Small Firms Association calls for cut in minimum wage

mikemac

http://www.breakingnews.ie/ireland/mhgbsnqlkfmh/

The Small Firms Association is calling for a cut in the minimum wage in order to help Irish businesses become more competitive.

The association, which is part of the employers' body IBEC, wants the €8.65 rate to be cut by one euro.

It says Ireland has the second highest minimum wage in the EU and this could result in higher unemployment through the loss of industries to states where lower rates of pay apply. I don't know what people in callcentres earn, possibly it's above this.

SIPTU general secretary Jack O'Connor, however, has described the SFA suggestion as incredible and says the minimum wage cannot be used as a scapegoat for the current economic downturn.

Imo this will be a terrible move. I've already seen comparisons that there is little incentive for people to work minimum wage jobs where there there are many social welfare benefits available for those who don't take up work.
A cut in minimum wage will accelerate this.

Also, the article mentions that Ireland will lose jobs to other countries with a lower minimum wage. But it isn't the multi-nationals that are paying this, it's mostly the retail and tourism sector and most of them are Irish owned and are not going to relocate anywhere.

It's true that Ireland has the second highest minimum wage in Europe but we are also one of the most expensive countries and trying to live and pay rent on minimum wage is no easy thing.

I can't see it being cut or am I giving FF too much credit.?It's be a very unpopular move imo so therefore it won't be cut.

seamus

I would be a very silly move - essentially reducing the income of those already on the breadline.

The bulk of our workforce earn well above the minimum wage rate and so wouldn't be affected by any such drop, which would mean that prices would be maintained at their current levels while unskilled workers take a €160/month pay cut.

I would make sense to hold the minimum wage steady for 3-5 years, definitely, but don't cut it.

As you quite rightly point out, the bulk of our minimum wage jobs are in the service industry - supplying services internally - and not in companies who are exporting their goods/products. There is little sense in service industry companies outsourcing, with the exception of call centres, but from what I remember most call centres pay well above minimum wage anyway - you need intermediate lingual and literacy skills.

DadaKopf

I would make sense to hold the minimum wage steady for 3-5 years, definitely, but don't cut it.

That amounts to the same thing doesn't it? People on the 'breadline' would see their real income drop by the same amount over that period. You'd also probably see people on higher wages seeing a drop in their incomes - business would see the minimum wage cut as a reason to cut those earning above (but near) minimum wage.

Morally indefensible.

jon1981

we need to get away from this one size fits all. Surely you would gain more from imposing pay freezes and reductions on people on above industry average salaries. I think it is very hard and short sighted to treat low incomes employees the same as high income employees, it will just put morale through the floor and speed up emmigration. And then you have the situation of letting go current staff to rehire staff on the new minimum wage

seamus

DadaKopf wrote: »

That amounts to the same thing doesn't it?

Only if other wages were to increase in that timeframe. Which they probably won't (well not by any significant amount). There's a fair argument to say that minimum wage defines a baseline for both our salaries and the cost of our goods.

Of course it's much easier to raise this baseline and increase our costs than it is to drop the baseline and expect the costs to drop with it.

If the minimum wage holds steady, this provides less justification for businesses to increase their costs and less justification for workers to demand higher salaries.

Although the minimum wage should generally be increased in line with inflation, there's enough evidence (I think) to suggest that controlling minimum wage will help control inflation.
Holding it steady in the short-term means that we can hopefully shackle our inflation low and allow some time for our European counterparts to catch up with us in terms of cost of living.

Dirty self serving pricks.

DadaKopf

seamus wrote: »

Only if other wages were to increase in that timeframe. Which they probably won't (well not by any significant amount). There's a fair argument to say that minimum wage defines a baseline for both our salaries and the cost of our goods.

Of course it's much easier to raise this baseline and increase our costs than it is to drop the baseline and expect the costs to drop with it.

If the minimum wage holds steady, this provides less justification for businesses to increase their costs and less justification for workers to demand higher salaries.

Although the minimum wage should generally be increased in line with inflation, there's enough evidence (I think) to suggest that controlling minimum wage will help control inflation.
Holding it steady in the short-term means that we can hopefully shackle our inflation low and allow some time for our European counterparts to catch up with us in terms of cost of living.

