This is a verbatum record of the 'debate' in the Northern Ireland Assembly on the resolution calling for the setting of the Minimum Wage at £5 an hour.
This debate was held on Tuesday 3 April 2001
Mr B Hutchinson: [He is a leading member of the Progressive Unionist Party, a party based on loyalism but which briefly had a socialist influence.]
I beg to move
That this Assembly considers the current minimum wage threshold to be too low and supports a minimum wage level of (at least) £5 per hour and calls for the youth exemption contained in the current legislation to be abolished so that the £5 per hour rate applies to all.
I want to point out a number of things about the legislation, even though it is a reserved matter. The legislation has been ineffective in tackling the problem of low pay and exploitation. Low pay is not an issue about people not doing the work; it is about exploitation.
There are three reasons why the legislation has not tackled the problem properly. First, the minimum wage has been set too low. It does not even keep pace with inflation. For many, it becomes the maximum, not the minimum wage, and we need to take that into consideration.
Secondly, there is no adequate enforcement. The unit that deals with enforcement is hidden away. There are very mild penalties. The unit is understaffed, and employers know that if they are caught the worst that will happen to them is that they will be made to pay the minimum wage.
These factors illustrate the fact there are few incentives to deal with the problem.
The third problem with the legislation is the inclusion of exemptions, the most obvious of which is age. We all know that for a long time a number of “high street” companies have been paying their staff a low wage. Some Members have sponsored Third-World issues. However, when considered in the round, it seems that some of the cases in Northern Ireland are just as bad. For example, certain companies pay 17-year-old staff members £1·70 an hour. That is a total disgrace, and we need to deal with it. Those Members who have supported such worthy causes elsewhere need to recognise that we need justice for people in the United Kingdom.
The Anti-Poverty Network’s statistics show that low pay affects 300,000 people in Northern Ireland. That is a damning statistic that we all need to take into account. The NSPCC claims that one in four families and one child in three lives in poverty. These are also damning statistics for such a society as ours, and we need to look at this in the context of low pay.
Northern Ireland wage levels are 20% lower than those of our counterparts on the mainland, yet the cost of living has increased at a quicker rate. My Colleagues on the Unionist side of the House continually, and rightly, refer to the need for parity with the rest of the United Kingdom. We need to look at the levels of wages needed to keep abreast of inflation and to ensure that people do not end up living in poverty.
Among the other factors that put Northern Ireland at a disadvantage, in comparison with the rest of the United Kingdom or even with the rest of Europe, is the 140% increase in our fuel prices. These are matters that we have to deal with on a daily basis. Electricity prices here are 21% higher than in Scotland, 27% higher than in England and Wales and a massive 53% higher than those of our neighbours in the Republic of Ireland. Those statistics highlight how important it is for employees here to earn a decent wage which enables them to keep their heads above water.
Our domestic electricity prices are the most expensive in Europe. The cost per unit in Northern Ireland is 9·43p. Electricity is cheapest in Finland, where it is 4·47p per unit. These factors need to considered when we, or employers, are deciding how much people should be paid. Statistics showing electricity prices and the earnings of those at the lower end of the pay scale are damning. In the financial year that ended in April 2000, Viridian made £70 million in profits, but it also announced that prices would rise again. Six weeks ago we had a heated debate on electricity prices.
Mr Cobain: [A member of the Ulster Unionist Party]
A heated debate?
Mr B Hutchinson:
Yes, it was a heated debate. Funny comments are not very appropriate to this debate, especially when they come from the Chairman of the Social Development Committee, who knows about the problem of fuel poverty.
We should be linking all of those with low pay. Take the lack of investment in the transport infrastructure and the effect that has on such people. Most people here need cars to journey to and from work because of that. One example, which cripples most people, is the cost of car insurance in Northern Ireland compared with that in the rest of the United Kingdom. That is just another element.
We listen to and comment on Budgets and Programmes for Government. On Committees we talk about sustainable development in communities, job creation and urban and rural regeneration. Even if we achieve all of that, will it work when the Anti-Poverty Network is telling us that 300,000 people in Northern Ireland are affected by low pay? Surely we must do something about that and ensure that the Assembly deals with poverty here? We say that we want sustainable development, and yet 300,000 people are affected by low pay. We cannot even guarantee that people in work will receive a wage from their firms that will keep their families on a weekly basis, yet we are asking communities to produce sustainable development.
The Green and Orange Tories in the House will argue that if we increase the minimum wage to £5 we will lose jobs rather than create them. That brings me to the amendment from Dr Birnie and Mr Beggs. They are asking us to look at the impact on national and local employment and to consider possible alternative threshold levels. Why not look at the European threshold level, which is set at £7? Regarding the amendment, I am not asking for a change in legislation today — it is a reserved matter — but I am asking people to do a number of things. We need to look at what the Assembly can do today and tomorrow without having to change legislation. The legislation can be changed as we go along.
As I have already said, we have to take action to lessen the burden on the 300,000 people in Northern Ireland who are affected by low pay. The Assembly could do something, if it wanted to. Bringing the motion to the Floor has already started the process. That has allowed a discussion to take place, and when I am finished speaking I hope that a serious debate will ensue. I call on everybody in the Assembly, and those outside, to lobby our Westminster MPs to try to get the minimum wage changed to £5.
I also call on the Assembly to establish a policy whereby all departmental employees, direct or indirect, are paid at least £5 per hour. A precedent has already been set here with the Assembly Commission’s deciding to set the minimum wage at £5. Departments could follow suit. We should take the lead and talk about what we can do. In summing up, my Colleague, Dara O’Hagan, will provide a breakdown of the figures of people being paid under £5 per hour in each Department. Let us establish a policy whereby the Industrial Development Board (IDB) does not award Government grants to companies that will not pay £5 per hour. We could restructure Government-sponsored training programmes to ensure that they top up state benefits to a level of at least £5 per hour.
Many lessons have been learnt about community development and economic regeneration. One is that without an integrated approach, they will not work.
