Low Pay Commission Report
32. Deputy Maurice Quinlivan: In light of yesterday’s publication from the Low Pay Commission, will the Minister of State indicate if he will be advising the Government to accept its recommendations and what is his view of the report?
Minister of State at the Department of Jobs, Enterprise and Innovation (Deputy Pat Breen): I thank Deputy Quinlivan for raising this question. The Low Pay Commission was established last year through the National Minimum Wage (Low Pay Commission) Act 2015. Its principal function is, once a year, to examine the national minimum hourly rate of pay and to make recommendations to the Minister in respect of the rate, ensuring that all decisions are evidence-based, fair, sustainable and do not create significant adverse consequences for employment or competitiveness.
The commission submitted its first report in July 2015. Its recommendation to increase the minimum wage from €8.65 to €9.15 per hour was accepted by Government and the increase came into effect on 1 January this year.
In its first report, the commission recommended that anomalies in regard to PRSI which could adversely affect employer costs should be addressed. To that end, adjustments were made to PRSI in budget 2016, which have been provided for by my colleague, the Minister for Finance. These changes will assist employers in reducing costs, thus ensuring a continuing positive climate for job creation. Measures were also introduced to ensure that the benefit of the increase was not lost to taxation for the employee.
The Deputy will be aware that the commission’s second report on the national minimum wage was submitted to Government yesterday and the recommendation made by the commission that the national minimum hourly rate be increased by ten cent to €9.25 will be considered by Government in the context of budget 2017.
I reiterate that the independence of the Low Pay Commission is firmly established in the National Minimum Wage (Low Pay Commission) Act 2015. The commission can only operate in accordance with that statutory remit and make recommendations to the Minister in accordance with the criteria that are clearly and explicitly set out in the Act. I want to make it very clear that I cannot speak for the commission and I stress the value of its independence. Clearly, the commission has to look at the matter across all the criteria of the Act. We will look at the report over the next three months and the Minister will make a decision on it in respect of budget 2017.
Deputy Maurice Quinlivan: I thank the Minister of State. In the summer economic statement, the Government has given a commitment to increase the minium wage to €10.50 per hour over a five-year period. How does one get from the current minimum wage rate of €9.15 per hour to €10.50 over five years with a ten cent increase? The answer is that it is impossible to do that. On the other hand, if the Government is making statements about the projected increase in the minimum wage over a five-year period, then what is the function of the Low Pay Commission? If the Government is going to set the rate, there is no need for a commission. Therefore, what is the role of the commission?
Yesterday’s recommendation is an insult to workers. It is a disgrace that a commission which costs the taxpayer almost €0.5 million would propose a ten cent increase to minimum wage for low paid workers. More than 70,000 people in the State depend on the minimum wage. The living wage is €11.50 per hour. At this rate, it will take 23 years for a minimum wage worker to achieve a basic living standard. Combined with the Government’s deferral of addressing the situation of zero-hour and low-hour contracts this month, this recommendation tells us two things, namely, that the Low Pay Commission is not fit for purpose and that the Government has no interest in tackling low pay, poverty and inequality.
Deputy Pat Breen: It is clear from the Deputy’s question that he does not think it would be appropriate for anyone to undermine or pre-empt the work of the Low Pay Commission. That is exactly what is laid out in the rules in the National Minimum Wage (Low Pay Commission) Act 2015, as passed in the Dáil last year. The independence of the commission must be respected and observed by all, including the Government. Obviously, all the criteria must be taken into account in the legislation but the commission is independent. It has met on 18 occasions since February 2015. It has examined the available data and the 33 responses it received. There was public consultation and it held meetings in Monaghan, Galway and Dublin and it met with a wide range of groups.
Under the Act, the Minister must, within three months of receiving the recommendation in the report, make a decision and make the necessary order. If the Minister departs from the recommendation or declines to make an order, the Minister must prepare to lay this before both Houses of the Oireachtas and state the reasons for his or her doing so. I stress once again that the commission is independent. I cannot speak for the commission nor can the Minister, Deputy Mitchell O’Connor, and that is extremely important.
The Deputy asked what considerations the commission takes on board. It takes on board a wide range of considerations when it makes decisions, which are not made lightly. The commission has looked at all the areas of concern for the employers and employees. The commission’s role is to ensure the wage is appropriate and is one employers and employees can sustain, which is extremely important.
Acting Chairman (Deputy John Lahart): I must inform Deputies that I will start to apply the clock because we are running well over time.
Deputy Maurice Quinlivan: The Minister of State said the Low Pay Commission met on 18 occasions. However, I received a reply to a parliamentary question yesterday which stated that there were 22 meetings, so there is a slight difference there. Is the Minister of State aware that the chairman of the commission earned €22,493 from 2015 to the first quarter of this year? In that period, according to the response we received, the chairman attended 22 meetings, which works out at approximately €1,000 per meeting. This is the person who is chairing the Low Pay Commission which yesterday recommended a ten cent increase for workers on the minimum wage. Surely to God, if there was ever an example of gross hypocrisy, this is it.
Deputy Pat Breen: The commission is made up of nine members and the chairman is just one person of that group making that decision—–
Deputy Maurice Quinlivan: Three of them did not agree with him.
Deputy Pat Breen: —–and I have to respect Dr. Donal de Buitléir, an eminent academic, who has done great work down through the years. The aim of the minimum wage is to have an incentive to work, which is extremely important. A rate has to be set that is fair and sustainable to help as many people as possible without having a significant effect on the economy or a negative effect on employment. That is where the commission is coming from. It is made up of nine people, three representing the unions, three from the employers sector and three academics with expertise in the area. We must support their independence. They have made this decision based on what is fair and sustainable. It is now up to the Government.
