SIPTU calling for €11.45 p/h minimum wage

PauloMN

Don't normally post here but thought this warranted debate:
http://www.irishtimes.com/business/siptu-calls-for-5-pay-increases-and-11-45-minimum-wage-1.2086867

I'm far from being an economics expert, but surely this is pure insanity? This would push up to having the highest minimum wage in Europe, if this table is correct:
http://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_minimum_wage

For me, this would drive up the price of everything, we'd be back to square one and we'd take a huge hit in tourism and exports among other things. Surely the way to go is reducing taxes, taking as many people out of the tax net as possible and keeping us competitive?

How are organisations like SIPTU getting any support at all, coming out with recommendations like these?

Voltex

PauloMN wrote: »

Don't normally post here but thought this warranted debate:
http://www.irishtimes.com/business/siptu-calls-for-5-pay-increases-and-11-45-minimum-wage-1.2086867

I'm far from being an economics expert, but surely this is pure insanity? This would push up to having the highest minimum wage in Europe, if this table is correct:
http://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_minimum_wage

For me, this would drive up the price of everything, we'd be back to square one and we'd take a huge hit in tourism and exports among other things. Surely the way to go is reducing taxes, taking as many people out of the tax net as possible and keeping us competitive?

How are organisations like SIPTU getting any support at all, coming out with recommendations like these?

JOC ranks second to Brendan Ogle as Ireland's number 1 certifiable Trade Union fruiter!

What the government needs to do is to focus on developing and sustaining the correct conditions that encourage entrepreneurial discovery and activity.

Just to start, a minimum wage of €11whatever would absolutely ensure that young people never get jobs, marginal trades and industries disappear, '000s of jobs lost, FDI gone- OVERNIGHT-.

The truth being that there is no government that will agree to a minimum wage anything like what JOC is looking for. The comments are populist and scream of a organisation that is seeking support to bolster a movement long bereft of popular public opinion. Mind you if I'm wrong and the government does agree to any increase in the minimum wage (which I fundamentally disagree with anyway) I will pack my bags..sell everything I own and get out of Ireland.

Steppenwolfe

Voltex wrote: »

Mind you if I'm wrong and the government does agree to any increase in the minimum wage (which I fundamentally disagree with anyway) I will pack my bags..sell everything I own and get out of Ireland.

That sounds pretty drastic. I presume it's just hyperbole. If the thought of the lowest paid workers in the state getting a few extra quid for their efforts evokes that type of reaction you have serious problems.

the_syco

If the min-wage goes up, how many people will see a drastic reduction in wage due to coming into the tax net?

Does this mean that businesses would have to pay an extra €5000? This would mean that 1 in 5 people would get let go from small businesses at the current level, with other charges also increasing.

Siptu, the country’s largest trade union, is to seek pay increases of 5 per cent across the public and private sectors.

Uhhhh... what? How exactly will be increase a wage increase by 5% to the private sector, and how many people, in a time that we're recovering, would be let go due to this bull**** proposal?

BoJack Horseman

The way income tax works, someone on €22k per year pays 4 times more tax than someone on €18k

The net difference between the 2 pay points is a little over €1k per year.

There should be some acknowledgement that those on €10-€11 are essentially minimum wage once tax is taken into account.

PauloMN

Steppenwolfe wrote: »

That sounds pretty drastic. I presume it's just hyperbole. If the thought of the lowest paid workers in the state getting a few extra quid for their efforts evokes that type of reaction you have serious problems.

I'd imagine it's not the thought of low paid earners getting a few extra quid that would provoke that reaction, but rather that the country would be put into a very bad place if that were to happen. I often hear your opinion being used in defence of raising the minimum wage as if people kind of enjoy low wage earners being on a low wage. It's so far wide of the mark it's scary.

Can you not see the massive, massive damage such a move would result in? How could small business survive with approx 30% wage cost increases overnight? How would an already fragile economy survive the huge dents to tourism? To export goods? Thousands of your staff on 11 per hour would very soon be on social welfare, and in a crippled economy, that wouldn't be long being slashed.

I'm just surprised some people seem to just believe any old populist claptrap fed to them without ANY attempt to scratch the surface and see what the consequences of such actions would actually mean.

The Muppet

That would mean someone on minimum wage would earn €429 Gross for a 39 hour week scandalous all together.

Voltex

Steppenwolfe wrote: »

That sounds pretty drastic. I presume it's just hyperbole. If the thought of the lowest paid workers in the state getting a few extra quid for their efforts evokes that type of reaction you have serious problems.

