Minimum wage - time for a decrease?

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The_Conductor

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.......

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The_Conductor

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

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

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.

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thomasj

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

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

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

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?

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

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!

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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?

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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.

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

Akrasia

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

Surely its a bit useless to trot that out unless its compared against some sort of index of the cost of living though.

Pardon my scorn. Whats gone wrong is that without regulation, sheer greed raised its ugly head and said 'fvck the consequences'.

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O theres far more to blame than would easily fit under that definition.

Tell me this - What role had the state in the mortgage/property derivatives market that spread the 'posion' around the globe?

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Mr.Micro

Whilst in principle this should be true. If so then the banks should have no bailout ever and shuld expect none and should go to the wall when they mess things up? The problem is that as banks they have all the public/businesses/ governments bank accounts details so if the banks go to the wall so do all their customers. So its a vicious circle. There was no real regulation IMO on the banks anyway or if there was it was lax and look at what they did.

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That would be the 'greed' thing then.

There was and is no obligation for the average bank to take on sub-prime loans on the scale that they did. Not only that, but institutions opened whose sole purpose was the exploitation of that market.

Take HBOS over the water there....It wasn't the Government that dismissed warnings (and indeed the 'warner') in there. It was the ethos of greed, and screw the consequences.

and if the banks generally were let go to the wall, what would happen would be a vast collapse, far far in excess of possibly any other crisis.

(Plus on the self interest note, my few bob would go down the swanee...)

dan_d

Lower minimum wage needed (around EU average) and a proportional drop in the cost of living.
Actually if the minimum wage dropped, the cost of living would nearly be forced to drop for the simple reason that people would just not be able to afford things anymore.
Part of our many problems is that we are pricing ourselves out of a market here (and i know that's not the solution to all our problems or the cause of it, but it will need to be done eventually)