Dáil Éireann Debate, Thursday - 12 October 2023
10. Deputy Maurice Quinlivan asked the Minister for Enterprise, Trade and Employment his views on the progression of the introduction of a living wage, as committed to in the programme for Government; and if he will make a statement on the matter. [44415/23]
Amharc ar fhreagraMy question relates to the Government's commitment to introduce a real living wage as outlined in the programme for Government. This must be a priority. Ensuring that people are paid a living wage is crucial to the well-being of our citizens and to the overall health of the economy. Low-paid workers are often the backbone of our society, performing essential roles in various sectors, especially retail, health and social care. The living wage is accepted to be the minimum amount acceptable for a decent standard of living. It is a wage that grants earners the opportunity of having a socially affordable standard of living. They deserve to earn a wage that enables them to meet their basic needs and live with dignity.
I thank Deputy Quinlivan for asking this well-timed question. I am extremely supportive of the living wage. It is part of our commitment to making work pay and supporting workers. As the Deputy correctly stated, the low-paid workers in our society are facing the same increases in the cost of living as the rest of us. They see their energy bills rising and are faced with childcare costs, rent and mortgages. We are proud to support to support these workers.
The first step towards reaching a living wage was the 80 cent increase to the national minimum wage on 1 January 2023, bringing it to €11.30 per hour. This will be followed by a €1.40 increase to the national minimum wage which was announced as part of the budget earlier this week. This significant increase will come into force on 1 January 2024 and will increase the minimum wage to €12.70 per hour.
The Low Pay Commission estimated that the €1.40 increase in the 2024 national minimum wage announced earlier this week will bring the minimum wage to 55.1% of median hourly wages. The Low Pay Commission will continue to make annual recommendations on the appropriate rate of the national minimum wage and the increases required so that by 2026 the minimum wage will reach the target of 60% of hourly median wages. The increase in the 2024 national minimum wage of €1.40, or 12.4%, is significant. Coupled with changes in income tax and the universal social charge announced in budget 2024, it shows the Government’s commitment to protecting and improving the incomes of low-paid workers.
Though the move to the living wage is a more recent decision, my party has increased the minimum wage ten times while in government. When we entered government in 2011, the minimum wage stood at €7.65 per hour. That it will become €12.70 in January 2024 is proof in the pudding that we truly believe in this. Once the 60% threshold is reached, the Low Pay Commission will assess the impact of the progression to the 60% target and then advise on the practicalities of gradually increasing the targeted threshold rate towards 66% of the hourly median wage.
I thank the Minister of State. Even if the median earnings calculation is reached in 2026, as stated by the Minister, Deputy Coveney, on budget day, it will not be delivered in the lifetime of the Government. As I said, a living wage will provide for basic needs, not wants. It is unlike the national minimum wage, which is not based on the cost of living. By implementing a minimum wage of €14.80 per hour, as recommended by the living wage technical group, we would not only improve the lives of many workers but also send a powerful message that we value their contributions and are committed to reducing income inequality. Such an amount would allow people to live with a level of dignity that a lower wage simply does not offer. To put this in context, at least 671,000 people live in poverty, according to Social Justice Ireland, and many of those are in the workforce.
It is true that implementing a living wage will come with some financial challenges, especially for businesses, some of whom may need temporary and limited Government support to deliver a living wage. However, the long-term benefits would far outweigh the initial costs. A real living wage would reduce the strain on our social welfare system and stimulate local economies by increasing consumer spending. It would also contribute to a fairer and more inclusive society.
The Government has flagged its aim to reach the living wage by 2026. There is no electoral context. It is not linked to the lifetime of the Government. We are moving steadily towards it. Will Deputy Quinlivan clarify whether it is still Sinn Féin's position that 60% of the median wage, moving towards 66%, is a living wage, as was the general consensus, or has it changed? It is important that this is done in a phased and calculated manner. It is good for workers, but it also reflects the fact that this requires serious buy-in from employers of all sizes. We want to do this in a way that does not impact drastically on inflation and that is sustainable for workers and employers alike.
We are doing that and are making very substantial moves through the recommendations of the Low Pay Commission and I believe we will be well on course to reach that target by 2026, as has been set out for years at this stage.
The Minister of State will be well aware that we have always supported the The Living Wage Technical Group's recommendations on that, which is different from what the Minister of State's Government has said is the living wage. We have always been cognisant of the problems and challenges which SMEs will face with regard to their ability to pay the living wage. For some businesses an increase is a burden which will place an initial stress on the performance but that can be temporary and the Government can assist them. We have the temporary business energy support scheme, TBESS. In August of this year we were told that less than 10% of that €1 billion budget had been spent. As regards the rest of that budget, a portion of this could be repurposed to assist the smaller and medium enterprises in the initial period of introducing the living wage. It could and should be used for what it was there for, which is to support businesses going forward.
It is within the gift of the Government to deliver such support and it is within its gift to deliver a true living wage. Low pay workers, many of whom work and are at risk of poverty as I said earlier, need to be helped especially at this time, particularly in a cost-of-living crisis.
On Tuesday, the Minister, Deputy Coveney, announced a €250 million investment from this Government in SMEs. This new fund will benefit 87% of rate-paying businesses across the country. This is in recognition of the need to increase the minimum wage, move towards a living wage, as well as accepting the increased costs to businesses. This grant will be paid into the bank accounts of these businesses in the first quarter of next year and this is the re-purposing the Deputy is talking about. It is effective and will get to source. This Government is completely committed to increasing the national minimum wage, reflecting the recommendations of the Low Pay Commission and will reach the living wage, bearing in mind that many business leaders, the larger ones with the ability, have already moved ahead in this process. We will reach it by the stated target of 2026 and we are doing that in a manner which brings the employers and the employer groups, as well as the trade union movement and the workers, on that journey as well.