My reaction would be in consequence to a State that thinks for one second that a minimum wage of €11+ p/h is for the collective good.
Maybe JOC is trying to outshine Alex Tsipras for the Euro nutter of the year??

Manach

The minimum wage is an important issue. There are different view points from across the spectrum citing sources praising or damning it or changes to it. By its nature it can be very easily politicised and used as a convenient tool to stir up popularism or attract lobbyists. Thus being so political, perhaps it needs to taken away from the hands of the most corrupt (politicans) and allowed to be set by those most effected by changes, the people. The Swiss have regularised debates on such and can set their's via a referendum. Given the leanings of this current government for social change via such a mechanism, there should be little resistance from that quarter :rolleyes:

Dunford

Usual SITPU rubbish. Idiots.

Voltex

Manach wrote: »

The minimum wage is an important issue. There are different view points from across the spectrum citing sources praising or damning it or changes to it. By its nature it can be very easily politicised and used as a convenient tool to stir up popularism or attract lobbyists. Thus being so political, perhaps it needs to taken away from the hands of the most corrupt (politicans) and allowed to be set by those most effected by changes, the people. The Swiss have regularised debates on such and can set their's via a referendum. Given the leanings of this current government for social change via such a mechanism, there should be little resistance from that quarter :rolleyes:

Very well put. That for me is how debates on such issues should be characterised.
In my opinion prices are far more than just a number..they define the value of a product or service via the mechanisms of the free market. If we take the free market mechanics as a given it becomes implicit that any of the factors of production for that product or service are also subject to market dynamics that influence the price of the final product. The effects of subventions like the minimum wage is that they corrupt the real market dynamics of price setting.

Yiikes

Trying to find a flexible part time job as a student is hard enough €11.45 would make it impossible.

Greenmachine

BoJack Horseman wrote: »

The way income tax works, someone on €22k per year pays 4 times more tax than someone on €18k

The net difference between the 2 pay points is a little over €1k per year.

There should be some acknowledgement that those on €10-€11 are essentially minimum wage once tax is taken into account.

Absolutely correct. There is a range of point where the USC and PAYE kick in where you would be down on money. Your tax liability increases substantially enough that you need to earn a few thousand more just to be where you would be at the €18k point.

The Muppet

There's no doubt some sections could well afford to pay their workers a little extra .

http://businessetc.thejournal.ie/ireland-supermarket-profits-1896543-Jan2015/

PauloMN

The Muppet wrote: »

There's no doubt some sections could well afford to pay their workers a little extra .

http://businessetc.thejournal.ie/ireland-supermarket-profits-1896543-Jan2015/

That's separate from a statutory minimum wage though. Anyway I think rules around contracts for such workers should be tightened up before anything else. It's clear that some of those companies are abusing employees with zero hour contracts etc..

Steppenwolfe

PauloMN wrote: »

I'd imagine it's not the thought of low paid earners getting a few extra quid that would provoke that reaction, but rather that the country would be put into a very bad place if that were to happen. I often hear your opinion being used in defence of raising the minimum wage as if people kind of enjoy low wage earners being on a low wage. It's so far wide of the mark it's scary.

Can you not see the massive, massive damage such a move would result in? How could small business survive with approx 30% wage cost increases overnight? How would an already fragile economy survive the huge dents to tourism? To export goods? Thousands of your staff on 11 per hour would very soon be on social welfare, and in a crippled economy, that wouldn't be long being slashed.

I'm just surprised some people seem to just believe any old populist claptrap fed to them without ANY attempt to scratch the surface and see what the consequences of such actions would actually mean.

OMG. I never realised it would mean the end of irish civilisation as we know it. :eek:

Do you people actually believe this garbage you spout in here. How many of you are living of the sweat of these low paid workers? Must be quite a few judging by some of the bile I see thrown around in here. I better stop before I say something I regret. You people ...

Paulzx

Nobody here obviously knows anything about haggling or driving a hard bargain. Do you actually run small businesses?


If Jack O Connor wanted a 5% pay increase he'd have looked for 10% today.

Jesus lads.......I'm surprised at your niavety

PauloMN

Steppenwolfe wrote: »

OMG. I never realised it would mean the end of irish civilisation as we know it. :eek:

Do you people actually believe this garbage you spout in here. How many of you are living of the sweat of these low paid workers? Must be quite a few judging by some of the bile I see thrown around in here. I better stop before I say something I regret. You people ...

I notice you didn't actually answer any of the concerns I've raised above. Those who come up with these completely impractical ideas never do address reality.

You think that raising Ireland's min wage from an already high level to the highest in the Eurozone in a fragile economy would be completely without consequence and would simply give the low waged more spending power? Simple as that?

