2007 minimum wage recommendation

1240/5(3159)

WRITTEN QUESTION TO THE MINISTER FOR SOCIAL SECURITY BY DEPUTY G.P. SOUTHERN OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY, 16th JANUARY 2007

Question 1

1. W ould the Minister agreetoseekanexplanation from theEmployment Forum for its decision to base the 2007 minimumwagerecommendationon the figure of40% of the average wageand inform membersof it and, in particular, would the Ministerseekanexplanationofwhytherecommendationisnot referenced to the internationally accepted relative lowincome threshold of60%ofmedianincome?
2. W ould the Minister inform membersofJersey's current relative low income threshold for a 40-hour week, and state how the minimumwagerecommendationrelates to this weekly figure?
3. In the light of this information,whatsteps, if any,will the Minister take to lift thefamilytypesgivenin Table 13 of the 2002 Income Distribution Survey(appropriately updated) on the minimumwageoutof relative poverty? In particular, will heconsider raising the minimum wage above the recommendation?
4. D o es the Minister supporttheEmploymentForum'srecommendationtointroduce a "YouthRate" at £4.05 foremployeesaged16to18infull-time education? Is the Minister awareof any such employees (in Saturday/holiday jobs) who are currently paid at a lowerrate?

Answer

1. T h ere is no need to ask the Employment Forum for anexplanationbecause it is contained in the Forum's report, in particular, pages11to15. I amaware that the Forum has not referenced its minimumwage recommendation to the medianincome poverty level because it is not generally acceptedas a base for setting the minimumwage in other jurisdictions.
2. T h e recommendationcannot relate to therelativelowincome figure as the latter cannotbe calculated accurately from current statistics. It can only be calculated from anup to date income distribution. The Statistics Unit have estimated a figureof £8.25 an hourbased on a 40 hourweekand calculated from updating data inthe2004/5HouseholdExpenditureSurvey. This estimateisnotbasedon the generally accepted "equivalised" income measure which would be thecase with data from anIncome Distribution Survey.
3. M inimumwagesdonot help thoseinrelative poverty who do not work, forexamplepensioners,people with disabilities and some lone parents. The States is introducing an IncomeSupportbenefit for peoplein work andthose that genuinelycannot work. I am currently considering the recommendationsof the Forum.
4. I a m considering the questionof a Youth rate and I recognise that the States rejected a Youth rate in 2004. The point at issueiswhether the minimum wage is a barrier to enterthe work force and gain work experience opportunities for young workers. I am not awareof any employees aged 16to 18 being paid at a lower rate, whichofcoursewould be a breach oftheLaw.

Question 2

Has the Minister received the final draft of the report he commissioned into the working of Long-Term Incapacity Allowance (LTIA) yet and, if so, will he –

1. i nform members what the report has to say concerning the long-term impactof LTIA for non- contributory funding?

2. a gree to releasethe full report tomembers?

If he has not yet received this report when does he expect to do so? Answer

I have not received the final draft of Professor Stafford's report but I expect to do so within a month. As a commissioned independent report, it will be released to both the public and States' Members and will be posted on the website.

Question 3

In a written answer tabled on 5th December 2006 the Minister suggested that increases in supplementation in 2006 appeared "to be as a result of growth and change in employment rates at the lower to middle-income earning levels." Would the Minister inform members what progress, if any, has been made in investigating this increased demand on tax revenues?

Answer

The increase in supplementation is due to an increase in contributors whose earnings are below the earnings ceiling and an increase on the average supplementation per contributor attracting supplementation.

Comparing the first nine months of 2005 with the first nine months of 2006 shows that on average, the monthly number of overall contributors increased by 822 (55119 to 55941) whilst the number attracting supplementation increased on average by 1143 (31787 to 32930). On average the individual level of supplementation increased from £135.25 a month in the 2005 period to £142.55 in the 2006 period. This 5.3% increase reflects the increase in earnings ceiling in January 2006 based on the increase in the earnings index published in June 2005.

Question 4

1. W ould the Minister detail formemberswhether consultation wasundertaken with the Data Protection Commissioneroverthequestionsasked in the application forms IS.01R and IS.01T relating toIncome Support?
2. H o w manyhouseholds have been askedto complete these application forms and how were they chosen?
3. C a n the minister explain why a 27-page questionnaire of such complexity for benefit claimants is necessary and, in particular, justify, on data protection grounds or otherwise, why the following information isbeing requested –

(i ) d e tails of any assets over the value of £1,000 held by the claimant or anyone in the household (section

H, p.17).

( ii ) T he current value of any land or property and income received by any other household member

(section H, p18).

(i ii ) D e ta i ls of –

( 1 ) b en e f its in kind;

( 2 ) so c i a l security contributions;

( 3 ) IT I S percentage;

( 4 ) C o n tr ibutory pension payments? (section G page 14)

(i v )  T h re e -month bank statements from the claimant and other members of the household.

(v ) D etails of income from benefits from therapeutic working and other benefits that hitherto have been

disregarded for rent rebate or other purposes?

4. In section K it is revealed that information may be shared byup to eightdepartmentsor other parties. Whatsafeguards,ifany,are,or will be, put in place to ensure that data are notinappropriately shared? Will thePopulation Office beaddedtothelistofthosedepartments that can sharethe data and, if not, is the populationregisterto be kept entirely separate?

Answer

1. F o rm IS.01T which was used for Housing subsidy claimants was sent to the Data Protection Commissionerforcomments. Comments received were incorporated into the form. IS.01R whichis used for claimants of other benefits is essentially the same as IS.01T apart from obvious small amendments to the accommodation section resulting in fewerquestions.
2. F o rm IS.01T sent outbytheHousingDepartmentreplaced the rent abatement/rebate review form which is normally sent out annually to households receiving rental subsidies. Thosehouseholds expecting a review between November2006andApril2007will receive form IS.01T (some 2750 households).

T h e remaining households receiving housing subsidies (2750) will receive IS.01R as will the 3000

households who do not receive rental subsidy but receive a non-contributory benefit from the Social Security Department.

3. T h e forms are necessarytoobtain information from existing beneficiaries toavoid them beingleft with no money when Income Support goes live. Not every household has to complete every section and it effectively replaces 14other application forms.The information asked for is necessary as the States have agreed that IncomeSupportshouldbebasedonassessmentsof both incomeand capital.

In o r der to assess income accurately and fairly, benefits in kind must be included but in order to ensure

that people are not penalised by regular work expenses, deductions for statutory payments such as social security contributions, income tax payments and potentially pension contributions need to be known.

T h r ee month bank statements are requested as evidence of income and is a normal practice which already

occurs in respect of rental subsidy, HIE and some welfare assessments.

T h e e xisting different disregard of benefit and earnings continues to be confusing and create disincentives

in the current disjointed system. To avoid this under Income Support, it is proposed that all income be taken into account and certain deductions are to be allowed against earnings.

4. T h e declaration does not allow unrestricted sharing of information betweenDepartments.The declaration allows the Department to verify information supplied by the applicant on the form with other Departments.There are no plans toadd the Population Officeto the list especially as the form will not be in use whenIncomeSupportgoeslive.When the population register is in place verification with the Population Office maybe necessary but only with the consentofthe applicant.