The other is that Government aid is being poured into different areas, but the issue is not being viewed in a holistic way. Now is the time to do that. We must look at how much money is being injected into Government programmes and at how much money the Department of Health, Social Services and Public Safety is contributing. All these issues must be examined to see if resources can be better utilised. There is an opportunity to look at the New Deal and other schemes — which do not work in any case— to see how they can be restructured.
If the Assembly cannot implement my suggestions on the 300,000 people who are on low pay, it is telling society that it is not prepared to deal with such matters. This is one way of dealing with some aspects of poverty. I ask all Members to support the motion.
Dr Birnie: [Ulster Unionist]
I beg to move the following amendment: Delete all after “low” and add
“and calls for an adequate research assessment of the national and local employment impact of possible alternative threshold levels.”
The proposer of the motion referred to me and the co-sponsor of the amendment as “Orange Tories”. I can only speak for myself: he is half-correct, but perhaps not the half that many people might expect.
Mr Ervine:[PUP]
When the Member reads Hansard tomorrow he will see that neither Member was named as an Orange or Green Tory.
Madam Deputy Speaker:
Order.
Dr Birnie:
I do not deny that the proposers of the Sinn Féin/PUP motion have some worthy objectives, to the extent that Mr Hutchinson referred to the problem of non-enforcement — that is, the illegal non-payment of the current minimum wage. I doubt if anyone in the House would disagree with that. I hope that we all support enforcement of the law as it stands.
In this amendment we are not attacking the minimum wage in principle. We accept that it is in the law. However, the motion raises the crucial question of what the correct minimum wage should be.
There are many reasons to doubt the wisdom of pushing for an increase in the minimum wage from its current level — which in October will rise from £4·10 to £5 — without also giving adequate consideration to the full range of consequences that would result from such a change. This could have an impact especially on the poor, for whom the proposers have a high regard. Furthermore, policy elsewhere in the United Kingdom would have to be considered because this is a non-transferred matter.
In an ideal world everyone’s wages could be raised at the stroke of a legislator’s pen. But — and therein lies the rub — you cannot legislate your way to prosperity. This can be achieved in the long run only by having a more competitive economy.
The proposers have not yet indicated that they have considered seriously the possible negative impact on employment that would result from raising the minimum wage by the extent they propose, and hence the implications for unemployment. Neither have they indicated that they accept that there are sound reasons for the so-called youth exemption, whereby there is a lower minimum wage rate for workers between the ages of 18 and 21. Workers in that age bracket generally have a lower level of productivity and are often still in training. They do not produce as much as fully trained adult workers. It does not seem unreasonable, therefore, that companies should economise on their costs until these younger workers reach full or average productivity and are fully trained.
Remarkably, the proposers have ignored the stance of the Low Pay Commission, which was the body established by the Blair Government in 1997/1998 to decide precisely what is being debated today — the level of the minimum wage. The commission recently recommended that the UK minimum wage should be increased to £4.10 this October and to £4.20 thereafter. Indeed, my party, through its Westminster spokesmen, has already welcomed that.
Interestingly, the Low Pay Commission includes representatives from the Transport and General Workers Union, the Confederation of British Industry and a number of labour market economists. Therefore it would appear to be reasonable to follow the figures that they have arrived at rather than the figure of £5.
Northern Ireland starts from a position of a lower average level of wages and productivity than the rest of the UK — something that the proposer did not mention. This implies that any ill-considered increase in the minimum wage here could have even more job-destroying effects on competitiveness. Members are too well aware of the tenuous position of firms in sectors such as textiles, clothing, farming and tourism. We should not lay the final straw upon such firms and possibly break their backs.
International evidence, as provided by the Organisation for Economic Development and Co-operation in 1998, implies that as a country’s minimum wage rises as a percentage of the market wage rate then the rate of unemployment in that country also rises relative to other countries. For a long time, France has had a relatively high minimum wage for its youth and it has also had a much higher rate of unemployment among young people than either the UK or USA.
Mr Ervine:
Bearing that in mind, will the Member give some indication as to why Northern Ireland has had its lowest levels of unemployment for a long time, even though the minimum wage has been in existence and has been increased?
Dr Birnie:
I was going to come to that point later.
In a sense, we have been fortunate that the introduction of the minimum wage in 1998 corresponded with a boom that was happening in the Northern Ireland labour market. Therefore, any negative effects on competitiveness were submerged by other changes.
However, the international evidence is clear, and I have some of it with me. If the minimum wage rate is set at too high a level for people under the age of 21 then it will destroy jobs. For example, the youth unemployment rate in France in the late 1990s was at the shocking level of almost 30%.
The House will destroy its credibility if it establishes a pattern of adopting what are simply economic wish lists. We might think that those are popular — and, of course, there are elections coming up shortly — but we will not be delivering what is in the real, best interests of the people. Almost every economic study has indicated that when a minimum wage is set at a relatively high level compared to the market rate it causes some increase in unemployment. Perhaps the 1998 UK minimum wage did not cause obvious unemployment because the level was considered carefully by the Low Pay Commission and its introduction — [Interruption]
Mr Kennedy:
Would the Member care to indicate what he personally thinks is an appropriate level for the minimum wage, given that he does not want to legislate for it?
Dr Birnie:
My feeling is that a rate of £4.10, which will rise to £4.20 next year, as recommended by the Low Pay Commission, is not unreasonable because the commission represents industry and economic experts.
Studies have indicated that minimum wages are not necessarily the best way to tackle poverty. That is another crucial point that the proposer of the motion did not adequately address. Many poor people are not in employment, so raising the minimum age does nothing to help them. That point was recognised by the Secretary of State for Trade and Industry, Mr Byers, in the statement that he made on the increase to the minimum wage on 5 March this year. Moreover, many low-wage workers belong to families that are not in the lowest income categories. That point was recognised by the Northern Ireland Economic Council in its 1998 report on the introduction of a minimum wage and its impact on the local economy. The level of the minimum wage is not, in any case, a transferred matter; responsibility still lies with Westminster. The proposer recognised that, but he failed to show why we should move beyond the levels established by the UK Low Pay Commission, which are now being adopted by the Secretary of State for Trade and Industry.
