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Minimum wage - time for a decrease?

BroomBurner

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?

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astrofool

deadhead13 wrote: »

4.5 of the workforce are on mimimum wage. My point being, a reduction would have little effect on the economic situation as a whole and is not justifiable. By the way - I am totally against such a reduction.

I don't think the point in reducing it is to reduce the wages of people who are currently on, or near the minimum wage, but instead to make Ireland more attractive as a country to create jobs in, due to a lower minimum wage.

With the second highest minimum wage in Europe, we are discouraging job creation. If minimum wage was lowered, in tandem with social welfare payments, than we would

a) be more attractive as a country for businesses and encourage jobs to be created where the current minimum wage stops them

b) Make working for the minimum wage more attractive than being on social welfare, so people are encouraged to get one of these new jobs, rather than languish on the dole.

deadhead13

Akrasia wrote: »

If I really said what I think of that comment, I would get banned for life from this forum. An utterly disgraceful comment. There are hundreds of thousands of workers on minimum wage (or within a euro or two of min wage) and these are mostly very hard workers struggling to get by in one of the most expensive countries in the world to live.

4.5% of the workforce are on mimimum wage. My point being, a reduction would have little effect on the economic situation as a whole and is not justifiable. By the way - I am totally against such a reduction.

Permabear

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Fol20

smccarrick wrote: »

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.........

I do think it should be lowered but keep in mind that we also have a very high inflation rate in comparison to the rest of the EU

grahamo

deadhead13 wrote: »

Reducing employers PRSI contributions would be the a more ethical approach.

The Employers PRSI rate here is already one of the lowest in Europe.

deadhead13

Reducing employers PRSI contributions would be the a more ethical approach.

The_Conductor

deadhead13 wrote: »

I think people are over-estimating the number people on the mimimum wage and the effect of reducing it would have on the current situation.

The matter is not the number of people on the minimum wage- its the manner in which jobs which might otherwise be in the economy are not there- as its economically unattractive for people to work at those levels, when the social welfare system is set at such a high level.

Reducing the minimum wage, reducing the cost of living, reducing social welfare entitlements- all in tandem- will produce tangible jobs, albeit at lower levels in society- but they would be jobs nonetheless, people would be productively employed, instead of reliant on our social welfare system. In time, as they became more skilled at those lower level jobs, they could aspire to promotional opportunities or employment elsewhere, making use of those skills that they might have learnt.

Its not an argument where lowering the minimum wage is a panacea- its not on its own- it has to be part of the larger picture.

The big problem at the moment is politicians are tinkering piecemeal with different options to see what is more palatable to the public, and what can be sold to the media- instead of making the hard decisions and exercising the decisive leadership that we so badly need.

S.

Akrasia

deadhead13 wrote: »

I think people are over-estimating the number people on the mimimum wage and the effect of reducing it would have on the current situation.

If I really said what I think of that comment, I would get banned for life from this forum. An utterly disgraceful comment. There are hundreds of thousands of workers on minimum wage (or within a euro or two of min wage) and these are mostly very hard workers struggling to get by in one of the most expensive countries in the world to live.

deadhead13

I think people are over-estimating the number people on the mimimum wage and the effect of reducing it would have on the current situation.

Akrasia

donegalfella wrote: »

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Fine, so how about dealing with my point about the effect of the low U.S. minimum wage and their very poor social welfare system?

Real incomes in the U.S. have been declining for the low paid since the 60s (even during periods of economic expansion) while the percentage of wealth held by the richest 1% has skyrocketed

The result is that millions of working people of the U.S. found themselves swimming in debt just to maintain the same (or worse) standard of living their grandparents had in the 50s and 60s (which they could maintain debt free)

Permabear

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Akrasia

donegalfella wrote: »

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You don't think the U.S. embargo has anything to do with those medicine shortages by any chance? Are you aware that GW Bush made it illegal for any pharmaceutical company with any operations in the U.S. (all of them) to sell anything to cuba even if they're not registered as a U.S. company.

Do you think the U.S. would last very long if it had an international embargo against it of anything like the Cubans have to deal with?

its appalling record of human rights abuses,

no worse than the U.S. record

Akrasia

donegalfella wrote: »

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erm, capitalism was really only invented in the 18th century when the industrial revolution kicked off, before that there were different blends of feudalism, absolute monarchy and communal living.

