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 ó Cheannairí - Leaders' Questions

Rents, cost of living and wages

Summary

Deputy Howlin argued that the CPI understates living costs and that rents are the central affordability problem, while also pressing for higher pay and the minimum wage. The Tánaiste blamed the housing shortage for rent inflation, said rent pressure zones and stronger regulation were helping, and noted further minimum wage rises are considered through the Low Pay Commission.

I always do. From January 2008 to October of this year, the consumer price index, CPI, rose by 3%. One might think that the cost of living has only risen marginally in that period but that would be a mistake; the CPI is not a cost of living index. This has been forcefully stated by the CSO for years but the message does not seem to have penetrated the minds of Government officials. The CPI, as its name indicates, is a price index. The goods and services in its fixed basket are not those driving up the cost of living for people who are struggling. The main problem is the rise in rents. The Tánaiste says that the rate of increase is diminishing; well, that must be all right, then. That rise is not distributed evenly across the country. CSO statistics from the RTB confirm rises in urban rents of well over 20% and of over 40% in some cases compared to 2008.

Comment on this

Is the Deputy referring to 2008?

Comment on this

Asked-for rents are 26% higher than at the peak of the Celtic tiger according to daft.ie. Job opportunities are overwhelmingly concentrated in the towns and cities and that is where the rent pressures are most acute. Rent pressure zones are meant to slow down rent increases to 4% a year, but if we use compound over the period of five years, that is 21.7% even where they are working. In many areas, they are not. An increase of 21.7% in five years is not affordable. It is in no way linked to people's increase in wages over that period.

The solution to the affordability crisis in housing, as the Tánaiste has rightly stated, is supply. However, there is another side, and that is workers' pay - people's incomes. Ireland has a far larger share of workers on low incomes compared to other European countries. The Irish living wage is calculated on the basis of the actual cost of living facing people in both rural and urban areas. It is estimated that a single person working on a full-time basis would need to be paid €464 a week in order to meet a basic standard of living. The national minimum wage is €372 per week, €92 short of meeting basic need, assuming the person is in full-time work. A number of sectoral wage agreements are based on the minimum wage and are usually set €1 above it. In short, it is not possible to live on that amount. What workers need is a pay rise. Will the Government agree to accelerate the rise in the minimum wage and sectoral agreements to link with what everyone now agrees is a living wage?

Comment on this
Simon Coveney The Tánaiste Fine Gael

The Deputy asked a lot of questions. His party understands the housing challenges that we face very well. Housing was a Labour Party brief up until the middle of 2016. We are talking about challenges that have emerged because of a recession. Housebuilding essentially stopped in Ireland with the exception of one-off developments across the countryside. We went from building 90,000 housing units to building about 6,000.

Comment on this

The issue now is rents.

Comment on this
Simon Coveney The Tánaiste Fine Gael

The rental challenge that we face is directly linked to that supply challenge.

Comment on this

However, the Government does not control it.

Comment on this
Simon Coveney The Tánaiste Fine Gael

That is why this Government introduced rent pressure zones, which have proved to be effective in terms of slowing down rental increases for existing rental tenancies. There is clearly an issue in respect of new rental tenancies that are coming in. There is a distinction now in the numbers that the RTB has published between the two, which is useful. There is a need to continue to build on the protections that we have for tenants. However, we also need to be honest about other elements of the data we have seen this week. We are seeing a declining number of landlords. Without landlords, we do not get properties that are available for rent. Ultimately, this is about trying to ensure that as supply increases - we need to continue to accelerate that supply delivery - we protect tenants as best we can but we must also ensure that we do not drive landlords out of the market.

Comment on this

The Government is shifting them on to the public purse.

Comment on this
Simon Coveney The Tánaiste Fine Gael

That is a balance. Undoubtedly, our priority has been to protect tenants at a time when rental prices have been increasing too rapidly. However, we have to be cognisant of the fact that we have a very unusual rental market in Ireland in which the vast majority of landlords only own one property and are effectively not professional landlords. That is why we need a strong RTB and it is why we have legislated to give it more powers. We will legislate to give it more powers again to make sure that landlords are not abusing the lack of supply in terms of price gouging. We will continue to do that and will listen to other political parties in this House that have constructive proposals in that regard, as we have done to date. Ultimately, the pressures on the housing market generally and on the rental market in particular are as a result of a lack of supply which we are addressing as part of a five-year strategy which we are only halfway through.

In respect of sectoral wage agreements, as the Deputy knows, we need to ensure that the Government commits to wage increases, particularly across the public sector, in line with what we can afford and in line with agreements that have been made. To accelerate that or to raise expectations without having the Estimates to deliver it in terms of budgets would be highly irresponsible. That is why a really important element of the confidence and supply agreement, for example, relates to wage agreements and ensuring we can follow through on them in a way that is affordable to the State but is also as generous as possible to the working public.

Comment on this

The Tánaiste obviously does not agree that workers need a pay rise. It is good for the economy. We have looked in very great detail across several countries. There is always resistance to increases in the minimum wage from employers in other sectors, but in every case it is good for the economy because it puts more money into circulation. We have a very unbalanced wage structure in Ireland. We have good equalisation through social welfare and taxation but the base pay is grossly unequal by any European comparison. I ask the Tánaiste again, acknowledging that we really need to raise the level of pay to the most vulnerable and lowest paid workers, if he will undertake to start in the public service. We have established that, right now, a living wage is €11.90 an hour. Will he undertake to seek to achieve that for public sector workers so that at least in the area of work which the Government controls directly, we can be confident that people are earning a living wage?

Comment on this
Simon Coveney The Tánaiste Fine Gael

As the Deputy will know, because he was involved in some of the decisions, over the past seven years there have been four minimum wage increases. We continue to look to the future in terms of further increases.

We now have a pay commission that makes recommendations independently with unions and employers giving input into that process. When we get recommendations for increases in the minimum wage, we implement them. That has been the record of this Government and we will continue to do that.

We have tried to ensure that when the Low Pay Commission makes recommendations, it takes into account all the issues the Deputy has raised on the floor of the House today and other inputs. It makes recommendations to Government and we have implemented those recommendations. The important thing is that the country continues to be as generous as it can be as we move away from the recession we experienced a number of years ago. As the economy grows and expands and as we approach full employment again, of course, people have an expectation that their quality of life will improve on the back of that. We need to ensure we do not get into a boom-bust cycle again by making commitments that put the country under significant financial pressure. Getting that balance right is important, as Deputy Howlin, of all Deputies, will understand.

Comment on this