I agree with the proposer about the need to deal with poverty, but he did not prove the case that raising the rate to £5 an hour at this stage was the best means to that end. The amendment does not rule out an increase to the minimum wage, but calls for careful consideration of the impact of any increase on unemployment figures and consideration of whether that would be the best way of tackling poverty generally.
Madam Deputy Speaker:
Because of the number of Members who want to speak in the time allocated by the Business Committee, I must ask that contribution be limited to five minutes.
Mr McGrady:[Social Democratic and Labour Party - the mainstream, catholic, maily middle class party, there is no socialist or labour element in this party.]
Madam Deputy Speaker, your pronouncement cuts to pieces what I was going to say. Little can be said in five minutes.
I welcome this cross-party motion. It addresses the culture that exists in Northern Ireland of paying people at the lower end of the wage scale. That has, in turn, created a further dependency culture, as people seek benefits and other ways of augmenting their income.
I listened with interest to what the proposer of the amendment said, especially the statistics. The problem is not new to Northern Ireland, and I am glad to support the motion. At a conference a quarter of a century ago, in 1973, my local branch of the SDLP proposed a motion calling on the conference to support a demand for all workers in the North to receive a national minimum wage that would be reviewed annually. It has taken a long time for that demand to reach fulfilment, and I think that we are still falling short of what is required.
Ms McWilliams:[Leader of the NI Women's Coalition, set up in 1996 as a political pressure group to promote women in politics, it has few clear policies, despite/or because of a Communist Party influence.]
Will the Member give way?
Mr McGrady:
I have only five minutes, so I am not going to give way.
I was glad that the Labour Party in Britain had caught up — albeit a quarter of a century later — in their manifesto for the 1997 general election.
The proposal in the motion is for a minimum of £5 an hour. People who work a 38-hour week — a full week’s work — are entitled to £190 a week for their labour, whoever they are or whatever their skills. No one should object to such a basic rate. Some may think that we are getting ahead of ourselves by proposing an increase of 10p or 30p an hour, but we should consider the statistics. Of all the European countries with a minimum wage — for example, Belgium, Greece, Spain, France, Ireland, Luxembourg, the Netherlands, and Portugal — the United Kingdom is second last.
It contributes only 38% of average earnings. Some Members are fond of statistics so I am giving them some. The United Kingdom is second last in the list; Spain is the only country that is lower. We have all the statistics we need. The low pay units have been cogitating on the matter for decades. The purpose of the amendment is to nullify the motion and remove the £5 figure. There is no other purpose for it. Statistics are coming out of our ears. We know what is happening. The SDLP is interested in creating a greater degree of social justice, less deprivation and less dependency on handouts from the state or charities. Surely to God that is not only a political commitment but also a Christian commitment. The Assembly must endeavour to give equality to the people who are working hard, long hours at wages below the minimum wage.
Since the current legislation was introduced, between 1·25 million and 1·5 million people have benefited. That is how bad the situation was, and it can be improved. In Northern Ireland 50,000 people are going to have at least a measure of their regular income — earned by the sweat of their brow — delivered to them by the motion. It is a modest increase — about 10p per hour. That is not a big deal.
The SDLP is seeking to achieve a degree of justice and equality of treatment and to give some pride to people. They should receive a just reward for their labour.
The low pay unit concluded that a national minimum wage had not adversely affected the economy. That has been statistically proven by the Low Pay Commission. Therefore another few pence will not make much difference. The SDLP supports the motion.
Mr R Hutchinson:
I came to the House today with a mind —
Mr Ervine:
Does the Member come without a mind sometimes?
Mr R Hutchinson:
I will treat that comment with the contempt that it deserves.
I came to the House with a mind to support the amendment. However, having listened to Mr Birnie, I will not be doing so. It is a disgrace that there are 300,000 people on the poverty line in Northern Ireland. A verse that is quoted so often — “The labourer is worthy of his hire” — is a good motto for any society to live by. There are many reasons why the minimum wage should be raised to a sensible figure in Northern Ireland. Too many people are struggling. In our surgeries and in the course of our work we meet many people every day who, through no fault of their own, are struggling to pay their electricity bills and their insurance bills. They are trying to make a decent living for themselves.
Many of us have come from working-class families and are not ashamed to say that. We have watched our parents and families struggle year after year. They are people who went out to do a decent day’s work but were not given a decent day’s wage.
I am sad that this is a reserved matter. I hope that the powers that be take note of what has been said in the Assembly. People need to have a decent minimum wage. Mr Hutchinson said that the price of electricity is higher in Northern Ireland than anywhere else in Europe. We pay more for petrol, food and insurance. Why should Northern Ireland be treated differently from other regions in the United Kingdom and Europe?
A lot of people claim income support, and many are put off going out to work because their hourly rate is insufficient for their needs, though some break the law by doing the double. Are we encouraging people to break the law simply because the minimum wage is so low? We need to consider this very seriously. Many people need help with their wages. Imposing a minimum wage which small businesses cannot afford to pay will cause difficulties. We need to be careful to avoid problems of this kind.
Dr Birnie:
Surely that is precisely what the amendment seeks to do.
Mr R Hutchinson:
I have no problem with the amendment; it was your speech, Dr Birnie, that put me off.
Madam Deputy Speaker:
Order. The Member will address his remarks through the Chair.
Mr R Hutchinson:
It is not because you are not an Orange Tory either.
Madam Deputy Speaker:
Order. The Member will address his remarks through the Chair.
Mr R Hutchinson:
Sorry, Madam Deputy Speaker.
Many small companies would be burdened if we raised the minimum wage too much. We have to consider them because they have provided employment over the years. I support the motion.
Mr M Murphy:[Sinn Fein, nominally a socialist party.]