34. Deputy Bríd Smith asked the Minister for Jobs, Enterprise and Innovation
Given all the talk this afternoon about the Low Pay Commission and the minimum wage and the obvious argument that this is a very low wage economy, we have to legislate carefully to make sure people do not fall too far below the poverty line, but workers already do. There was an attempt last week to introduce an au pair Bill that would prevent those workers having access to the industrial relations machinery of the State. I am very concerned about certain companies establishing here and practising which are paying workers well below the minimum wage and refusing them access to the Workplace Relations Commission. I am talking in particular about Deliveroo. How can the Minister regulate that and stop these things happening?
Deputy Pat Breen: I have forwarded the details supplied by the Deputy to the Workplace Relations Commission for examination and action if appropriate. Irish employment rights law makes a distinction between a contract of service, which applies to an employer-employee relationship, and a contract for service, which applies in the case of a self-employed person. Most employment rights legislation does not apply to independent sub-contractors with the exception of health and safety and equality.
Ireland has a well-resourced and proactive labour inspectorate, which now forms part of the Workplace Relations Commission, WRC. There are already existing mechanisms in place to tackle this issue. Inspections are undertaken on the basis of risk analysis which identifies certain areas of focus. Where the WRC inspection service receives complaints in relation to bogus self-employment or bogus sub-contracting, they are forwarded to the Revenue Commissioners and-or the scope section of the Department of Social Protection for investigation either solely by the recipient or jointly with the WRC.
In most cases, it will be clear whether an individual is employed or self-employed. Where there is doubt in relation to the employment status of an individual, the relevant Departments and agencies will have regard to the code of practice for determining employment or self-employment status of individuals. This code was drawn up and agreed in 2007 by the relevant Departments with the Irish Congress of Trade Unions, ICTU, and the Irish Business Employers Confederation, IBEC.
The Deputy will be aware that the Department of Finance and Department of Social Protection have recently conducted a joint public consultation on the use of intermediary-type structures and self-employment arrangements.
There is a convergence of interests with my Department. Apart from the significant losses to the Exchequer, the practice has serious implications from an employment rights perspective. In this respect, it is important that individuals are correctly designated so that employees are not deprived of employment rights. This is particularly the case for vulnerable workers.
The case highlighted by the Deputy is one example of the changes that are emerging in the world of work. The European Foundation for Working and Living Conditions, Eurofound, has identified nine distinct new forms of employment.
The work of Eurofound reflects a common problem at EU and international level, and not just in Ireland.
Deputy Bríd Smith: This is a very old form of exploitation except that it is hyper-exploitation couched in modern facilities such as Facebook and social media to gain employment
[Deputy Bríd Smith: ] In fact, the contract from Deliveroo is quite similar to one I saw from a building company, Rhatigan. According to the contract, the people who work for it are self-employed, so they do not deserve the minimum wage but are on €4.25 or €4.50 an hour. They have no recourse or access to the WRC, and if any person attempts to go to the WRC or any other State machinery such as the Employment Appeals Tribunal, Deliveroo is indemnified against any costs or claims the person may make. Deliveroo is a growing company. I have a leaflet that was distributed to every home in Dún Laoghaire, not just restaurants. It exploits, in a hyper way, young people, foreign students and very young students in this country. A wage of €4.25 an hour is unacceptable, as is not having recourse to State legislation. Are we back to 1913? Can the Minister of State give us some guarantees that this will stop?
Acting Chairman (Deputy John Lahart): I need to remind Deputies that it is inappropriate to name organisations or individuals from outside the House.
Deputy Pat Breen: I did not name any company but, as I said, I have referred the company to the WRC, as I explained to the Deputy. There are new forms of employment all over Europe. It is a problem for Europe, one with which Eurofound is dealing.
The Revenue Commissioners examine the taxation problems for such workers and the scope section of the Department of Social Protection has the function of deciding whether a person is an employer or an employee. It is important to point that out. In the code of practice we discussed, there are criteria in place to determine whether a person is an employer or an employee. I can send the information on to the Deputy.
The WRC has a statutory authority to share information with Revenue and the Department of Social Protection. A total of 575 joint operations took place between the two bodies in 2015 and 353 took place in 2014. Many more inspections have taken place. As the Deputy rightly pointed out, many problems arise in the food and hospitality sector. The WRC has 56 inspectors to carry out this work. I am satisfied that it has the necessary resources.
Deputy Bríd Smith: I am glad there are 56 inspectors. It is not that long ago that there were more dog wardens in the country than labour inspectors. I worked for a union, tutoring in labour law. We were acutely aware of the lack of resources for inspections.
I do not want to take up too much of the Minister of State’s time, but we have to go a bit further with this. We need a mechanism in labour law which will insist that if a watchdog such as the WRC receives enough complaints from the public it can carry out a thorough investigation into the activities of any company, such as those I have mentioned, and the hyper-exploitation of young people. If we let this happen, why would all bus drivers, teachers and nurses not be on self-employed contracts? We are hurtling in that direction if we do not stop this.
Deputy Pat Breen: This is a problem not just in Ireland but all over Europe, and that is why Eurofound is examining the issue. There is employee sharing, job sharing, interim management, casual work, ICT-based mobile work, voucher-based work, portfolio work, crowd employment and collective employment. I am satisfied that the WRC is doing its job. Problems that previously took two years to solve now being dealt with in three weeks. The WRC has the necessary resources and manpower, and we should let it do its job with the assistance of the Department of Social Protection and the Revenue Commissioners. They share information and carry out joint operations and inspections. That exercise is extremely important and uncovers a lot of non-compliance in the areas we have mentioned.