Lol, there's only one person here believing garbage and that's you.

Godge

Does anybody have the statistics for the share of GDP taken by income as opposed to capital for the last decade. There are bound to have been drastic changes as a result of the boom and subsequent recession.

Before taking a view on this, those statistics would be interesting.

jank

Raising the min wage will just make it harder for unskilled and low skilled workers to get jobs. It will also increase automation and technology never mind companies will look to out source to cheaper countries. Stupid comments by SIPTU.

the_syco

The Muppet wrote: »

There's no doubt some sections could well afford to pay their workers a little extra .

http://businessetc.thejournal.ie/ireland-supermarket-profits-1896543-Jan2015/

Maybe. But they'll just put more people on zero-hour contracts.

=-=

As for a reason why we shouldn't increase the min wage; Dell.

Raising the min wage wouldn't be shooting oneself in the foot; it'd be double-barrell shotgun kneecapping ourselves!

Kermit.de.frog

How many low paid jobs would be lost under this proposal? Nuff said.

Steppenwolfe

Kermit.de.frog wrote: »

How many low paid jobs would be lost under this proposal? Nuff said.

Who gives a ****? Nuff said.

Steppenwolfe

Voltex wrote: »

My reaction would be in consequence to a State that thinks for one second that a minimum wage of €11+ p/h is for the collective good.
Maybe JOC is trying to outshine Alex Tsipras for the Euro nutter of the year??

You better start packing your bags so. The Tsipras victory is only the start for Europe. The tide is turning and it's going to sweep you lot away like a tsunami.

PauloMN

Steppenwolfe wrote: »

You better start packing your bags so. The Tsipras victory is only the start for Europe. The tide is turning and it's going to sweep you lot away like a tsunami.

Who is "you lot"? I assume you mean those of us who are concerned that raising the minimum wage would have a very damaging effect on our economy?

As for Greece - completely different situation to Ireland. Absolute basket case of an economy. What has happened in Greece won't happen here, thankfully.

Guy:Incognito

Steppenwolfe wrote: »

Who gives a ****? Nuff said.

The people currently in those jobs probably give a ****.

Guy:Incognito

Steppenwolfe wrote: »

You better start packing your bags so. The Tsipras victory is only the start for Europe. The tide is turning and it's going to sweep you lot away like a tsunami.

Yeah the sooner they can all get back to not paying tax and get that silly neutral budget they just got turned back in to a deficit the better for everyone :rolleyes:

Yiikes

Steppenwolfe wrote: »

You better start packing your bags so. The Tsipras victory is only the start for Europe. The tide is turning and it's going to sweep you lot away like a tsunami.

You a comedian?

the_syco

Yiikes wrote: »

You a comedian?

This is what their current leader got elected on.

BoJack Horseman

Steppenwolfe wrote: »

The Tsipras victory is only the start for Europe. The tide is turning and it's going to sweep you lot away like a tsunami.

Love it!

1 communist electoral victory & the reds are already out making threats to people.

Tis a grand future they desire.

Geuze

Godge wrote: »

Does anybody have the statistics for the share of GDP taken by income as opposed to capital for the last decade. There are bound to have been drastic changes as a result of the boom and subsequent recession.

Before taking a view on this, those statistics would be interesting.

A good question.

Irish data would be skewed by MNC, IFSC, external factors, though.

Geuze

http://www.cso.ie/en/releasesandpublications/er/nie/nationalincomeandexpenditureannualresults2013/#.VM9GTmisWSo


See table 1 of the NIE 2013.


Non-agri wages

2008 = 76,235m
2013 = 66,581m

Domestic trading profits of companies (including corporate bodies) before tax

2008 = 40,259m
2013 = 46,925m

Godge

Geuze wrote: »

http://www.cso.ie/en/releasesandpublications/er/nie/nationalincomeandexpenditureannualresults2013/#.VM9GTmisWSo


See table 1 of the NIE 2013.


Non-agri wages

2008 = 76,235m
2013 = 66,581m

Domestic trading profits of companies (including corporate bodies) before tax

2008 = 40,259m
2013 = 46,925m

So wages have taken a big hit while capital profits have benefitted. The recession has seen wages share of GDP fall while capital profits have risen. I believe this needs to be addressed.

Two ways of reversing this that I can think of:

(1) Increase capital taxes and reduce income taxes
(2) Increase minimum wage and reintroduce national wage rounds for other wages/salaries.

(1) would not be welcomed by the MNCs, leaving (2) which is why it is on the agenda.

Anyone have a third way?

