In this week’s Public Policy bulletin, read about the Irish Government’s introduction of the National Living Wage as well as the constitutional challenge upheld by the Supreme Court to the ratification of the EU-Canada Trade deal (CETA). We also take a look at the Fiscal Advisory Council’s assessment of the proposals of the Commission on Tax and Welfare as well as the latest Northern Ireland Labour Market Report and the European Commission’s Autumn 2022 Economic Forecast.
Tánaiste announces introduction of National Living Wage
Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, this week announced the Government’s introduction of a national living wage for employees. The national living wage will be set at 60 percent of hourly median wages as recommended by the Low Pay Commission Report on the Living Wage. Under the Government’s plans, the living wage will be introduced over a four-year period and will be in place by 2026, at which point it will replace the National Minimum Wage.
The first step towards reaching a living wage will see the implementation of an 80c increase in the National Minimum Wage from 1 January 2023 to €11.30 per hour. This will be followed by gradual increases to the National Minimum Wage until it reaches 60 percent of hourly median earnings. By 2023, it is estimated that 60 percent of median earnings would equate to approximately €13.10 per hour.
Supreme Court rules ratification of Comprehensive Economic Trade Agreement (CETA) between Ireland and Canada unconstitutional
In a significant judgment, the Supreme Court last week ruled in favour of a constitutional challenge brought by Green Party TD Patrick Costello against the Government’s plans to ratify the EU–Canada Comprehensive Economic Trade Agreement (CETA). In a majority ruling of 4–3, the court held that the Constitution of Ireland precludes the government and the Dáil from ratifying CETA as Irish law now stands. Originally agreed between Canada and the EU in 2016, the CETA is primarily a trade treaty designed to significantly reduce tariffs and increase trade between the two parties. Having provisionally come into force in 2017, all EU national parliaments are required to ratify the deal before it can take full effect.
In its current form, CETA tribunal awards are “in substance converted almost automatically into judgments enforceable in this State”, depriving the High Court of its capacity to supervise such awards and ensure they comply with the Constitution and EU law, Mr Justice Gerard Hogan said.
However, as Justice Hogan went on to note ““this fundamental constitutional objection would accordingly be cured” if certain amendments to the Arbitration Act are effected by the Oireachtas. Following the judgment, the Government reaffirmed its commitment to ratify CETA in full after allowing a period of time to reflect on the implications of the court’s decision.
Read a copy of the Supreme Court’s judgment here.
Fiscal Advisory Council estimates additional €15 billion in Exchequer Revenues could be generated if Commission on Taxation proposals implemented
Following the issue of the Report of The Commission on Taxation and Welfare in September, the Irish Fiscal Advisory Council has this month advised that, if implemented, the proposals of the Commission would raise an additional €15 billion in Exchequer revenues.
In an Analytical Note assessing the potential impact of the Commission’s proposals, the Council’s “broad brush estimates suggest an increase in total revenues of around 5.3% of Gross National Income”.
However, while the report of the Council notes that the Commission’s net revenue-raising proposals “offer one potential strategy” to address the challenges the State currently faces, the Council expressly “does not take a view on whether or not this is the right approach”. The report of the Commission set out a strategy for raising Exchequer revenues and contained 116 recommendations to this effect which are currently under consideration by the Government.
Latest Northern Ireland Labour Market Report published
This week, the Northern Ireland Statistics and Research Agency (NISRA) published its most recent Labour Market Report. According to the report, the number of employees receiving pay through HMRC PAYE in NI in October 2022 was 781,300, a 0.2 percent increase over the month and a 2.5 percent increase over the year. Earnings from the HMRC PAYE indicated that NI employees had a median monthly pay of £1,967 in October 2022, an increase of £10 (0.5 percent) over the month and an increase of £117 (6.3 percent) over the year.
In addition, the report noted that October 2022 saw the second consecutive monthly increase in the claimant count. The seasonally adjusted number of people on the claimant count was 36,100 (3.8 percent of the workforce) – marking an increase of 1.4 percent from the previous month’s revised figure and still higher than the pre-pandemic count in March 2020 (by 21.1 percent).
As also set out in the report, the Department for the Economy recorded 60 redundancies in October – bringing the annual total number of redundancies to 940, the lowest twelve-month total in the time series (since 2000).
European Commission’s Autumn 2022 Forecast
Ireland's GDP is expected to grow by 7.9 percent in 2022, then to moderate to 3.2 percent in 2023 and 3.1 percent in 2024 on the back of lower purchasing power and uncertainty weighing on investment, according to the European Commission’s Autumn 2022 Economic Forecast.
Net exports, particularly of multinational corporations, are however expected to remain resilient and be the main driver of growth. Inflation is expected to peak at 8.3 percent in 2022 and to remain high at 6.0 percent in 2023 before eventually moderating to 2.8 percent by 2024.
While the Forecast projects that most Member States will enter into recession during the last quarter of the year (due to the ongoing uncertain economic environment) momentum accrued in 2021 together with strong growth in the first half of this year are set to lift real GDP growth in 2022 as a whole to 3.3 percent in the EU (3.2 percent in the euro area) - well above the 2.7 percent originally projected in the Commission’s Summer Interim Forecast.
While the Commission predicts inflation will continue to contract economic activity into the first quarter of 2023, growth is expected to return to Europe in spring.
Digital Services Act: EU’s landmark rules for online platforms enter into force
This week saw the launch of the EU’s new set of rules for a safer and more accountable online environment as provided for in the Digital Services Act (DSA). The DSA applies to all digital services that connect consumers to goods, services, or content including online marketplaces. One of the key purposes of the DSA is to increase protections for consumers transacting online.
Under the provisions of the Act, all online intermediaries will have to comply with wide-ranging new transparency obligations to increase accountability and oversight with a special regime applying to platforms with more than 45 million users. However, smaller platforms and start-ups across the EU will benefit from a reduced set of reporting obligations and special exemptions from certain rules.
Following the entry into force of the DSA this week, online platforms will have until 17 February 2023 to report the number of active end users on their websites to the Commission.
Read the Commission’s press release here.
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