Go raibh maith agat A LeasCheann Comhairle. I support the motion. The exploitation of one person in the workforce is bad. However, it is an indictment of our society that over 100,000 workers in the Six Counties receive £3.60 an hour — particularly when one considers that it is women and young people who are being exploited. This is a return to the Dark Ages — sweatshop employers are exploiting the workers through pure greed.
Multinational businesses with over £1 billion annual profit worldwide come to mind. While the fat cats get fatter, the strays get thinner. We need to support workers and set the minimum wage at £5·00 an hour to lift them and their families out of the poverty trap. This will enable mothers and fathers to worry less at the end of the week about how to feed their kids and pay their bills. Go raibh maith agat.
First, I would like to thank Mr Hutchinson and Dr O’Hagan for bringing this motion before the House. However, I am surprised that such a limited amount of time has been set aside for such an important issue. The Alliance Party has always supported the principle of the national minimum wage, and we have also supported the European Social Chapter. The two are inseparable. It is a basic human right for an individual to get a fair day’s pay for a fair day’s work. We welcomed the introduction of the national minimum wage in April 1999.
It became illegal for an employer to pay less than the minimum wage. We all know that, contrary to that legislation, a number of employers tried to avoid that by threatening their workers with the sack if they complained. Unfortunately, many young people became victims of that. The exploitation of the young is nothing new in Northern Ireland or in other societies around the world.
One of the main benefits of the Good Friday Agreement was that it created a focus on basic human rights. I look forward to the production of a Northern Ireland bill of rights that will, I hope, become a model for the rest of the world and will deal with issues such as this.
Under the present legislation, different categories with different wage levels have been established. I firmly believe that that sort of categorisation contradicts the spirit of the existing equality legislation in Northern Ireland. The Equality Commission should look at that issue very closely, because we are well acquainted with the whole question of whether things are discriminatory. That is an issue that needs to be looked at very seriously.
On 5 March the Government announced that the national minimum wage would increase to £4·10 per hour from 1 October 2001 and £4·20 per hour from 1 October 2002. Such a proposal shows contempt for those in the low-wage economy. I strongly urge the Low Pay Commission, under the chairmanship of Prof. George Bain, who comes from Northern Ireland and should realise and understand the problems that exist in Northern Ireland, to seriously reconsider those recommendations.
It had always been my fervent hope that the uncaring and selfish society of Thatcherism was dead and buried, especially with the election of a Labour Government. I am sad to say that I have been very deeply disappointed by the approach of the Labour Party to many of the important social issues that permeate society, both here and in the rest of the United Kingdom. At the moment, Northern Ireland is being promoted overseas by the IDB as an economy that pays affordable wages. It would greatly concern me if in fact Northern Ireland were being promoted as a low wage economy, as it has been in the past. In trying to attract American investment to Northern Ireland, the IDB makes the point that wages in Northern Ireland are 35% lower than in America.
It is vital that all these workers receive a fair wage for a fair day’s work. I support the motion, not only because it reflects, in full, the policy put forward in the most recent Alliance Party paper on the economy, but also because it is fair and right. I oppose the amendment because it is a fudge and does not deal directly with the issue at hand.
Ms McWilliams:
I commend Billy Hutchinson and Dara O’Hagan for bringing this motion today. I support it. I did not have to come into the Chamber to change my mind, but in relation to what Esmond Birnie said, there are a number of myths that I would like to knock on the head. Contrary to his view, the national minimum wage has not caused and will not cause a reduction in employment. All the research on the national minimum wage points to the fact that the vast majority of firms have found it affordable. Dr Birnie needs to take that on board.
Secondly, it has not caused an inflationary hike in earnings or had a knock-on effect further up the pay structures.
Dr Birnie:
I agree with the Member that those conclusions have been reached. However, they relate to the rate of £3·70 per hour, which will go up to £4·10 per hour. They do not apply to the rate of £5 per hour.
Ms McWilliams:
Being a good economist, Dr Birnie should surely know that those who carried out the research have also done the forecasting. They pointed out that the national minimum wage would not cause an inflationary hike in the UK or elsewhere in Europe. On the contrary, the research argues that it benefits employers.
When the Hastings Hotel Group’s representative provided evidence on the tourism industry to the Higher and Further Education, Training and Employment Committee last week, I asked him about the impact of the national minimum wage on his industry. He said that it was good for the industry to have a national minimum wage. If workers are paid less than this, they are poached and move from one hotel to the other. An employer who can prove that he or she is paying good wages — with good training that leads to decent skills and qualifications — will earn loyalty and hold on to workers. That system can only be useful for the tourism industry. Those are the words of an employer.
Mr Hutchinson pointed out that for too long Northern Ireland and its tourist industry have been known for low wages. This is an indictment of that industry, and we must set a national minimum wage based on realistic living costs in Northern Ireland. It was with this in mind that the Trades Union Congress set a target of £5 per hour for collective bargaining at its 1999 conference. The UK Low Pay Commission settled on this rate also.
Unfortunately, a side effect of the national minimum wage is that certain workers have been told that they are no longer allowed to keep tips. We must have regard to this. In the past this workers have been able to supplement meagre wages by tips from customers. I take pleasure in the fact that, unlike America, we have not gone down that road and here you get what you pay for. Setting wages and reassuring customers that employees are actually getting those wages prevents us from wondering what kind of tips we should be handing out and from treating workers like servants.
Who are the low-paid? They are usually people in the private sector rather than in the public sector, although the Assembly should take a look at the staff from contract agencies who work here and who do not get £5 per hour. Members have queried this. Nevertheless, the proportion of contract agency staff in the Assembly has gone up rather than down. We may need to look at our own House in the public sector before criticising the private sector. However, more often it is the private sector that is not paying the minimum wage.
The low-paid are more often manual workers than non-manual; part-time rather than full-time; and women rather than men. It is also a problem for young people, and the motion addresses this issue as it has been the crux of the problem in the past.