Any increase in the minimum wage would prompt more cowboy Jobsbridge rubbish like "barber floor sweeping technician" apprenticeships.

The minimum wage (as discussed in the article) is no longer the minimum wage thanks to that scheme scam.

Jobsbridge needs to be fixed/removed before any adjustments (other than downwards!) to minimum wage occurs.

antoobrien

Godge wrote: »

Anyone have a third way?

Cutting the cost of living/doing business. There's a whole host of things that can do that, from tax cuts to cost savings, streamlining processes and so on. Of course the reason that none of that will happen is that somebody will lose out.

blackwave

I had a little laugh when I read this in the paper. €11.45 for Min wage would be a disaster for the economy. I would support a small increase in the minimum wage to €9 a hour. However what I would rather is for tax reform for people on low incomes (under 22k) as one poster pointed out it makes it nearly better for people to be on social welfare instead of working. At this stage in our recovery we need to be making incentives people to work.

Brussels Sprout

Let's for a minute imagine this happens:

So the minimum wage is increased by a massive 32%.

Small and medium enterprises operating on tight margins are forced to increase their prices by 32% to stay solvent.

What are the odds that the same people chearleading that great champagne socialist Jack O' Connor would be the ones starting threads giving out about the rip-off prices and greed of Irish businesses?

djpbarry

The Muppet wrote: »

That would mean someone on minimum wage would earn €429 Gross for a 39 hour week scandalous all together.

Well, yeah, for someone with zero skills and experience, €439 per week is far too much.

Greyian

Brussels Sprout wrote: »

Let's for a minute imagine this happens:

So the minimum wage is increased by a massive 32%.

Small and medium enterprises operating on tight margins are forced to increase their prices by 32% to stay solvent.

What are the odds that the same people chearleading that great champagne socialist Jack O' Connor would be the ones starting threads giving out about the rip-off prices and greed of Irish businesses?

Well, they wouldn't have to raise their prices by 32%.

If a company was selling a product for €100, and their costs were say...€50 for the product, €10 for rent/electricity etc, €30 for wages, €10 profit, if you increase the wages by 32% (€9.60), you would only have to increase the selling price by 9.6% to keep the same profit margin.

The suggested jump in the minimum wage is still way, way too high though.

Get Real

I second the opinion that an x% rise in wages/other costs does not equate to the same x% rise in goods (or at least it shouldn't, otherwise companies are using it as an excuse)

Take the humble cup of tea. Made, including the water and disposable cup for circa 7cent. Retailing at 1.70. A gross profit of 1.63.

Say the price of providing this tea were to jump by 50% tomorrow. To the business, this is an increase of 3.5 cent per cup. (10.5 cent total) They could:

1. Pass this 3.5 (4) cent on, to maintain their gross profit of 1.63 (the price of a cup has gone up by 2% not 50%, even though tea costs have gone up 50%)

2. Keep prices the same, and still make a decent gross profit.

3. Complain in the media etc price has jumped 50% so goods will need to jump the same (complete nonsense), why would you raise prices by 85cent to cover a real rise of 3.5 cent, other than greed.

Same can be said for labour, say I made 50 till transactions an hour @ 9 euro per hour, each good costing 4 euro. Per transaction 50 transactions for 9 euro= 18cent labour per transaction.

If my wage were to rise 33% to 12 euro an hour, the goods at the till would not jump 33%( from 4 euro to 5.50.) The old labour cost 18c per transaction, the new cost would be 18+33%=24 cent per transaction, this is an increase of 6 cent. 6 cent is 1.5% of 4 euro.

This means that yes prices would rise, but at substantially lesser rates, giving the lowest earners in society more disposable income, which not only increases their quality of life, but also means they spend more in the locality on non essential goods (eating out, a car, furniture, shopping) which in turn creates more spending, domestic demand, jobs and wealth.

If you give a millionaire an extra 5 grand a year, it makes little difference to their spending habits, they'll likely spend the same amount, and keep the rest tied up in a savings account for the long term. If you give a lower earner an extra 5,000 a year, they may increase their savings (which is good for them) but spend that little bit more, driving consumer demand and increasing vat and income tax revenue, whilst achieving higher living standards.

Business owners will either

1. see a slight fall in revenue, but still be profitable

2. If struggling, pass on the cost, but at a much smaller percentage overall, to maintain current earnings.

3. Actually see an increase in business and profits as people go out more, spend more, treat themselves to pubs, restaurants, a new telly etc.

