We use Google Analytics to see which pages are read and how the site is used, so we know what to improve. This only runs if you accept. See our privacy notice for details.

Dáil
‹ Ceisteanna—Questions. Oral Answers. - Employees' Net Disposable Income.

Employees’ net disposable income

Summary

Mitchell asked about the effect of deductions and work-related costs on employees’ disposable income compared with welfare, and also sought the employer’s total cost of paying the average industrial wage. Ahern said his Department had not studied the overall comparison, disputed Mitchell’s figures, and said the issues largely belonged to Finance and Revenue; Mitchell argued that low take-home pay discouraged employment.

Jim Mitchell Mr. J. Mitchell Fine Gael

asked the Minister for Labour if his Department have done any analysis or research into the net disposable income of employees, deductions for PAYE contributions, PRSI contributory occupational pension contributions, VHI contributions, differential rent or mortgage repayments, transport costs to work, trade union subscriptions; and the amounts of gross pay which a married employee with three, four or five dependent children needs to earn to have the same disposable income as a person of similar family size on long term unemployment assistance, taking into account Christmas bonus, free fuel and medical costs.

4.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

asked the Minister for Labour if he will give the average total cost to an employer to pay to an employee the average industrial wage of £201.88 as of June 1988; and the principal additional costs apart from gross pay.

Comment on this
Bertie Ahern Minister for Labour (Mr. B. Ahern) Fianna Fáil

I propose to take Questions Nos. 3 and 4 together.

My Department have not carried out research or analysis into the overall impact on employees' net disposable income of the various taxes, PRSI contributions, expenses and deductions from pay referred to in the question because it raises issues outside my area of responsibility. Research and analysis by my Department have been limited to the relationship between social welfare allowances, in money and kind, and allowances on training and unemployment schemes.

Statutory deductions mentioned in the question dealing with PAYE and PRSI are the responsibility of the Ministers for Finance and Social Welfare. The major additional cost to an employer who was paying an employee the average manufacturing industrial wage of £201.88 at June 1988, was the employer's PRSI contribution of £25.03 (or 12.4 per cent of the employee's gross earnings).

In so far as trade union subscriptions are concerned, the rates vary between employments and trade unions. Generally, the amounts involved are small and, in general, are graded according to the level of income. Other deductions mentioned in the question such as VHI contributions and transport costs to work, would be matters for negotiation between the employer and his employees and are not regulated by legislation.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

Is it any wonder that 73,000 people left the country last year leaving 242,000 people still on the unemployment register when the Minister for Labour has done no studies into the net disposable income of those in employment versus those on social welfare? I want to make it clear that I consider those on social welfare not very well looked after at all, but it is very clear to anyone who has done research in this matter that persons on the average industrial wage or less can be severely worse off. Will the Minister agree that that trend has been accentuated by the budget?

Comment on this

I have seen the results of the research carried out by the Deputy and while I have found it interesting I could dispute some of the figures from my own experience, apart from the areas of my responsibility. In the budget the Government endeavoured to take those in the low categories of pay out of the tax net thereby increasing their take home and disposable pay which, presumably, is what the Deputy would wish the Government to do.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

Presumably the Minister is primarily responsible for employment or has another Minister that responsibility? What shocks me is that the Minister does not seem to understand why, despite four years of low inflation —below 3 per cent — and four years of trade surpluses we have had no perceptible increase in employment. That comes as no surprise to me because the Government do not seem to understand what is involved in trapping jobs and what is preventing their creation. The Taoiseach, in a non verbal intervention, indicates "no".

Comment on this
Seán Treacy An Ceann Comhairle Independent

Let us not enter into the realm of debate.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

Will the Minister confirm that the figures for a husband, a wife and four children, on long term unemployment assistance, taking into account the free fuel allowance and the Christmas bonus, is now £116.70 per week? Will the Minister confirm that a person on the average industrial wage, after deductions, ends up with £112 per week?

Comment on this
Seán Treacy An Ceann Comhairle Independent

This seems to be more appropriate to a debate.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

I am putting a question to the Minister.

Comment on this
Seán Treacy An Ceann Comhairle Independent

The Chair has an obligation to dispose of five priority questions within 15 minutes. I cannot delay interminably on any one or two questions. There are other Members waiting and their questions should be answered. Let us have finality on this question.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

I appreciate the Chair's difficulties but I want to put a question to the Minister again.

Comment on this
Seán Treacy An Ceann Comhairle Independent

Let us not have repetition.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

I did not get an answer to my question. I should like to ask the Minister why, despite four years of inflation below 3 per cent and trade surpluses for four years, we have had no perceptible reduction in unemployment. In fact, unemployment among those over 25 years has gone up in the past two years.

Comment on this
Seán Treacy An Ceann Comhairle Independent

The Deputy made that statement earlier.

Comment on this

The labour force survey of last April, the source of the latest figures, showed a reduction, not a major one. The live register returns last week indicated that for the fourteenth month on the trot there was a reduction. I do not think that answers the Deputy's question because he is trying to prove that people on low pay can end up with less than those on social welfare benefits thus highlighting a disincentive to work. The Deputy has raised some interesting points but, as I said in my reply, they are budgetary and Revenue matters. The Deputy will be aware that the generation of employment is primarily a matter for the Minister for Industry and Commerce. I have answered any questions that come within my ambit. I should like to repeat that the decision to increase the thresholds and allowances for those on low pay will help those people.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

It worsens their position. The Minister should look at the table.

Comment on this
Vincent Brady Minister of State at the Department of the Taoiseach (Mr. V. Brady) Fianna Fáil

The table produced by the Deputy was wrong.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

The Minister should dispute it if that is the case. He told me, privately, that I had produced a very interesting and accurate piece of work.

Comment on this

And I repeat that I found it very interesting but I do not think it was accurate. The Deputy stated that a person on long term unemployment assistance in receipt of £80 per week would if in employment, have to earn up to £160 gross or £8,000 per year to give him the same net income. I could not reconcile those figures irrespective of the way I totted them up.

Comment on this
Seán Treacy An Ceann Comhairle Independent

Can we move on to another question?

Comment on this

The figures issued by the Department of Finance show that the differentials are closer than the Deputy's figures. The study was interesting but the issues raised by it are budgetary and Revenue and are not the concern of the Minister for Labour.

Comment on this
Seán Treacy An Ceann Comhairle Independent

I am calling Question No. 5.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

May I put a further supplementary to the Minister?

Comment on this
Seán Treacy An Ceann Comhairle Independent

I have called the next question.

Comment on this
Jim Mitchell Mr. J. Mitchell Fine Gael

In view of the fact that the Minister did not give a proper reply to my question, and that he has adopted a Departmental approach which highlights the absence of a co-ordinated plan to unemployment, I should like permission to raise the subject matter of my question on the Adjournment, Sir.

Comment on this
Seán Treacy An Ceann Comhairle Independent

The Deputy ought to have mentioned that earlier. I am seeking to save time and deal with other questions. However, I will not comment on this matter again and if Members want to dissipate the time of priority questions that is their affair.

Comment on this