For the vast majority of human civilisation, there was no 'private property', the enclosure of land which was mostly during the 18th and 19th centuries in the UK were acts of parliament designed to reward loyalty to the state and facilitate the accumulation of private wealth. The forced enclosure of land forced the peasants into the cities where they became wage slaves to industry (it was literally work in these factories or you and your family will starve to death) The birth of capitalism was not a nice chapter in human history.

Before the revolution, per capita incomes in Cuba were higher than those in Japan or Spain. Today, your average Cuban earns $17 a month.

so what, the exchange rate between the cuban currency and the U.S dollar is hardly representative of the real income of the cuban people. Plus they have longer life expectancies, better access to health and education and lower unemployment rates than many parts of the 'great' united states (there are parts of capitalist america that are poorer and more violent than anywhere else in the 'developed world'. These are the consequences of a rubbish welfare system combined with a pathetic minimum wage, and even such an employer friendly system is not going to protect them from mass unemployment as this depression kicks in.

I hear it's absolutely dreadful. The Baltic Tiger, soaring growth rates, unprecedented freedom—where will it end?

Same way our 'tiger' ends in a crash, just like all the other capitalist booms and busts. Free marketeers love championing 'tiger' economies and then blaming the state when it all inevitably goes tits up (hows argentina these days? Was Iceland's collapse a result of too much government regulation?)

Akrasia

ardmacha wrote: »

Prices are not rising, there is negative inflation. The minimum wage has to come down and the dole too, by however much inflation is negative.

Prices are not falling, the CPI was negative by .1% at the last release, but groceries prices had actually increased, The 'value range' products from the multiples is providing the illusion of value, but it is not comparing like with like, sure, you can buy a frozen pizza for 2 euros, but it's list of ingredients reads more like a chemistry text book than a recipe for actual food.

Basic staples like milk, bread, rice, potatoes, cheeses are still as expensive as they were this time last year, the only way people can stretch their lower incomes is to buy lower quality foods which will have long term health implications and its just an illusion that you're actually getting cheaper food.

(there is usually less actual food in the cheaper products, sausages with 30% pork compared with 60% pork for the higher quality products, chicken with less than 50% chicken, 'fillets' that are so pumped full of fluid they evaporate when you cook them)

Permabear

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L.R. Weizel

According to the history books I've read, human beings once lived in caves. Isn't it amazing how we got all the way to the industrialized nineteenth century before Karl Marx figured out that we'd been doing it all wrong?

If we weren't doing something wrong, we wouldn't be in such a downturn, and it's not as if this is the only downturn we've had in ever either.

Before the revolution, per capita incomes in Cuba were higher than those in Japan or Spain. Today, your average Cuban earns $17 a month.

Stats on this please? I know Cuba as it is, is not a very pleasant place to live, but as far as I am aware after the "revolution" it improved significantly and many of the improvements to the country and it's infrastructure still stand today, no matter how bad it's gotten. If you can prove me wrong on this, go ahead and I'll find something to refute it if it look shaky.

I hear it's absolutely dreadful. The Baltic Tiger, soaring growth rates, unprecedented freedom—where will it end?

Funny how much time it's taken conditions to improve, and how it happens just after they go to countries with much better, you guessed it, minimum wages, and take that money home and spend it there.

Actually, that's probably part of the problem too, as selfish as it sounds.

Tell me your justification for a minimum wage again?

I don't recall saying that complacement eejits didn't deserve a decent wage. But they do bring all of us down.

Don't you long for the days of the pure, incorruptible commies?

No, because I'm not a communist and don't believe we've ever even had a proper communism, whether it be due to practicality issues or whatever. I just have little respect for Libertarianism.

All I know is I'd much rather live in Sweden than here, if I had the resources to move.

Permabear

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L.R. Weizel

ardmacha wrote: »

Prices are not rising, there is negative inflation. The minimum wage has to come down and the dole too, by however much inflation is negative.

But the actual PRICES we are paying for things are NOT going down. Stop looking at the statistics and start looking at what people are saying. If prices were going down I wouldn't care as much. We could have used this recession to **** over the people at the top who ****ed us over to begin with, but our government as usual takes it out on the little guy, which will only prolong the recession by another few months at least. We'll be uneducated, hungry, unemployed, and piss bored.