OMD

Get Real wrote: »

I second the opinion that an x% rise in wages/other costs does not equate to the same x% rise in goods (or at least it shouldn't, otherwise companies are using it as an excuse)

Take the humble cup of tea. Made, including the water and disposable cup for circa 7cent. Retailing at 1.70. A gross profit of 1.63.

Say the price of providing this tea were to jump by 50% tomorrow. To the business, this is an increase of 3.5 cent per cup. (10.5 cent total) They could:

1. Pass this 3.5 (4) cent on, to maintain their gross profit of 1.63 (the price of a cup has gone up by 2% not 50%, even though tea costs have gone up 50%)

2. Keep prices the same, and still make a decent gross profit.

3. Complain in the media etc price has jumped 50% so goods will need to jump the same (complete nonsense), why would you raise prices by 85cent to cover a real rise of 3.5 cent, other than greed.

Same can be said for labour, say I made 50 till transactions an hour @ 9 euro per hour, each good costing 4 euro. Per transaction 50 transactions for 9 euro= 18cent labour per transaction.

If my wage were to rise 33% to 12 euro an hour, the goods at the till would not jump 33%( from 4 euro to 5.50.) The old labour cost 18c per transaction, the new cost would be 18+33%=24 cent per transaction, this is an increase of 6 cent. 6 cent is 1.5% of 4 euro.

This means that yes prices would rise, but at substantially lesser rates, giving the lowest earners in society more disposable income, which not only increases their quality of life, but also means they spend more in the locality on non essential goods (eating out, a car, furniture, shopping) which in turn creates more spending, domestic demand, jobs and wealth.

If you give a millionaire an extra 5 grand a year, it makes little difference to their spending habits, they'll likely spend the same amount, and keep the rest tied up in a savings account for the long term. If you give a lower earner an extra 5,000 a year, they may increase their savings (which is good for them) but spend that little bit more, driving consumer demand and increasing vat and income tax revenue, whilst achieving higher living standards.

Business owners will either

1. see a slight fall in revenue, but still be profitable

2. If struggling, pass on the cost, but at a much smaller percentage overall, to maintain current earnings.

3. Actually see an increase in business and profits as people go out more, spend more, treat themselves to pubs, restaurants, a new telly etc.

A lot of use of gross profit there when discussing cafe "profits" which is substantially different to net profit.

Anyway the effects on business really depend on how labour intensive the business is and how reliant on lower paid workers it is. One of the main areas that would be effected is childcare costs. Those who think childcare is expensive now will be in for one hell of a shock.

LordNorbury

PauloMN wrote: »

For me, this would drive up the price of everything, we'd be back to square one and we'd take a huge hit in tourism and exports among other things. Surely the way to go is reducing taxes, taking as many people out of the tax net as possible and keeping us competitive?

How are organisations like SIPTU getting any support at all, coming out with recommendations like these?

SIPTU are bankrolling the Labour Party and it is because of the likes of SIPTU that we can't reduce taxes, (because we can't reduce labour costs) because having a SIPTU and other PS unions which basically have a veto on policy that relates to public expenditure, where their members and the pay of their members is the highest thing on the agenda, this prevents us from reforming how public services are delivered.

You'll find that nearly without exception, SIPTU members are typically in public sector or semi state jobs where annualised losses are backfilled by government subvention/injections of cash to make up for losses clocked up in the previous year, losses that you will invariably find are down to the excessive cost of labour that can't be dealt with because SIPTU says so.

Where you have a small company that has to actually turn a profit and stay solvent on a continuing/year on year basis, you are unlikely to find a SIPTU member. Their members are in cosy little workplaces, the last of the handy numbers, in places like Irish Rail, national hospitals, Dublin Bus & Bus Eireann, Eircom, Aer Lingus, An Post, Coillte, Bord Na Mona, ESB, and other such industrial la la lands where there is either a monopoly that keeps prices artificially high, or else the government is obliged to let them waste money on excessive labour costs which the taxpayer will eventually have to cover losses for on an annual basis.

LordNorbury

Get Real wrote: »

I second the opinion that an x% rise in wages/other costs does not equate to the same x% rise in goods (or at least it shouldn't, otherwise companies are using it as an excuse)

Take the humble cup of tea. Made, including the water and disposable cup for circa 7cent. Retailing at 1.70. A gross profit of 1.63.

Say the price of providing this tea were to jump by 50% tomorrow. To the business, this is an increase of 3.5 cent per cup. (10.5 cent total) They could:

1. Pass this 3.5 (4) cent on, to maintain their gross profit of 1.63 (the price of a cup has gone up by 2% not 50%, even though tea costs have gone up 50%)

2. Keep prices the same, and still make a decent gross profit.

3. Complain in the media etc price has jumped 50% so goods will need to jump the same (complete nonsense), why would you raise prices by 85cent to cover a real rise of 3.5 cent, other than greed.

