Minimum wage - time for a decrease?

BroomBurner · 10-02-2009 3:31pm #1

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

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

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

Permabear · 10-02-2009 3:38pm

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gurramok · 10-02-2009 3:56pm

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

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

Permabear · 10-02-2009 3:59pm

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The_Conductor · 10-02-2009 4:01pm

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

engrish? · 10-02-2009 4:02pm

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

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

Sully · 10-02-2009 4:07pm

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

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

Permabear · 10-02-2009 4:11pm

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Permabear · 10-02-2009 4:18pm

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BroomBurner · 10-02-2009 4:19pm

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

Permabear · 10-02-2009 4:35pm

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ejmaztec · 10-02-2009 4:40pm

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

OhNoYouDidn't · 10-02-2009 4:43pm

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

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

Permabear · 10-02-2009 4:52pm

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OhNoYouDidn't · 10-02-2009 4:55pm

Yes, basically.

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

Permabear · 10-02-2009 5:00pm

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Fratton Fred · 10-02-2009 5:20pm

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

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

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

10-02-2009 5:36pm

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

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

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

Permabear · 10-02-2009 5:47pm

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10-02-2009 6:12pm

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

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

turgon · 10-02-2009 6:13pm

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

That would be my issue with your proposal.

mrquiteaguy · 10-02-2009 6:15pm

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

10-02-2009 6:18pm

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

OhNoYouDidn't · 10-02-2009 6:26pm

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

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

turgon · 10-02-2009 6:36pm

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

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

Permabear · 10-02-2009 6:37pm

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Permabear · 10-02-2009 6:44pm

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Soldie · 10-02-2009 6:48pm

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

Fratton Fred · 10-02-2009 6:49pm

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

The_Conductor · 10-02-2009 6:57pm

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

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

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

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

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

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

S.

Permabear · 10-02-2009 7:00pm

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Minimum wage - time for a decrease?

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