The fact that, when pressed on Morning Ireland, Patricia Callan from the Small Firms Association admitted that only 19% of their membership were in support of this proposal speaks volumes. When pressed further, she fairly well admitted that they were waiting for the right time to drop this idea, whether the evidence is behind it or not.

SIPTU's President cited Luxembourg where Eurostat found that it has lower unemployment and higher minimum wage than Ireland.

So I'm just not sure that the classical economic arguments against the minimum wage apply to today's world. Jack O'Connor's alternative analysis of inflationary pressures is that

These arise from spiralling, largely imported inflation and collapsing business confidence. Not only would cutting the minimum wage contribute nothing to resolving these problems but it could exacerbate them by depressing the spending power of consumers still further and sending out a message that things are so desperate that we are prepared to single out the most vulnerable members of the workforce for punitive treatment."

“The cost of living in Ireland has been driven relentlessly upward by profit taking across many sectors of the business community, including some companies that only pay the national minimum wage. Is the SFA seriously suggesting that families who spend a disproportionate share of their income on items such as food and fuel are the also the group most able to absorb cuts in their already meagre living standards?

You also have to ask: how much prosperity is lost in Ireland, and well-being lost to people, because the State won't invest in social programmes proven in other countries?

jon1981

the SFA is ranting on about the small firms suffering from the cost of fuel...heres a shock... us employees are suffering too :eek:

ejmaztec

Has anyone ever heard of any business that has been prosecuted for not paying the minimum wage?

sink

ejmaztec wrote: »

Has anyone ever heard of any business that has been prosecuted for not paying the minimum wage?

edit: after re-reading the question I realise I interpreted it wrong. Discard my post

sink

Lowering the minimum wage is not going to improve our competitiveness for exporting. The only way to improve our competitiveness is to improve infrastructure this is a long term solution, there are no short term quick fixes for the government I'm afraid. Cutting the minimum wage will only benefit a few local businesses which provide services to the domestic market. It will probably harm retailers and other essential services as the minimum wage earners spending power will be seriously depressed resulting in downward pressure in these markets.

Scofflaw

We are in something of a competitiveness bind in respect of wages - people cannot afford for them to fall, because while the value of property has fallen, the mortgage payments on property bought haven't. Therefore, the only way we can increase competitiveness through wages is allowing stagnation - and even that will be painful if interest rates continue to rise. The alternative route, though, involves foreclosures and the complete and accelerated collapse of house prices.

However, the minimum wage is entirely irrelevant to that, and the idea is indeed a bit of self-serving greed dressed up as a 'solution' to a separate problem. A pay freeze in the civil service - or even reverse benchmarking - would be more relevant.


cordially,
Scofflaw

oscarBravo

hellboy99 wrote: »

Firstly I'm not talking s***, why don't you go and get proof that every business in this country is paying at least the minimum and post it here.

You made a specific accusation; defending it by demanding that someone else show that nobody is guilty is disingenuous at best.

Secondly there are plenty of companies & shops that are paying below the minimum wage...

How do you know? and have you reported them to the relevant authorities?

...and thirdly I do have proof of one particular company that are paying under the minimum wage but due to legal reasons I cannot name them.

You made a specific accusation here. Back it up or retract it. It's too easy to say "I have proof but I can't talk about it."

hellboy99

What about the likes of Irish Ferries, Gama;

Lough Foyle Ferry Company, subsidised by both Donegal County Council and Limavady Borough Council has not been paying some of its staff the legal minimum wage. Cllr Mac Lochlainn was informed that some staff working on the Magilligan/Greencastle Ferry were receiving a wage of €5.60 per hour or €210 for an average 37.5 hour week, which is well below the legal minimum wage.

The case of Pawel a construction worker from Poland working in Dublin, were after a few months he was told by a representative of the trade union that the company was not paying him the minimum wage.

Back in 2005 - 2006 a TU group carried out a study were it found that around a quarter of a million migrants, mainly from Poland and Latvia, worked in Ireland, many of which were paid cash considerably below the legal minimum wage.

The_Minister

Progressive Democrats (the party who brought in the minimum wage) have come out against this (just read the statement), Labour are against this, Fianna Fail are against this.
It just won't happen.

stepbar

seamus wrote: »

Have you got proof to back up the claim that a large company in this country is routinely breaking the minimum wage laws or are you just talking through your arsehole and blaming foreigners for all the ills in society?