Same can be said for labour, say I made 50 till transactions an hour @ 9 euro per hour, each good costing 4 euro. Per transaction 50 transactions for 9 euro= 18cent labour per transaction.

If my wage were to rise 33% to 12 euro an hour, the goods at the till would not jump 33%( from 4 euro to 5.50.) The old labour cost 18c per transaction, the new cost would be 18+33%=24 cent per transaction, this is an increase of 6 cent. 6 cent is 1.5% of 4 euro.

This means that yes prices would rise, but at substantially lesser rates, giving the lowest earners in society more disposable income, which not only increases their quality of life, but also means they spend more in the locality on non essential goods (eating out, a car, furniture, shopping) which in turn creates more spending, domestic demand, jobs and wealth.

If you give a millionaire an extra 5 grand a year, it makes little difference to their spending habits, they'll likely spend the same amount, and keep the rest tied up in a savings account for the long term. If you give a lower earner an extra 5,000 a year, they may increase their savings (which is good for them) but spend that little bit more, driving consumer demand and increasing vat and income tax revenue, whilst achieving higher living standards.

Business owners will either

1. see a slight fall in revenue, but still be profitable

2. If struggling, pass on the cost, but at a much smaller percentage overall, to maintain current earnings.

3. Actually see an increase in business and profits as people go out more, spend more, treat themselves to pubs, restaurants, a new telly etc.

What if your customer won't pay the cost you try to pass onto him/her? What if your customer says they can get your product/service cheaper abroad? What if you trying to pass on the additional cost means you've lost that customer?

Greyian

Get Real wrote: »

I second the opinion that an x% rise in wages/other costs does not equate to the same x% rise in goods (or at least it shouldn't, otherwise companies are using it as an excuse)

Take the humble cup of tea. Made, including the water and disposable cup for circa 7cent. Retailing at 1.70. A gross profit of 1.63.

Say the price of providing this tea were to jump by 50% tomorrow. To the business, this is an increase of 3.5 cent per cup. (10.5 cent total) They could:

1. Pass this 3.5 (4) cent on, to maintain their gross profit of 1.63 (the price of a cup has gone up by 2% not 50%, even though tea costs have gone up 50%)

2. Keep prices the same, and still make a decent gross profit.

3. Complain in the media etc price has jumped 50% so goods will need to jump the same (complete nonsense), why would you raise prices by 85cent to cover a real rise of 3.5 cent, other than greed.

Same can be said for labour, say I made 50 till transactions an hour @ 9 euro per hour, each good costing 4 euro. Per transaction 50 transactions for 9 euro= 18cent labour per transaction.

If my wage were to rise 33% to 12 euro an hour, the goods at the till would not jump 33%( from 4 euro to 5.50.) The old labour cost 18c per transaction, the new cost would be 18+33%=24 cent per transaction, this is an increase of 6 cent. 6 cent is 1.5% of 4 euro.

This means that yes prices would rise, but at substantially lesser rates, giving the lowest earners in society more disposable income, which not only increases their quality of life, but also means they spend more in the locality on non essential goods (eating out, a car, furniture, shopping) which in turn creates more spending, domestic demand, jobs and wealth.

If you give a millionaire an extra 5 grand a year, it makes little difference to their spending habits, they'll likely spend the same amount, and keep the rest tied up in a savings account for the long term. If you give a lower earner an extra 5,000 a year, they may increase their savings (which is good for them) but spend that little bit more, driving consumer demand and increasing vat and income tax revenue, whilst achieving higher living standards.

Business owners will either

1. see a slight fall in revenue, but still be profitable

2. If struggling, pass on the cost, but at a much smaller percentage overall, to maintain current earnings.

3. Actually see an increase in business and profits as people go out more, spend more, treat themselves to pubs, restaurants, a new telly etc.

You would also have to factor in that the goods that the cost of goods for a company would also rise too, as their suppliers wage costs would have risen also.

So in the case of, say, baked goods.

Let's say we have a cake. The producer has costs of €6/cake, 50% for the flour, eggs, chocolate etc, 30% for the labour, and 20% for rent, electricity etc. Let's say that this cake sells to Supervalu for €10.00.
Now, as a result of the 33% jump in wage costs, the new cost for the producer is €6.60 (labour jumps from €1.80, to €2.40).
The producer will likely raise the cost to Supervalu from €10 to €11 (to maintain the same 40% margin they had previously).