It is inconsistent with legislation to talk about equal work of equal value and then talk about age differentials. Pay should be based on skills and qualifications, not on age. If an individual has the necessary skills and qualifications or is in training, work and pay should follow accordingly. Therefore, on the basis of fairness alone, we should not allow such differentials to enter the equation. That would create a labour market distortion, and historically younger workers have been seen as a cheap form of labour.
Those are some of my arguments for the creation of a national minimum wage of £5 per hour.
Mr Cobain:
I have listened to people talk about statistics for most of the day, but any economy has the right to pay people a minimum wage. This question involves both moral and economic issues.
There was a lot of resistance to the minimum wage being set. We are now seeing this resistance with respect to how much should be paid as the minimum wage, and that is the next hurdle we will have to jump. Those who have argued against the minimum wage have lost that argument, so the next argument will be to restrict the minimum wage as we go along. These are the arguments that some people are continuing to make.
The same arguments were made regarding a reduction in the number of hours worked. It was said that the economy could not sustain a reduction in working hours, an increase in holidays, and that it could not cater for women. All those arguments have been made before and the economy has proven itself stronger than most expected.
Unemployment in the United Kingdom is at its lowest level for 40 or 50 years. This does not mean that there is not a correlation between wages and unemployment. However, it is not the direct correlation that some are trying to make. Some people in my party have been unable to get over the fact that we have stopped putting children up chimneys in the last hundred years. There are issues that the Assembly must address. The Assembly cannot deal with the matter directly, but there are issues, such as those that Mr Hutchinson raised, that the Assembly could have a direct impact on.
Moving on to the issue of poverty, we cannot have this silo effect where we deal with wages and simply forget about the rest of the issues. During the debate on the Executive programme funds the Department for Social Development, which deals directly with people who are living in poverty, received less than 1% of the £146 million that was allocated by the Assembly. Issues that directly related to poverty were excluded.
People come here and they like to make brief, media- catching statements, which really do not mean anything. The vast majority of Members are — cross my fingers — left of centre, and the people should be benefiting from radical new ideas agreed and put into place by the Assembly. That is not happening. There are people here who have never suffered from poverty and do not look at poverty as a whole. Many of us have experienced poverty, but there are people here who have no perception of what it is like. I listen to arguments about whether the minimum wage should be £4, £4·20, or £4·30. Many of us are angered when we listen to arguments like this, especially when they comes from professional people who have been born with a silver spoon in their mouths and have been helped throughout their life. These are the ones who claim that 20p an hour may have an impact on the economy.
My point is that if we are concerned about people living in poverty then the minimum wage is only one aspect. There are people living in Housing Executive homes who will be unable to have their bathrooms and kitchens replaced this year because the Assembly voted to restrict the amount of money that will be spent on that. People are dying of hypothermia because the Assembly refused to provide money for fuel poverty. In the education field, there are second and third generations who are suffering from numeracy and literacy difficulties and we have not provided money for that. I could go on for the next 25 minutes about what the Assembly could have done and yet did not do.
Many of us are deeply concerned about poverty. It is a cross-party matter. However, there are people here who are using this debate. They are hypocrites, because when it comes to issues directly related to poverty, they will refuse to vote for issues because it will, in some cases, embarrass their Ministers and Departments.
Ms Hanna:[SDLP]
I support the principle of a minimum wage, which can and will be negotiated upwards, perhaps even higher than £5. I am no economist but I believe that the argument regarding a minimum wage having a negative impact on employment can no longer be substantiated.
We have to give people a decent wage for a decent day’s work. A minimum wage will go some way towards enabling those caught in the poverty trap of low-paid jobs and benefits to take up the challenge of a job — especially women, who fill three quarters of the low- paid jobs — and towards eradicating the exploitation of workers. It is a tool to tackle inequality by increasing the wages of the lowest paid. It is unfortunate that the under-18s have no set minimum wage; this might reflect their youth, and lack of training, but a fixed minimum wage would give young people some protection from exploitation.
The gap between the rich and the poor, the haves and the have-nots, is increasing. The Low Pay Unit estimates that over three million households in the UK live in poverty, despite the fact that at least one member of each is in paid employment. UNICEF has ranked the UK as being in the bottom four of its league table of child poverty in rich nations. One in three children in Northern Ireland lives in poverty. Women who work full-time are still paid only 80% of their male colleagues’ earnings, and part-time female workers receive even less.
The repercussions of these fundamental inequalities spread through every aspect of society — from education and housing to basic ill health which, for many people, is inextricably linked to poverty. To improve the health of the population, it is essential to reduce these inequalities and improve the living standards of poor households.
A higher rate of minimum wage would have further benefits — increased productivity brought about by better staff morale, a lower turnover of workers and reduced spending on benefits. Furthermore, businesses would be encouraged to invest in training. It is essential that a focus on the training of employees is an integral part of changes to the minimum wage. We need to ensure that people are trained to their highest capability and that they are given the opportunities and incentives to further their education, qualifications and careers.
We have a Department of Learning and Employment, and we are all much more conscious of the need for training for life and employment. We must ensure that children who leave school can look forward to work, not the dole. Our consultation on the future of selection at 11 is very timely. If we replace selection at 11 — and I hope we will — we must replace it with a system in which all our children leave the education system with good education and job skills. We need to match the job skills to the jobs, and we need the jobs.
This is a reserved matter, but it is very important that Departments work together and look at ways in which their remits have an impact on the living standards of the population and at ways in which we can improve the conditions in which the most vulnerable people live. A more comprehensive overview must be taken of all the issues involved in employment, but I welcome the debate.
Mr McGrady:
Before the Member concludes her remarks, I would like to remove any confusion she or the Assembly might have that I was supporting the substantive amendment and not the substantive motion. I am opposed to the amendment, and I would like us to be on the same wavelength in that sense.
Ms Hanna:
We are, and I never doubted that.
I rushed, and I now realise that I could have had another minute. I welcome the debate in the Chamber, and I certainly support the motion.