Well they mightn't be breaking the law in terms of paying the minimum wage, but one thing's for sure there's many employers helping foreign students break the terms of their student visa. FACT. I know because I get about 4-5 a day looking for loans and everyone of them are working more then they're allowed to. In fact the slyer ones have two p/t jobs, one going into one bank a/c and the rest going into another. They're certainly not fooling anyone. If the SFA had balls they'd be asking their members to ensure compliance instead of asking low paid workers to take a paycut.

DadaKopf

Here's another hole in the SFA's argument:

In support of this outrageous demand the SFA has produced a table from Eurostat. It claims to show that Ireland has the second highest minimum wage in the EU. This is junk-mail economics. The SFA knows (and if it doesn’t it should be statutorily barred from uttering anything until it raises its IQ) that international comparisons of this sort only makes sense when you factor in living costs - the how-much-bread-does your-Euro-buy’ measurement (or Power Purchasing Parities). The SFA had access to this information because it comes side-by-side in the same Eurostat release. What does this show?

My gosh, it shows that of the countries that have a minimum wage in the EU-15, Ireland is the lowest - some 25 per cent below league leader, Luxembourg. So much for the SFA’s junk-mail economics.

Time Magazine

PPP is very flawed for lower-income brackets.

PPP is necessarily "average living costs"-adjusted. Lower-income brackets don't work off average living costs. If you have a significant number of people paying huge sums in mortgages (hello Ireland) that will up the average without affecting the lower-end market.

People on minimum wage also are those who get a lot of State benefits. Welfare systems vary hugely across member states, not taken into account by PPP.

I haven't thought about how these would affect Ireland's true rating, though.

DadaKopf

Obviously PPP is problematic, but not as problematic as the SFA's remedial maths skills. Given the CSO figures registering a rise in the consumer price index, with unavoidable living costs (utilities, rent etc.) rising, it's clear that those on lower incomes are getting hit hard.

Time Magazine

Anyone have any figures on how many people are actually on, say, less than €10 an hour?

How does this correspond with how many u21s are in employment?

Jim_Are_Great

hellboy99 wrote: »

Like I said for legal reasons I can't name the company.

Just so you know, if it's true you have nothing to fear. See section 14. So either back it up, or retract.

oscarBravo

hellboy99 wrote: »

Like I said for legal reasons I can't name the company.

You keep saying that, but I've already pointed out that you made a specific allegation against a named company in this thread. If your next post on this forum doesn't either back up or retract that specific allegation, you'll be banned.

Time Magazine

Ah you're putting him in a very tough place there oB. Even if he did name a company, it's probably a personal issue with relatively few people involved, which is always going to happen with a population of four million.

hellboy99

oscarBravo wrote: »

You keep saying that, but I've already pointed out that you made a specific allegation against a named company in this thread. If your next post on this forum doesn't either back up or retract that specific allegation, you'll be banned.

How on earth can I be banned for that ,different story if I did name the company, I would understand then for being banned. I'm not going to get into why so I retract what I said in a previous post.

oscarBravo

I'll make this real simple for you. In post #9 on this thread, you accused Spar of employing people for less than the minimum wage.

Back it up or retract it. Last warning.

hellboy99

Retracted and posts deleted.

oscarBravo

Thank you.

sovtek

seamus wrote: »

Now foreign workers, particularly asylum seekers, make up a disproportionate number of our undereducated workforce and some of them are being exploited exactly as the Irish have been.

Actually I saw a stat a few months back showing how foreign workers were better educated than the Irish.

irish_bob

i would not be in favour of this move
besides those who are on minimum wage are all in the private sector and its not the private sector that is the problem right now

seamus

sovtek wrote: »

Actually I saw a stat a few months back showing how foreign workers were better educated than the Irish.

This would certainly be plausible if you take into account the total number of foreign workers, especially from other EU countries, who've migrated to our shores in the last ten years.

sovtek

seamus wrote: »

This would certainly be plausible if you take into account the total number of foreign workers, especially from other EU countries, who've migrated to our shores in the last ten years.

I can't remember but I think it was non-eu but I could be wrong about that. Read it in the paper so I don't remember the source.