Supervalu now want to sell this cake. Previously, they've been selling it for €20, after buying it for €10. The remaining €10 was made up by wages of, say €3.00 and rent etc of €2.00, with a profit of €5.
However, the cost of the cake has risen by €1. The cost for Supervalu to sell the cake has also risen by €1 (€3->€4 in staff wages). So, they now need to sell it at €22 to maintain the same €6 profit/cake, or €22.67 to maintain the same 30% margin (as the cost has jumped from €15/cake to €17/cake).

So, while the staff costs alone would have contribute to a 5% (€1 raise in staff costs) if we looked at it purely on Supervalu's level, the actual rise is going to be 10% plus, because of the increased wage levels down the supply chain.

I'd imagine that for electronic items etc, the price jumps would be lower (for example, if you buy a brand new TV in a shop, the portion of the cost that can be attributed to Irish wages is going to be very small).
However, for anything with is more labour intensive, you're likely to find that the jump in prices is going to tend towards the rise in wage costs.

It would be quite possible that a 33% jump in the minimum wage would see electronic items etc work out cheaper, relative to wage levels, than they currently are, whereas labour intensive products may end up comparatively more expensive (if the cost of a product jumps by 20%, low wage earners are benefiting because they've seen wage levels jump 33%, but middle-income/high-income earners are likely to have much more modest wage increases, lowering their purchasing power).

We would also likely see a further erosion of our international competitiveness, as our wage demands would serve to discourage foreign direct investment.

Paulzx

LordNorbury wrote: »

and because having a SIPTU and other PS unions which basically have a veto on policy that relates to public expenditure,

That "veto" really worked on the FEMPI legislation:rolleyes:

I love this "the unions run the country" nonsense. It's up there with the "reds under the beds" paranoia in the USA in the sixties.

LordNorbury

Greyian wrote: »

We would also likely see a further erosion of our international competitiveness, as our wage demands would serve to discourage foreign direct investment.

There is no toleration of price increases in the domestic economy at the moment, we are still stuck in a serious deflationary cycle. Just because Electric Ireland can jack up costs or a taxi can jack up costs, because these guys can go to a regulator and have an industry regulator rack up prices by 5-10%, in the private sector, right now, you can't even try to put up prices, there is simply no toleration for it. All you will do is invite your customers to shop around for better value, in fact they will already be shopping around on the hunt for lower prices even when you are not increasing your prices!!!

This is what deflation in a macro economy does, it makes people obsess about price and anyone running a business in the current climate in the Irish domestic economy, will be able to tell you exactly what this feels like. There will be no attempt to increase the minimum wage at all because people will not pay the increase in price, it will drive people into the black market in droves.

In any event, Jack O' Connor is a person who absolutely nobody takes seriously these days. Even people who would have traditionally been seen as supportive of him, now despise him for his cowardice on water charges, how cowardice when the whole working community in this country were laid siege to and his wholesale sell out of his entire membership base. When people in this country started waking up to the fact that there was a determined and well orchestrated campaign in this country by two successive governments to leave what were traditionally middle class hard working people, in absolute penury to pay for what is in essence a banking scandal and utterly broken systems of public administration, when they started protesting and started looked for some long overdue leadership from wasters like Jack O' Connor and the likes of him who were up to their necks in partnership, etc, all they got was useless waffle and politically encoded bullshítty type sound-bytes from him and the other insiders in this country who sold people out.

People won't forget that, and don't forget, at the Irish Water protests a few months ago, Jack O' Connor couldn't even turn up and address the crowd for fear they would turn on him, so make no mistake about, these are the last career mutterings of a prize eejit who nobody is interested in hearing anything from these days.

LordNorbury

Brussels Sprout wrote: »

Let's for a minute imagine this happens:

So the minimum wage is increased by a massive 32%.

Small and medium enterprises operating on tight margins are forced to increase their prices by 32% to stay solvent.

What are the odds that the same people chearleading that great champagne socialist Jack O' Connor would be the ones starting threads giving out about the rip-off prices and greed of Irish businesses?

They couldn't do that, they are already struggling to stay in business while at the same time struggling to compete with a huge domestic black market that is typically allowed to trade away completely unchallenged and an online alternative market that is again often not competing on the same overhead terms as a legitimate business. Any attempt to increase prices substantially to factor in a 32% increase in labour costs will just close down a lot of small businesses in a fairly short space of time.