Mr S Wilson:[Democratic Unionist Party]
This debate ought not to be simplified into an argument between Green and Orange Tories and all the good people on the other side. Many very important issues have been raised here today. What should be the level of the minimum wage? Various contributors have pointed out that there is no consensus on that. The Low Pay Commission, which includes some trade unionists, says that it should be £4·10. UNISON recommends £4·69. Billy Hutchinson said that it should be £5, while in Europe it is £7. We could have a lottery. Will it affect employment in a buoyant economy? The evidence we have so far is that it does not, but it may well do so in an economy which is going into recession.
There are many imponderables in all this. As Ms Hanna said, to a certain extent we are debating in a vacuum. It is a reserved matter, and we can say whatever we want. Billy Hutchinson made one very important point. He said that this was a reserved matter and that, therefore, we had to ask what this Assembly could do. When he raised that question, I thought — and I am not talking politically — that he really has a strange partner in bringing this motion forward, especially when he asked what this Assembly could do. The only Minister in this Assembly who I know has encouraged workers to take a wage that is below the minimum wage is the Sinn Féin Minister of Education.
On a number of occasions I have raised in the Assembly the question of term-time-only workers. That is something that the Minister of Education could deal with at a cost of £1·15 million. Yet on 20 June, in the only pronouncement he has made regarding those workers — workers to whom he gave support before he became a Minister — he encouraged them to accept an offer that would spread over 12 months salaries that are currently paid over 10 months. That had been put forward, and he said
“I believe that this approach presents the best way forward for all involved”.
And he encouraged them to accept it.
I then received a letter from a constituent who had applied for a job with the education and library board as a school porter. The 10 months that he would have been employed for would, if holiday pay were included, have paid him a total of £6,363. Averaged over the 12 months, it would have paid him £3·49 per hour. I am using that to illustrate a point. It is fine when we talk of this as a general concept to say that we support a minimum wage of £5·00. We have already heard Sinn Féin Members talk about their support for this motion. However, when it comes down to Ministers who actually have the ability to ensure that people are paid a decent wage, it seems that the departmental Mafia gets to them, and what sounds all very well in this Chamber is not actually delivered on the ground.
I have no difficulty supporting a decent wage for people who are paid low wages. It gives them dignity and encourages employers to value their employees and give them training to increase their productivity. However, we have to ask ourselves — especially given one of the proposers of this motion — whether, when it comes down to delivering, Sinn Féin is actually doing the job.
Mr Ervine:
I am not sure whether Mr S Wilson is for the motion or the amendment, but we will find out soon enough.
We have heard constantly today that this is a reserved matter. In dealing with it, let me take you on one of my wanderings. I dare say that if Mr Roger Hutchinson were here, he would take the opportunity to add something to that.
I was in Germany recently. Wages in the former East Germany are 30% below the German national average. They have achieved wage increases in the last 12 years that bring them to just 30% below.
We have to ask ourselves — and ask the First and Deputy First Ministers, the rest of the Executive and, especially, the Minister of Finance and Personnel — what arguments are going to made to the United Kingdom Government asking them when our transition period is over. When are we going to be at just 30% below the rest of the United Kingdom? When will we be 25%, 20% or 15% below? There is some naivety on the part of the proposer of the amendment when he does not realise that in laying down aspirational markers in the Assembly and, as my Colleague Mr Billy Hutchinson said, by making the differences where we can —
Dr Birnie:
The East German case illustrates precisely the dangers of a rapid increase in wages relative to productivity. Unemployment there is now 30%. Does the Member want that here?
Mr Ervine:
The mark went from being worth about 2d to being worth about two quid overnight. That makes a difference. No one is asking for that. We are asking for the means to let people survive. Not only do we have the shameful circumstances of people not being paid a decent wage, but we also do not even give them permanent contracts in circumstances where they are being paid less than £5 per hour — or, at the moment, less than £4 per hour. They cannot make any judgements about their future lives based upon the degree of income that they get — which is paltry. Even if they could, they will face difficulties because finance houses and similar organisations will not take their word that they are likely to be in employment for a longer period. They get hit by a double whammy.
I accept the comment made by Sammy Wilson that there are things that we can do. There are practical measures that I need not rehearse — my Colleague has made the comment, and I am sure that Dara O’Hagan will back it up. The reality is that we have a choice. We sit here and we take what Westminster doles out to us, like some sort of nodding ducks. Then we get ourselves into an ideological nightmare over the issue of rates. If we were making the arguments sternly in a cross-party fashion, and in a joined-up-government-attitudinal way, then I believe that the Government of the United Kingdom would be very foolish to ignore us.
However, the Government of the United Kingdom have had strange experiences. Only one Unionist voted against the privatisation of gas. I imagine that if I were to look back to when the minimum wage was passed Britain, as part of a European initiative, I would nearly bet — I may be wrong, but I doubt it — that every Unionist voted against it.
This society’s representatives have consistently offered mixed messages to the citizenry and, more especially, to the Government of the United Kingdom. That would tell me that if we can get our act together and go as a unified group of people and kick down the door of 11 Downing Street, we can definitely do better. Therefore when we see a motion like this — and Sammy Wilson identified the core element for us — what can we do about it? There are two things. There is what we can do about it and what we can make others do about it.
I advocate that Members support the motion, abandon the blocking mechanism of the amendment, and accept the reality that unless we fight strong, hard battles we are never going to be as well off as the former GDR is within Germany. We will always be second class citizens unless we are prepared to go and demand better and more.
Mr Carrick:
I have listened carefully to the debate and much has been said about the principle of the national minimum wage. However, we dare not lose sight of the end-user. The end-users in this case are people. It is a question of seeking social justice for the people. It is a question of seeking a quality of life for the people, and it is about the promotion of self-worth among the people, with the exclusion of exploitation. That is what this debate should be about.
The guiding principles that were referred to when the Low Pay Commission was given its brief in the Queen’s Speech in May 1997 are still as relevant today as they were then. The elimination of poverty, fair recognition of the labour that is supplied, the creation of a prosperous economy and the provision of a stable society are all very laudable.
