Minimum wage - time for a decrease?

BroomBurner · 10-02-2009 2:31pm #1

Judging by comments from the Minister for Labour Affairs, I would say that the government will be intending on dropping minimum wage soon.

"The Minister for Labour Affairs has said he hopes the minimum wage does not become a barrier to employment.He was speaking at the launch of the annual report of the National Employment Rights Authority which revealed that 73 % of employers in the catering sector are now complying with employment legislation. Last year the Authority said it recovered more than €3m due to workers who had been underpaid by employers"
(Source: RTE Radio1)

Do you agree that it should be lowered? If so, by how much? If not, why not?

Permabear · 10-02-2009 2:38pm

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gurramok · 10-02-2009 2:56pm

Thats just ridiculous and something out of extreme capitalism. There should be a safety net for lower paid workers and the govt has a duty to protect the most vulnerable, not for them to be exploited by get rich quick businesses.

Yes, reduce the wage but reduce it to bring it in line with the European average as maybe with the UK as they are our biggest trading partner.

Permabear · 10-02-2009 2:59pm

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The_Conductor · 10-02-2009 3:01pm

I don't support the abolition of the minimum wage- but it must be acknowledged that it is set at an artificially high level, especially in comparison to the countries we are trying to compete with (which is one factor in our astronomical prices). Our average industrial wage is falling, wages in all sectors with the exception of the financial sector- with still seems to be increasing for some strange reason, are all falling- the argument has always been that the minimum wage, social welfare benefits etc were to be pegged relative to the average industrial wage- and this was the justification for the large increases in recent years- now that all other wages are falling, it makes sense for a commensurate reduction to be made in those payments originally pegged to them.........

engrish? · 10-02-2009 3:02pm

I have to say I agree with the last two posters, there has to be a lower minimum wage and it should be set at a european average. Why would you invest in a country where the labour costs are higher for the unskilled.

Even on a smaller scale, the costs are too high.

Sully · 10-02-2009 3:07pm

An employer could charge sweet feck all per hour which would be entirely unfair. There needs to be a minimum wage but at the moment if it was reduced it would not reflect the cost of living. The cost of living needs to come down first before we can even consider reducing a minimum wage.

With regards to having no minimum wage - seems like complete madness. There needs to be a decent per hour wage for an empolyee to work for otherwise you run the risk of an employer having nearly slave labour in terms of a wage. I understand about negotiaitons but lets be fair - in a lot of the jobs the candidate isnt going to negotiate with the owner of the business for a better wage. Think about students, shop workers etc. and not the big busineeses where you work out a decent contract.

Permabear · 10-02-2009 3:11pm

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Permabear · 10-02-2009 3:18pm

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BroomBurner · 10-02-2009 3:19pm

Donegalfella, that's a good arguement for reducing minimum wage, but not necessarily a good arguement for abolishing it.

Permabear · 10-02-2009 3:35pm

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ejmaztec · 10-02-2009 3:40pm

I've known many small shops where even the managers don't get much more than the minimum wage. These shops are barely ticking over paying that. The workers know that they could go off and earn more working for larger concerns, but it's loyalty more than anything that keeps them where they are.

OhNoYouDidn't · 10-02-2009 3:43pm

But as a society we have made a decision to criminalise low wage employement on the basis that the business classes in Ireland can not be trusted to provide decent wages and conditions, especially to vunerable migrants.

There is a legitimate discussion over the level of the minimum wage. To argue abolition is straight out of the Chigaco School, which recent events have proven to be a failed ideology. You chaps had your turn, look what happened.

Permabear · 10-02-2009 3:52pm

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OhNoYouDidn't · 10-02-2009 3:55pm

Yes, basically.

At least the FF'ers have had the good sense to keep their heads down here for the past few weeks. Its a pity the neo-liberals have not had the same cop. Your idea of a deregulated banking market has caused this havoc. Not central banks.

Permabear · 10-02-2009 4:00pm

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Fratton Fred · 10-02-2009 4:20pm

there is a defacto minimum wage though. at some point it becomes better to sign on than to work. if employers pitch their wages below this point, no one will work for them.

Ireland has a very generous welfare system, it does not need a generous minimum wage as well. When you have people working who don't care about productivity because their wages are linked to a notional government figure rather than productivity then you end up with a workforce who have no interest in the performance of the company.

If your wages are linked to the value you bring to your employer, then you are more likely to take an interest in company affairs and work accordingly.

10-02-2009 4:36pm

Were they to knock a euro off the minumum wage, for a 40 hour week you would only be earning about 75 euros a week more than a single person on the dole. And that's before PRSI or anything else gets deducted.

