and get the data, which would be a difficulty for us.

Deputy David Stanton

The number of people with disabilities in the workplace is not as high as it could or should be. Are the wages they are being paid and supports they have impacting on that? As Dr. Walsh says, that is for another day.

Deputy Matt Shanahan

I return for a moment to the idea of a national median wage as opposed to a sectoral median wage. For example, in the pharmaceutical sector, the median wage would be far different to that of a courier company. How will the Low Pay Commission's research in the future reflect that? We have such a strong foreign direct investment component in the economy at present. It is probably skewing where the median should fall, certainly at the high end.

I have already raised the future analysis that the witnesses are doing. I believe they need to seek greater engagement with more employer bodies in the future to develop their analysis. From what I am hearing, there has not been the level of engagement that is required, particularly with the small and medium enterprise sector, which, at the end of the day, is the largest employer in this country. I have spent time working in the enterprise sector. I hear about the difficulties to business. Mr. Courtney mentioned the number of businesses that fail at start-up. That is because it is so hard to start a business. Senator Ahearn was talking about where the living wage might fall when looking across economies. Looking at the component costs of utilities in a business compared with five years ago, they are significantly higher. That has an effect on the profitability of businesses and what they can pay.

Regarding the research and analysis that the Low Pay Commission is providing to Government, would it consider doing research to support the value of low-paid work and how low-paid sectoral employers could be supported? For example, if a guy is coming back into employment on a job activation scheme, the chances are that he will be paid the minimum wage. He or she may be low skilled and doing a low-value job. With the rising cost of the minimum wage, employers will reduce that amount of activity.

That means the person will not remain in the workforce. The commission needs to carry out a sectoral analysis for small businesses in order to highlight to Government circumstances where we may have to continue providing support. If we are going to provide support via social welfare for people who are not working, it is far better to keep them employed for the myriad of reasons, such as social and economic, that we are aware of. I ask that the commission might look at something like that because I believe the Government has, in its drive to move on and to reflect economic activity and the number of people working, made a very advanced step, but we have imposed a significant cost on small businesses in particular. I can tell our guests that, in light of where the minimum wage rate stands, trying to start a microbusiness and employ two or three people is very difficult to do.

Mr. Ultan Courtney

We will take those comments and observations back to the commission and consider them. They are important and worthy of debate in the commission to see what factors we may look at for research in the future because our agenda is broadening, whether we like it or not.

An Cathaoirleach

Do any other members wish to contribute further? No. I thank the representatives of the Low Pay Commission for assisting the committee with its consideration of this important matter. We will consider it further as soon as possible.

That concludes the business of the committee in public session. I propose that the committee now go into private session to consider other business. Is that agreed? It is agreed.

Mr. Ultan Courtney

I thank the Chair. The commission always receives a good and fair hearing at this committee's hearings, which I appreciate.

The joint committee went into private session at 11.11 a.m. and adjourned at 11. 28 a.m. until 9.30 a.m. on Wednesday, 25 October 2023.