Paragraph 3 of the executive summary of the second report of the Low Pay Commission states
“Several years will be needed to assess the full effects of the National Minimum Wage. But already it is clear that a large number of people have benefited. Two-thirds of beneficiaries are working women and, of these, two-thirds are part-time workers. Well over one and a half million workers were entitled to a higher pay by April 1999 because of the minimum wage, and our initial assessment is that the substantial majority of these workers, in the formal sector at least, are now receiving their entitlement.”
That is a start. We must build on that to make sure that what we have achieved does not slip, and that those who are still excluded and exploited will enjoy the benefits that the rest of us are currently enjoying.
One section of the report deals with small firms. While we want to give due recognition to the needs of employees, we cannot do so in isolation from the impact that will have in small firms. The small firm has been the backbone of the Northern Ireland economy. Their contribution, even in the face of adversity and civil strife over the past 30 years, has been tremendous. Yet, the loyalty and steadfastness of those small businesses has been rewarded with yet more layers of bureaucratic administration, and the imposition of unpaid tax collecting and benefit paying work.
The wage departments of small firms are now collecting National Insurance, income tax and student loan repayments — all in an unpaid capacity. They are now paying out statutory maternity pay, statutory sick pay and the working families tax credit. The burden that has been imposed on the small business employer has been horrendous.
We must take into account that there will be a straw that breaks the camel’s back. The position of small businesses has to be factored into the thinking of the national minimum pay regime. We cannot divorce one from the other. We have got to work together to produce that social cohesion and economic dynamic that will leave us with a prosperous society.
The minimum rate, whatever it will be, must be tailored to the situation in Northern Ireland and not imposed by a set of circumstances experienced elsewhere. The Assembly will have a role in influencing those charged with that decision by factoring in the unique circumstances that exist here.
Mr Beggs:[Ulster Unionist]
I support the concept of a minimum wage and the proposal to increase it. Everyone in Northern Ireland wants to move away from the generally low-wage economy towards a well-paid economy so that the value of all workers is recognised and rewarded.
I have listened carefully to what has been said in the debate, and I have not heard an explanation of why the figure of £5 per hour has been chosen. Would £6 per hour not be more appropriate? I would like to put it on record that, if there were agreed economic evidence that £6 per hour would be appropriate for Northern Ireland, I would support that. I would like to hear, from Members who have still to sum up, why the figure of £5 per hour has been selected.
Because of the criteria for choosing the figure I have suggested, in the amendment, which also stands in my name, that detailed economic research should be carried out in Northern Ireland. Research would make sure that we all fully understood the benefits and possible difficulties involved in choosing a level for the minimum wage. We should not pick the figure out of a hat.
It was mentioned that the TUC has advocated the figure of £5 per hour. Has that figure been applied to Northern Ireland in particular? I would welcome information on that from Members. Detailed research, specific to Northern Ireland, would surely be appropriate.
Several Members have spoken about the minimum wage in other European countries and have pointed out that those figures are higher than the figure proposed. However, Members have failed to mention the high levels of employment in those countries. In addition, I understand that the TUC has recommended a figure of between £4.50 and £5. It has not advocated a set figure.
I agree with Mr Wilson that if there is a Government Department in Northern Ireland that is not paying the current minimum wage, let alone considering future minimum wages, we must take the matter into our hands and address it now. During the summer months people who are paid that wage cannot claim unemployment benefit. Many of those people are in an employment trap. They may have difficulties finding other jobs to suit the times that they are available to work, and they cannot sign off because they will lose all benefit entitlements for some time. We should address those issues now and do what is within our power.
I also agree that it is hypocritical of Sinn Féin to have been a part of moving this motion, considering the fact that it has not put its own house in order.
How are we going to raise wage levels in Northern Ireland? We can do this through education, training and the upskilling of our entire workforce. My Colleagues and I have been pressing for investment in our higher and further education sector. Dr Birnie was critical, only yesterday, of the Programme for Government for not providing significant additional funds towards basic education, so that the value of all workers to the companies that employ them could be improved. The entire economy would benefit from that, and everyone could be paid more.
The economy would be able to make better use of the workforce if its knowledge and skills were developed, and everyone would be able to demand higher wages and in that way everyone’s worth would be fully recognised. So why are we limiting the figure to £5 per hour? What is wrong with £6 per hour? I would like to hear evidence and see research done that backed up the figure that is chosen.
I would like to return to some of the comments made by Sinn Féin. When you think about the number of potentially highly paid jobs that have been lost to Northern Ireland over the past 30 years as a result of terrorism, it seems hypocritical of Sinn Féin to criticise the Government or anyone else about any level for the minimum wage. Many people in Northern Ireland do not have a job today because of Sinn Féin’s terrorist activity.
If you were an outside investor would you have chosen to create highly paid jobs in Northern Ireland over the past 30 years? I am pleased that there has been a reduction in terrorist activity and that many new investors are looking to Northern Ireland, but we must get the stability that is required here. We still have to address the 80 or more Mafia gangs, many of whom have paramilitary links, so that employers can confidently come here and trade in a peaceful society where there is no blackmailing. We need a fully peaceful society in which everybody backs the forces of law and order and supports the criminal justice system.
I will welcome such a change when those on the other side of the House eventually get off their high horses and show support for a stable Northern Ireland by their actions rather than just by fancy words. Let us all have a stable Northern Ireland in which we can all progress and our children can earn even higher wages. I hope that those of you who have been listening to what I have said know that I did not move the amendment with any figure in mind — not £5, not £4·10, not £6. A proper evaluation should be considered. Other Members have said that Northern Ireland should go it alone in certain areas. What effect would it have on Northern Ireland if other parts of the United Kingdom had a different minimum wage level?
The final decision must follow an examination of the ultimate effects on our economy, so that it is the most needy who benefit. We need to ensure that poorly paid employees do not end up unemployed and in a poverty and benefits trap, as a result of which it is not worth their while to work. It is important that we encourage people into employment, to develop skills and to continue lifelong learning so that if employers do not pay the wages they need, they can look to other employers who will value their skills. The purpose of the amendment is to have an investigation into the ultimate benefits of any possible threshold level.