I think what we really need is someone with balls to start planning for the whole economy. The incompetent and roundabout way they're going about it at the moment is a disgrace. "Lets take something off the oap's..."
"Oh wait they dont like that and have nothing better to do than protest"
"Ok what about the students?"
"Yeah, sounds good"
"The Public Service?"
"Well we can try but like the oap's we need them"
And now its the minimum wage. And whats a person on the minimum wage going to do? Hardly strike, because other people will gladly take the jobs right now.
It seems like all they feel like doing is plugging up a few holes in the floor of the ship, when its a new ship that we need.

I am currently unemployed and planning on going back into education this September. I also live at home so I can't get the dole. I would probably work for about 5-6 euros an hour at this stage - So from my perspective of having nothing at all, job creation is always a plus.
However I'm sure if I worked in Spar and could end up earning less than the minimum wage now, I'd be bricking it.

Permabear · 10-02-2009 4:47pm

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10-02-2009 5:12pm

I totally agree. What it means is even at the moment, minimum wage workers get payed ~90 euros for a 35 hour week. Just over 2 euros an hour before taxes. Of course I'm talking the difference between being on the dole and minimum wage there, but it's true.

Like I said, the whole make-up of the systems in our economy need to be tackled. I personally couldnt see the problem in knocking at least 50-75 euros off the dole and dropping the minimum wage in line with the UK.

turgon · 10-02-2009 5:13pm

I understand where your coming from but there is one problem with no minimum wage. Supposing a Irish person and a Polish worker go for the same job. THe Polish worker will be able to negotiate a lot lower wage becasue he sends x amount home and the cost of living there means that it is in fact worth more than here in Ireland. The Irish person has to set a certain standard for himself but will usually be higher than the Polish.

That would be my issue with your proposal.

mrquiteaguy · 10-02-2009 5:15pm

No.Why should the poor/unemployed/unfortunate work the same 40 hour week and have their wages cut when others are on twice as much.
The problem we are in is that the Government hired too many people when times were good and paid them hundreds a week more than people in the private sector.

10-02-2009 5:18pm

The cost of living there is a lot lower, yes. But what about the cost of living over here? I doubt very much that even with the minimum wage as it is, there's very many foreign people sending much money home while on it.
What do you think they're doing exactly, sleeping rough and going without food?

OhNoYouDidn't · 10-02-2009 5:26pm

Which is EXACTLY why the economic right argue for it. Not only does it make it cheaper to do business (savings that will not be passed on), it generates a fear factor amongst the staff.

As I said earlier, society has decided to not engage in a race to the bottom and put a safety net in place to protect low earners.

turgon · 10-02-2009 5:36pm

Em well if your on minimum wage working 40 hours that still upwards of €350. Donegalfella was making an argument on the dole thread that he could easily live on under €200, which I agree with. So they could send at least half home.

OhNoYouDidn't: That would seem to be the problem, but I imagine that there is some logical reasoning behind the proposal.

Permabear · 10-02-2009 5:37pm

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Permabear · 10-02-2009 5:44pm

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Soldie · 10-02-2009 5:48pm

Forgive my less-than-advanced knowledge of economics, and correct me if I'm wrong, but wouldn't lower wages mean that typical minimum-wage employers (such as supermarkets, for example) would have less outgoings and as such be able to afford to lower their prices (negating those on lower wages having less purchasing power). Also, supermarkets, to continue the example, in being able to lower the cost of their goods, would mean they'd be able to compete with supermarkets across the border. Supposing all of this is true, wouldn't it not only benefit people individually, but also the economy overall?

Fratton Fred · 10-02-2009 5:49pm

I would argue that it gives staff the ability to influence the success of their company. If they help reduce costs and increase productivity, then they become a lot more valuable to their employer who, in turn, should pay them more because they are harder to repalce.

The_Conductor · 10-02-2009 5:57pm

Well- at what level do you say we have a sufficient level of government interaction in the economy? How about privatising education, abolishing public healthcare, privatising the police force etc?

I do believe that the minimum wage is too high, that social welfare payments are too high and that some of the public sector is overstaffed and overcompensated (I'd be looking at the politicians first of all in this respect).

While more public sector employees were employed in the good times- our public sector is comparatively speaking far below the average size per head of population in the OECD, and the civil service is actually the smallest per head of population globally. The media have been great at murky'ing the water on this one. It doesn't mean that its efficient or delivers services, as required, when and where required. But it also doesn't mean that correct expectations have been set on the part of the public. We spend less than 1/4 as much as France per head of population on public healthcare- yet we wonder why VHI/BUPA etc is necessary- you get what you pay for.

We could say- government involvement in the economy is evil- and move to a wholly American model. But do we really want to go there?