Paulzx

LordNorbury wrote: »

There is no toleration of price increases in the domestic economy at the moment, we are still stuck in a serious deflationary cycle. Just because Electric Ireland can jack up costs or a taxi can jack up costs, because these guys can go to a regulator and have an industry regulator rack up prices by 5-10%, in the private sector, right now, you can't even try to put up prices, there is simply no toleration for it. All you will do is invite your customers to shop around for better value, in fact they will already be shopping around on the hunt for lower prices even when you are not increasing your prices!!!

This is what deflation in a macro economy does, it makes people obsess about price and anyone running a business in the current climate in the Irish domestic economy, will be able to tell you exactly what this feels like. There will be no attempt to increase the minimum wage at all because people will not pay the increase in price, it will drive people into the black market in droves.

In any event, Jack O' Connor is a person who absolutely nobody takes seriously these days. Even people who would have traditionally been seen as supportive of him, now despise him for his cowardice on water charges, how cowardice when the whole working community in this country were laid siege to and his wholesale sell out of his entire membership base. When people in this country started waking up to the fact that there was a determined and well orchestrated campaign in this country by two successive governments to leave what were traditionally middle class hard working people, in absolute penury to pay for what is in essence a banking scandal and utterly broken systems of public administration, when they started protesting and started looked for some long overdue leadership from wasters like Jack O' Connor and the likes of him who were up to their necks in partnership, etc, all they got was useless waffle and politically encoded bullshítty type sound-bytes from him and the other insiders in this country who sold people out.

People won't forget that, and don't forget, at the Irish Water protests a few months ago, Jack O' Connor couldn't even turn up and address the crowd for fear they would turn on him, so make no mistake about, these are the last career mutterings of a prize eejit who nobody is interested in hearing anything from these days.

Hang on a minute.................A couple of posts ago you claimed the unions had a veto on forming government policy. Now your saying that the leader of the largest union in the state is irrellevant because no one listens to him

Which is it? Are the unions running the country or not?

LordNorbury

Paulzx wrote: »

Hang on a minute.................A couple of posts ago you claimed the unions had a veto on forming government policy. Now your saying that the leader of the largest union in the state is irrellevant because no one listens to him

Which is it? Are the unions running the country or not?

Yes unions have far too much say in how this country is run & administered, completely disproportionate to their membership, as the majority of people in this country are not in unions. As I've made clear and as is historically obvious, because unions can't exist in the absence of a blank cheque to cover and backfill continuing and ongoing trading losses, they have been largely pushed out of the private sector, mainly through businesses that they have managed to shut down, like Fruit of the Loom, Packard Bell, Vita Cortex, Waterford Crystal, Airmotive, "Team" Aer Lingus/SR Techics, etc, etc.

Hence why unions are now deeply embedded in our public sector, where they can't be displaced, because the public sector & the semi state sector, is the last place left in Ireland where hundreds of millions of Euro of losses can be sustained & taxpayers money can be used to backfill the financial hole, as has been the case every single year in organisations like An Post, Dublin Bus, Irish Rail, the HSE, Bus Eireann, just to name a few. This is exactly why the government won't sell their shareholding in Aer Lingus, because the 'about-to-be- aniliated' Irish Labour Party, are now terrified of unionised Aer Lingus staff in North Dublin!

While at membership level, union members continue to collectively hold disproportionate influence over national policy which continues to prevent elected decision makers from cutting pay for the purposes of making the organisation cost effective and fit for purpose, at the top table, equally there can be no doubt that Jack O' Connor has lost his leadership credibility on a national level to such an extent where he actually would be capable of invoking serious public disorder if he attempted to address a public gathering in relation to Irish water or any other focal issue that is causing people to protest at the present time. The guy has been completely found out as a government puppet who has nothing in common with those he claims to represent, he is a champagne socialist whose selfish agenda of appeasing & ignoring his paying membership, while assisting government in saddling people, his own membership with obscene levels of illegitimate debt, with 6 years of austerity while he sat by and by agreement with two successive governments, did nothing, is now plain for everyone to see.

I'll concede defeat on these points when Jack O' Connor turns up and addresses an Irish Water protest, but he knows well that he can't because he knows he is a sell out traitor who people basically now hate.

Head The Wall

Let's not forget also that if minimum wage staff get this increase then all staff that currently get paid in between these rates (8.65 to 11.45) will also be looking for pro-rata pay increases. It's an utterly idiotic idea but one doesn't expect much from the toolbag O'Connor

FreudianSlippers

The US has constantly found that raising the minimum wage is not beneficial to those on lower incomes; it simply makes it more difficult for unskilled/uneducated workers to find jobs and the costs of doing so do not outweigh the benefits in any real sense.

http://www.bloombergview.com/articles/2014-02-18/raising-the-minimum-wage-is-still-a-bad-idea