Dr O’Hagan:[Sinn Fein]
Go raibh maith agat, a LeasCheann Comhairle. I will try to respond to most of the Members’ points. Dr Birnie said that Mr B Hutchinson was only half right when he referred to him as an Orange Tory. His party Colleagues should start to question his credentials. Dr Birnie, in moving his amendment, spoke about the poor and their lack of employment in a condescending manner. We should move away from using such language.
Dr Birnie:
Will the Member give way?
Dr O’Hagan:
No. I have only 10 minutes.
The motion is concerned with giving people decent wages that will bring them out of the poverty trap. Dr Birnie said that this is a reserved matter, and I accept that. However, the Assembly can take action by sending out a clear message that we want to be progressive and want people to receive a decent wage.
At first I thought that Mr McGrady supported the amendment, but then it became clear that he supported the motion. He talked at length about social justice and fair pay. I appreciated Mr Hutchinson’s contributions on fuel poverty, the poverty trap and income support.
He raised an important point, which I think was also raised by Mervyn Carrick, about small businesses and the possible burden on them. There is no reason for not being imaginative or for the Government, instead of wasting millions of pounds on questionable programmes such as New Deal, not taking the burden off small businesses and topping up their employees’ wages to £5 per hour.
Mick Murphy and Sean Neeson supported the motion, and Mr Murphy spoke about exploitation. Many Members spoke about exploited groups, young people, part-time workers and women in particular.
Mr Neeson put the issue into context, and his contribution about equality legislation and the European social chapter was very useful. He made an important point about the IDB’s web site promotion of the North of Ireland as a low-wage economy, which should concern everyone.
Monica McWilliams quite rightly said that a national minimum wage does not increase unemployment and is good for industry. The Northern Ireland Economic Council supports this stance and has stated in a report on the minimum wage that it could have a catalytic impact on a strategy aimed at improving growth and competitiveness by forcing firms to seek and explore other areas of competitive advantage — sometimes referred to as the shock effect. An increased wage rate could induce firms employing low-wage labour to improve other aspects of competitiveness such as management practice, training, the use of technology and so forth, thereby improving productivity and ultimately increasing the demand for labour.
Ms McWilliams also raised the issue of contract agencies. That should be examined, and with particular regard to contracted employees who work for the Executive and the Assembly. She painted a picture of people who are adversely affected and yet again those people were young people, women, part-time workers and manual workers — all forms of cheap labour.
Madam Deputy Speaker:
Order. Will Members please hold conversations outside the Chamber.
Dr O’Hagan:
Fred Cobain and Carmel Hanna supported the motion, and Ms Hanna made the point that one in three children in the North of Ireland is living in poverty, which has an effect on housing, education and ill-health.
Unfortunately the contribution from Sammy Wilson was the usual tirade against Sinn Féin. That is all that needs to be said.
David Ervine stated that it is not simply a case of what we can do, but what we can make others do. That is an important message that should be coming from the Assembly — [Interruption]
Madam Deputy Speaker:
Order.
Dr O’Hagan:
Mr Carrick spoke about small firms. I will return to that point. Roy Beggs asked why the figure of £5 per hour was chosen. The motion says “(at least) £5 per hour” and addresses the principle of a decent living wage. Ms Hanna asked why we cannot have a figure that could be negotiated up. It does not have to be £5 per hour, and I am sure that Mr Hutchinson, as co-mover of the motion, would be more than happy to see an even higher level of wages.
Unfortunately Roy Beggs’s contribution turned into a typical rant again against Sinn Féin. People must understand that as a party we are entitled to bring forward motions — [Interruption]
Madam Deputy Speaker:
Order.
Dr O’Hagan:
We will not stop doing that; we will not stop raising issues about — [Interruption]
Madam Deputy Speaker:
Order. The Member is entitled to be heard.
Dr O’Hagan:
We as a party will continue to raise issues such as low wages, poverty, inequality and injustice.
We are here by dint of our having been elected. We are entitled to be here, and we are here to stay. People like you had better get used to that.
Madam Deputy Speaker:
Order. The Member will be reminded to direct her remarks through the Chair.
Dr O’Hagan:
Finally, I want to give a few figures —
A Member:
Will the Member give way?
Dr O’Hagan:
No. I have only about two and a half minutes left.
I want to give a few figures that relate to what we in the Assembly can do about the issue. First, the Assembly Commission led the way when it accepted the principle of at least £5 an hour as the minimum wage for any person employed by the Assembly. That is to be welcomed. That is very progressive and sends out a positive message to the rest of society.
A Member:
Will the Member give way?
Dr O’Hagan:
No, I am sorry. I have only two minutes left, and I want to get these points in about the Executive.
That is where we can make a difference. In total, the 10 Departments employ 4,285 people who are currently earning less than £5 per hour. I will break it down by Department: the Department of Culture, Arts and Leisure, 47; the Department of Education, 80; the Department of Agriculture and Rural Development, 447; the Department of Enterprise, Trade and Investment, 174; the Department of Finance and Personnel, 376; the Department of Health, Social Services and Public Safety, 130; the Department of Higher and Further Education, Training and Employment, 239; the Department for Regional Development, 266; the Department for Social Development, 2,192; and the Department of the Environment, 334.
The message from the Assembly should be that it supports the concept of the minimum wage. We call on all Ministers to ensure that every person employed in their Departments earns at least £5 per hour. That would be a practical start.
On the wider issues of decent wages and helping people out of the poverty trap, I urge Members to support the motion and reject the amendment.
Question That the amendment be made put and negatived.
Main question put and agreed to.
Resolved:
That this Assembly considers the current minimum wage threshold to be too low and supports a minimum wage level of (at least) £5 per hour and calls for the youth exemption contained in the current legislation to be abolished so that the £5 per hour rate applies to all.
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