Any interaction, by anyone, in the labour market produces an effect, a distortion if you will. You can be certain that private sector interaction in certain sectors has also had a similar distortionary effect.

Pure capitalism is not the answer- but neither is a social situation where the government muddies its hands in the running of the economy at large. The current situation we find ourselves in, is to a large extent a result of misbehaviour in the private sector (which argued for lesser regulation- and was granted it on the understanding that self-regulation was for the better of the economy as a whole). That little experiment certainly hasn't worked.

S.

Permabear · 10-02-2009 6:00pm

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Permabear · 10-02-2009 6:12pm

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The_Conductor · 10-02-2009 6:14pm

First and foremost- we do not want to retain our current level competitiveness- we are not competitive, full stop. Thats why Dell has moved laptop production to Lodz in Poland, why Ericsson is outsourcing 'Knowledge Economy' jobs to China and even back to Sweden etc

Our economy over the past 10 years has not been built on permanent high value jobs- its been built on Jack the plumber, Gerry the electrician and Jan the carpenter. It was crazy to allow this to develop- and the lengths the government and vested interests went to, to try to prolong the party, are wholly inexcusable- but we now have the hangover and have to learn how to deal with it.

Our minimum wage is way too high.
Our social welfare entitlements are too high (and should in all instances be means tested).
Provision of services and exchequer expenditure is based on a tribal/parochial system whereby every TD/Senator/Minister tries to grab whatever they possibly can for their constituency and are not willing to look at what is best for the country as a whole. Even county development boards are more than happy to stab each other in the back at any opportunity- and when things do go wrong- its a case of- lets blame the IDA or Enterprise Ireland or some nameless bureaucrat on Kildare Street.

There has to be recognition by the public of just how bad the Irish economy is, and then there has to be buy-in into a recovery plan. Flogging 2 billion in public sector pay savings is a drop in the ocean when our budget is forecast by the government at 19.5 billion and at 24 billion by the OECD........ The media are complicit in manipulating the public on this one- but there is a mess there that people are not being brought up to date on......

Higher taxes, lower entitlements, cuts in services, closures, fewer teachers, fewer public sector employees- cuts and chops all over the place. Thats what has to happen. We need to stop our self-delusion and get this underway sooner rather than later.......

Permabear · 10-02-2009 6:19pm

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The_Conductor · 10-02-2009 6:37pm

I recognise US government intervention in the economy- however a lot of their current problems stem from lack of regulation or more to the point lack of provision of resources to properly regulate their financial industries.

If you want to go down the non-interventionist route- it will lead ultimately to the insular/nationalist/protectionist situation that the US seems to be lurching towards.

You seem to stating that intervention is inherently bad- whereas I would counter that there can both good and bad intervention- that different situations call for different measures. Mill's non-interventionist theories have been superceded in most developed economies at this point. This however is the politics and not the economics forum

I disagree that the European model of social democracy inexorably leads to lethargy. Certainly- you could hold up either the French or the Latin models as an argument supporting your hypothesis- but you would be ignoring the manner in which the nordic social model is applied- and to which much of the continent strives towards. Measuring economic success purely in financial terms is in itself a very two dimensional manner of measuring the overall wellbeing of a system. You hold that the economies of Eastern Europe have learnt their lesson well. The inverse of this is life expectancy has actually fallen in most of the former iron curtain since the fall of communism. I am not arguing in favour of communism- simply that while its monetary policies may have been severely detrimental to its people, that measuring economic performance solely in financial terms is flawed.

From the US- Madox's amazing pyramid scheme and its resultant effects on numerous charitable organisation
From Ireland- The construction sector bankrolling the two largest political parties
From Ireland- the original sale of Eircom and its subsequent reprivatisation and its effect on future public purchasing of shares

I can keep going on.......

Not at all. We have had bubbles for as long as anyone remembers- think back to the original bubble- tulips from Amsterdam

GrumPy · 10-02-2009 6:43pm

What happens if you are on minimum wage, and the government decide to drop it? Has your employer got the right to drop it, or the fact you were employed under the pretense you would earn 8.50/8.65 or whatever?

The_Conductor · 10-02-2009 6:49pm

If the minimum wage is reduced- employers have the right to employ people at a lower rate of pay. It is up to employees to negotiate what they are actually paid. People will not automatically be paid the lowest possible rate of pay.

Permabear · 10-02-2009 7:23pm

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thomasj · 12-02-2009 6:32pm

Making public servants redundant is not going to help things in terms of the redundancy payment, the lump sum they get as well as the increase in dole numbers this would cause

webshopper · 16-02-2009 1:19am

To stop unemployment rising to 20% the minimum wage has to be cut by 30%, to regain international competitiveness.
Social security payments and entitlements need to fall by 35% to encourage people to work in this lower wage environment.
Public service wages need to be cut by 40%. ( remembering that it's only a couple of years ago that "Benchmarking" gave the public service an undeserved 17% pay rise.)
Inside 3 months, when all these wage cuts were in the system, the cost of living would have fallen by at least 15%, probably more, as the "high wage cost factor" disappeared from the cost of goods chain.