This is what some people don't understand, while I might be left leaning I'd love to see more competitiveness, but it just isn't there because companies can so easily get away with charging whatever they like(making minimum wage easy to disregard, paying out an extra euro an hour per person doesn't compare when they can charge twice as much).

If they lower the dole it'd be a disaster. I'm on disability myself, and all I have are my hobbies. They just raised the amount I have to contribute to rent allowance by a fiver, and even that is awkward. I like to do more than merely exist, you know, I like to go out now and again and buy things I'm interested in. I'd rather have a good job that I probably deserve with a CS degree but that's not going to happen in this climate.

ardmacha

and it's going to be impossible soon with rising prices to live on the dole.

Prices are not rising, there is negative inflation. The minimum wage has to come down and the dole too, by however much inflation is negative.

Permabear

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L.R. Weizel

Rojomcdojo wrote: »

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.

You're kidding? When were you last on the dole.

L.R. Weizel

So I've been told. Heaven forbid I express an opinion that differs from the statist norm!

Your views are not rare at all, and being in a minority does not make your views any more valid.

It's the government's business to control people's standard of living? Did I miss something, or did we all just wake up in Cuba?

Gee, I'm sorry some of us can't be like you and be completely unable to accept the idea of Utilitarianism. It doesn't really matter if it defies your sacred ethic of small government. Whatever is best for the people is best, that's a tautology, and without a central system to control it, which can only be called a "government", there is no way to improve the average standard of living, or rather to guarantee it anyway, it becomes much less likely.

Ironically, before the trade emargo on Cuba, socialism turned the country around from a third world ****hole to a somewhat decent industrious nation, and it still benefits from that to some extent today.

Meanwhile many of the eastern european states aren't doing too well with their new found capitalism are they? I'm not defending the USSR's perversion of communism here as I've heard from older Polish people what it was like. But the point is that a lot of countries aren't doing all that well for their new found free market.

According to OECD research on the minimum wage, "If the wage floor set by statutory minimum wages is too high, this may have detrimental effects on employment, especially among young people." In other words, high minimum wages mitigate against employment for younger, less skilled workers.

Did this take into account what someone mentioned earlier, that having no minimum wage would mean that if a Polish person and an Irish person went for the same job, they would be able to negotiate a lower wage with the Polish person, thus lowering the standards for everyone? Replace "Polish" with "complacement eejit"(Half the irish population) in the absence of immigrants.

Irish businesses cannot be trusted. They are all cowboys.

When did I view them as completely separate? I've long said that the public sector shouldn't exist, so I'm obviously in favour of having one sector (what we now know as the private sector) be the only sector.

Libertarianism is anarchy for old boring people. I'm sorry, but that's how it is.

I don't know why you think that businesses would offer us a better standard than a government that at least has to cave to public pressure to some degree(again the earlier idiom involving negotiating wages applies to how business responds to supposed supply and demand.). This is what I can't get. Big business is only going to be MORE corrupt than big government, and half the reason most governments are corrupt is down to capitalist incentive to begin with.

Rising prices? Gone shopping lately? The days of the rip-off Republic are numbered, I'm afraid.

Have you? I haven't noticed one or two things being raised. One thing I noticed is that the price of a lot of toys are being raised. Tesco have raised their prices on a few things over the last few months too.

Permabear

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L.R. Weizel

Free-market economists

You know what? Most economists are full of ****. None of them agree on how to get us out of this situation. In fact just today on the radio one incredible economic advisor made the statement that the cost of living had dropped. That's how out of touch Economists are.

The fact is Economics is simply not a seriously rigid science. It's a means to an end, but it depends what you want. So many economic theories relies on assuming extreme right wing ethics such as your own, talking about improving the economy but with little regard as to whether it actually improves the standard in living.

Incidentally, this is exactly the problem with Ireland - during the Celtic Tiger we had a good economy but the average person did not benefit from it in the slightest. I would say the proof is in the Tesco Value pudding people on your idea of minimum wage will have to eat for breakfast.

In fact I'd go so far as to say what we're seeing now isn't all that different from what we've been seeing the last few years. I've been noticing thinks like specialist shops pulling out and shutting down for quite some time. This isn't down to a lack of right wing sociopaths running the business, but exactly because of it.

The only country that works without a minimum wage is Sweden, and that's precisely because they're NOT right wing, the corporations are kept under control.

