The Tánaiste and Minister for Enterprise Trade and Employment Leo Varadkar has called for a "grown-up conversation" on increasing Employers' and Employees' PRSI to fund a reformed social insurance system, including income-linked unemployment benefits.

Speaking at a webinar on low pay organised by the TASC think tank, Mr Varadkar also observed that the National Minimum Wage is now too low, and pledged to transition to a higher Living Wage over the lifetime of this Government.

The current Minimum Wage of €10.10 per hour is set to rise by 10 cent next year to €10.20 - though this is significantly lower than the current estimated Living Wage of €12.30.

The Tánaiste insisted Ireland was not a low pay economy in cash terms, with a higher National Minimum Wage here than in the "vast majority" of countries.

However, he acknowledged that the cost of living here is higher, as many people must pay for public services they would get free elsewhere. 

He described the 2021 National Minimum Wage rise of 10 cent recommended by the Low Pay Commission as "very small", adding that if they had recommended a 20 cent increase he would have been happy to accept it.

However, he went on: "I expect even in 2021 that 10 cent increase, while very small at 1%, will probably be ahead of earnings across the economy, which will probably fall in 2021 because of the pandemic."

Mr Varadkar also noted that low pay had a cost for government through Family Income Supplement and the Working Family Payment, as well as the cost of medical cards and housing subsidies.

"When people are poorly paid, very often the bill is picked up by the Government, and it would be better if people were paid better and that would cost society and the Government less," he said.

However, he also cautioned that competitiveness could not be discounted, especially for small businesses.

"There is a point where you could increase pay in certain sectors, and certain businesses, to the point where people end up working fewer hours, have their hours cut, or there are fewer jobs, so we have to be mindful of that" he said.

The Tánaiste said the most significant measure to tackle low pay would be moving to a Living Wage but warned it would have to be phased in to assist businesses in meeting the cost.

He criticised the current calculation of the Living Wage by the Vincentian Partnership, saying it did not include the voice of the employer, and made "incorrect" assumptions about housing costs - and suggested that a new model would have to be devised.

Mr Varadkar also noted that average annual earnings had increased "considerably" since 2013, and faster than the rate of inflation, though he forecast that they would be hit by the pandemic.

He suggested that reforming the benefits people receive for PRSI could make a real difference to addressing low pay, and cited his pledge to legislate for statutory sick pay by the middle of next year. 

He also highlighted the need to reduce the cost out-of-pocket expenses for public services, describing Ireland as an "anomaly" where so many people had to pay for hospital, GP and medicine costs, and even people on the minimum wage may not qualify for a medical card. 

He also queried the "real outlier" of the cost of childcare, saying there was something "fundamentally wrong" when the Government was putting "huge" money into childcare through schemes, and parents were still paying very high fees.

The Tánaiste warned against reducing executive compensation, saying if executives were paid less and taxed more, there would be less investment.

He said this could apply in higher paid public service grades like hospital consultants where other English speaking countries like America, Canada and Australia were able to poach our talent.

He said that to build a more secure society and economy, issues that needed to be addressed included low pay, sick pay, housing, childcare, lifelong education, pensions and healthcare.