Think about it logically - The Chinese pay the same as us for raw metals and crude oil.
Yet a Chinese hammer manufacturer can buy the metal, forge the tool, transport it to port, ship it to here, sell it to a wholesaler who then sells it to a retailer to sell to us, and a profit is made at every stage.
Yet we couldn't even send the finished hammer back to China because the cost of posting it from here to there would be higher than the €3 the hammer retails for here.
Wages that are too high are the root cause of our current employment and standard of living woes.

wasper · 16-02-2009 1:30am

Less than a year ago, most of the so called free market advocates were saying that you can't cap the wages & benefits paid to the so called 'Captains of industries', financial wizards..etc. But they have a problem with someone earning less than €10 an hour. The majority in this country & in any country in the world are given wages & have no say prices fixing. The minority control the economy & dictate prices of items & wages.

Akrasia · 16-02-2009 8:59am

I absolutely love the way Free marketeers (of the chicago variety) are supposedly all about 'personal responsibility'
But when their system of laissez faire banking explodes into the greatest economic depression since easter island ran out of wood... 'er, it was all someone else's fault'

Laissez faire capitalism has been the dominant ideology over the last 10 and look at what happened?

pdb123 · 16-02-2009 9:21am

I'm sorry, but social welfare payments are not too high,

try living on 200 quid a week? I can't imagine its very easy..

While we do need bring down costs, we don't need to do it by attacking people on the dole, people who are too sick to work, people with mental problems, people who have been made redundant by ruthless, profit maximising companies..

We all need to look at taking cuts, every one of us, but how can we when, a vast majority of people are saddled with huge debt, linked to a decreasing asset?

The cost of living needs to come down, wages need to come down. Social welfare is the least of this countries problems..

grahamo · 16-02-2009 10:00am

Why are the vulnerable and low paid always hit first when things go pear shaped?
I'll bet a lot of the posters on here calling for pay cuts and using the excuse that "the private sector has taken all the pain" haven't personally taken any pain.
It seems to be a case of pay cuts and redundancies for all as long as it doesn't affect moi!

Permabear · 16-02-2009 10:17am

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pdb123 · 16-02-2009 10:29am

So let me get this straight donegalfella,
are saying that the banking system doesn't need regulation or government intervention?

Funny who how they came cap in hand to governments across the world, when their unethical,immoral lending practices came back to bit them in the hole..

Do you think the packaging of good and bad debt and selling around the world is an example of a industry that was over regulated?

Permabear · 16-02-2009 10:35am

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pdb123 · 16-02-2009 10:46am

OK, lets say i owned a warehouse
I sold you 50 TVs - 30 of them didn't work, you complained to me & told you to GFY!! I told it was all working. Who do you complain to?

Every industry needs legislation to opperate inside.

Permabear · 16-02-2009 10:52am

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pdb123 · 16-02-2009 10:59am

Ok I think we are getting into a brick wall scenarios..
We will have to agree to disagree.

Akrasia · 16-02-2009 11:02am

Have you ever had to live on minimum wage? it's really difficult, especially if you have any loans to pay each month. I live with my girlfriend earn 350pw, she earns 300pm I have 320 pm worth of loans left over from my time as a student and I have rent and bills and petrol and insurance road tax and food and clothes (ha, i haven't even got shoes that fit properly) (Yes I do need a car, I live in Ennis with pretty much zero public transport) I have about 40 euros a week of 'disposable' income which leaves me zero savings because that is always taken up by 'frivolous' expenditure like replacing flat tyres, the tv license, unplanned for expenses like flowers for a sick relative in hospital and the extra petrol it takes to drive to galway to visit her, the inevitable birthday, wedding, confirmation, presents that are all more expensive than they are valued...

I haven't taken a holiday in years because I can't afford it, we hardly ever go out anymore, I haven't even visited my mother who moved to cardif 3 years ago because I can't afford the couple of hundred euros it would cost for the weekend.

I got an ESB bill for 300 feckin euros last month despite deliberately leaving the heating off for most of the (coldest in more than a decade) winter (an inexplicable jump of more than 300% on the previous bill of 75 euro) we don't even have a bin service because we can't afford the cost taking our own recycling to the centre and bring our own rubbish to the dump.
We certainly don't have sky tv or broadband, we're essentially already living in the 1980s

Minimum wage - time for a decrease?

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