The thing is that countries that have something to offer can be "allowed" to be somewhat socialist. Sweden is a major scientific nation, for example. But what does Ireland have to offer? If companies come in and see ONLY minimum wages, I can see how it will put them off. If there's some reason for them to be in this market, for them to keep in our good books then it will not be so.

Given that companies can charge whatever they want in this country and nobody will really bother to complain near enough, I would say that over-rides the problem of the minimum wage.

Ireland needs something to offer. We supposedly have good colleges, and that's kept a lot of companies interested. But honestly most students are larger louts and anyone who knows anything about Irish student life would be reluctant at best. Also, when I was graduating over the last couple of years, funding was pretty low for my department. The drop out rate for Computer Science was also very high. I think this might have something more to do with multi-nationals coming and going than anything.

It also wouldn't explain Wal-mart buying out Dunnes, who are notorious for poor wages. Obviously there's something else at work.

L.R. Weizel

donegalfella wrote: »

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To be honest you have some cheek saying that since a lot of the reason is that a lot of foreign immigrants will work for peanuts. A lot of them don't even get minimum wage, so who are you going to pick? When you lower minimum wage, you lower everyone's standards. Yeah, you can blame the higher minimum wage for that, but it happens to some extent everywhere. The point is that you end up letting the private sector control standards of living, which quite frankly IS the government's business. People will always sell themselves short, and it will be harder and harder for younger, less skilled people to earn a decent living and work their way up, because there will always be those willing to work for peanuts because their food or hobbies cost them next to nothing.

I am sorry for having little tolerance for right leaning libertarians, but viewing public and private as completely seperate is a silly idea.

If they lowered minimum wage, they'd have to lower dole too most likely, and it's going to be impossible soon with rising prices to live on the dole.

L.R. Weizel

donegalfella wrote: »

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But that doesn't take into account the cost of living here. If companies want to bitch about high minimum wage, they should make kind of effort to make their products cheaper.

If you drop minimum wage, companies will be greedy and won't driop the price of their product to reflect it.

It's tough enough living on minimum wage as is.

If they can lower the cost of living, then by all means lower wages.

RedPlanet

Akrasia wrote: »

Honest Joe will go out of business because shady jim will be selling cars for a fraction of the price under a number of different aliases and won't have any of the costs of actually meeting warranty obligations. eventually, honest joe will become an alcoholic and become very bitter about how the people in his town treated him so badly, shady jim will stay until the heat becomes too much, when he will move to spain and eventually get killed in a car accident by one of his own dodgy seats with faulty brakes.

Consumer behaviour will change over time to accept dodgy car dealers as a fact of life, people will become more distrustful but at the same time more accepting of shenanigans because 'they're all the same'
Bit like politics really. We've come to expect that they're all self serving bastards so even when an honest one comes along (by chance) he gets lumped in with the rest of them, chewed up and spat out.

Actually i think that should be amended.
Honest Joe will certainly go under.
To be replaced by other dodgy car sales people, immitating the business model of Shady Jim.
Witness, the decline of customer service in this very country, particularly in the food service industry.

Akrasia

donegalfella wrote: »

This post has been deleted.

Honest Joe will go out of business because shady jim will be selling cars for a fraction of the price under a number of different aliases and won't have any of the costs of actually meeting warranty obligations. eventually, honest joe will become an alcoholic and become very bitter about how the people in his town treated him so badly, shady jim will stay until the heat becomes too much, when he will move to spain and eventually get killed in a car accident by one of his own dodgy seats with faulty brakes.

Consumer behaviour will change over time to accept dodgy car dealers as a fact of life, people will become more distrustful but at the same time more accepting of shenanigans because 'they're all the same'
Bit like politics really. We've come to expect that they're all self serving bastards so even when an honest one comes along (by chance) he gets lumped in with the rest of them, chewed up and spat out.

Akrasia

dvpower wrote: »

How about linking reform of the Minimum Wage to the introduction of a Maximum Wage?

It could be linked directly, say at 20x. Anyone paid above the maximum wage would be subject to a tax rate of 100% on these earnings.

genius idea. That would mean an instant reduction in income if masters of the universe decide to exploit the lowest paid. if the lowest paid are forced to work for 10k a year, the max salary would be 200k per year. (still a massive salary by any normal person's standards)

If they decided to give the poorest a 10k a year rise, their own max salary would jump to 400k per year.

