Plight of low-paid workers falls down list of government priorities

19 July 2016

Today’s report from the Low Pay Commission on the proposed 2017 rate for the National Minimum Wage is disappointing.

This year, I increased the National Minimum Wage to €9.15 an hour from €8.65 per hour. That means that a single worker who ordinarily works a full week will be almost €800 better off in 2016.

As a result of this recommendation, if accepted by government, the future for those on low pay looks less bright than it ought to be.

The proposed increase of 10 cent per hour for the lowest paid workers in the State falls well short of anticipated average earnings growth in Ireland this year.

We have recorded stellar employment and economic growth this year and last.

Those who predicted the demise of the retail and hospitality sectors as a consequence of this year’s 6% increase in the rate of the minimum wage have been proven wrong.

Consumer confidence is flying and the Irish economy is the EU’s fastest growing with an expansion of about 5% this year. Ireland is now seventh, having climbed nine places in the IMD World Competitiveness handbook.

The mood music from government in recent weeks has created the expectation that this recommendation would be on the low side.

At this rate, it will take about ten years for this government to reach its stated objective in the Programme for Government of a national minimum wage of €10.50 an hour by 2021.

Almost three months into the lifetime of this administration, it appears that government has yet to provide guidance to the Low Pay Commission as to how this target is to be reached over the next five years.

As the LPC is a statutorily independent body, it is the case that the legislation governing its functions and operation would have to be amended to allow the target to be reached and to enable the Commission it to take a direction from government.

The fact that this has yet to be done shows just how low down the list of priorities the plight of low paid workers is for this government.

This inaction confirms my suspicions that the government itself doesn’t believe it has a shelf life beyond next year.

Even the Conservative Party in the UK wants to see the NMW converted to a Living Wage of 60% of median earnings by 2020. In doing so, they directed the UK Low Pay Commission (on which we have modelled our Commission) to consider the pace of increase and how the 2020 target would be reached.

Labour is proud to have established the Low Pay Commission and to have presided over a cumulative 20% increase in the National Minimum Wage from 2011 to 2016.

I am absolutely confident that the LPC has, can and will play a hugely valuable role in making sure that work pays and that our society becomes a better and fairer place.

However, political leadership and vision is required to allow it to make good on the political promises made by FG and the Independent Alliance around increases to the minimum wage.

Labour wants to see the NMW reach 60% of median earnings, in line with the original aim of the 2000 National Minimum Wage Commission and we clearly set out those plans out in our 2016 manifesto.

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