The_Conductor

Akrasia wrote: »

Its very interesting that the likes of IBEC and ISME are banging about reductions in minimum wage, but I've heard nothing about calls for reductions in commercial rates. Now I know that rents are 'freely negotiated' but there are lots of businesses locked into leases on premises and are paying rents that are far too high and unable to move because the capital costs would be prohibitive.

Why are the business people banding together to target the lowest paid and barely a word is mentioned about the greedy landowners who contribute little or anything to real wealth creation.

You're incorrect.
IBEC have consistently called for reductions in commercial rates- they have published a number of green papers on this- and have also issued a number of press releases via their subgroup 'Retail Ireland'.

Its overly simplistic to suggest that business people are banding together to target the lower paid- and that landowners are 'greedy'.

In a commercial setting- it tends to be the larger pension funds who own retail properties, not the mythical greedy landlord. Rents are set according to what the market is capable of bearing- as retailers are less willing to pay higher rents- units become vacant until such time as equilibrium returns between supply and demand.

Wealth creation is in itself also a misnomer. How do you define wealth creation? The service sector is already almost 80% of the Irish economy. You could argue that this means less than 20% of the economy is in fact productive- which is flawed in the extreme.

We *need* to shrink our costbase- across the board. From the top down, everyone *has* to accept that we cannot afford to expect the levels of remuneration that we have become accustomed to. Certainly- it could be argued that some sections of the workforce are better placed to accept a cut than others- however in a context where we have priced ourselves out of the global economy and we are a small open economy- we have two options- massive protectionism to support indigenous services and industries (the problem being we never fostered those industries in the first instance), or stripping the excess at all levels until such time as we are in a position to compete with those we choose to compete against.

The 'knowledge economy' crap that the government is spewing makes lovely headlines- but when those selfsame jobs- such as the losses at Ericsson in Clonskeagh, are the ones being lost- we have to accept that what we are doing quite simply is not working and that we need to retrench urgently, while we still have something there to save.

What people have to accept is the media have an agenda- and it does not automatically entail telling the public the full story. Nice headlines attacking the fatcats in the banks, the tycoons in IBEC, or the tax exiles such as U2, Dermot Desmond and many others- sell papers and are very evocative in the minds of the public. Its an easy sell. Its far more difficult to try to paint an all encompassing picture showing everyone what their part in the picture is, and prescribing nasty medicine for all.

All our costs have to come down- wages, rates, service charges, raw material charges (if you think we are paying the same raw material costs- you're also wrong). In partnership with this- we need to broaden our taxation base and bring more people into the tax brackets- its political suicide- but so too is allowing Ireland Inc to teether on the edge as we now are (Ireland's spread on its national debt is now 4.05% above the EU average- and fully 1.05% above Greece, which is the second highest in the EU).

The international community is already in the process of writing us off as a basket case- somewhat ironically, it appears that the original bank guarantee of last October is the stumbling block internationally- not the shenanigans that have happened since).

What we need is leadership from politicians, the trade unions and the employers. What we need is communication and hard facts to be put in the public arena. What we need is the abondonment of sacred cows. We have none of these. We are floundering- and in a situation that our national debt is now expected to exceed 70 billion again this year- we need solutions.

An artificially high minimum wage is stiffling the economy. Silly levels of board remunerations and an artificially low corporate tax rate (against which 3 EU countries are already taking action), have to be addressed. Social welfare entitlements benchmarked against a notional average industrial wage should be seriously reaccessed.

Its unfair to address the national problems piecemeal so sectors feel they are being singled out for unfair treatment, perhaps because they are 'an easy touch'. Giving into to the over 70s on medical cards has created a perception that if you do not like the medicine that is being doled out that all you have to do is organise a protest and accost a few ministers (whatever about accosting ministers- and some of them do deserve it, to do so in a church of all places was despicable).

We need to take cognisance of the trouble we are in, and devise an all-encompassing response to resolving our problems. We are never again going to have 10-15% annual growth rates- that was an anomaly, a more reasonable 1-2% rate is the norm. However- hand-in-hand with this- we should never again average 5-7% inflation rates- which is partially what did it in for us in the end- along with the wastrel bankers, the inept politicians, the conniving construction industry and crooked developers- it was a cog in the wheel of our own design.

Decreasing the minimum wage will not solve anything in itself- but providing its part of an all-encompassing package, it will help breath new life into our flagging economy.