Minimum wage.

murphaph

It may surprise many to hear that there is no minimum wage in Germany and you can legally work for €1 an hour (so called "mini-jobs"). Germany would be perceived by many as an expensive place to do business but in reality, is Ireland the bloated overpaid sick man of Europe? Is it time for the minimum wage to go? Or be reduced dramatically? Is it preventing employers from hiring? Would some people rather stay in low(er) paid employment than sit on the dole and stagnate? I believe the answer is yes. Any opinions on the minimum wage?

bobcar61

It surprised me when I heard that. My manager is German,the most sound down to earth fella and another colleague is German. They both moved away from Germany when they were 16,one is now 30 and the other 44.

We were talking about Germany and I asked if they would go back..got a very strong NO from the two as they said they could be working for nothing if they went home. Alot of cleaners in hotels get paid next to nothing.

I think the minimum wage is needed in Ireland at the moment,if it was to be abolished employers could pay employees what they want and it may not justify with the cost of living.

mikemac

Every cut in the minimum wage will have to be matched or exceeded by cuts in the job seekers rate.
We already of cases where people can get more on job seekers and other benefits then working low paid jobs.

A cut in minimum wage will make this situation worse unless some minister takes the unpopular decision to slash welfare.

As for my opinion. I've paid rent and supported myself on minimum wage. It can be done but the cost of living here is very high.
So I say no, don't cut it

ScouseMouse

Of course it needs to go. We have allowed ourselves to get lazy and make excessive demands. The unions have demanded to much and now, we have priced ourselves out of the international market.

Cuts will be painful, but have to happen.

Source of this information? Daily life, the news, FAS, and on and on.

bobcar61

I'm still paying rent and bills and running a car on minimum wage while also attending college full time.
If minimum wage was cut then there is no way I'd be able to keep this up so I would have to cut something out.

Permabear

This post has been deleted.

kulchie

haven't we always had a minimum wage? i.e. the dole, who is going to work for less than this amount?

Webmonkey

kulchie wrote: »

haven't we always had a minimum wage? i.e. the dole, who is going to work for less than this amount?

I would. I'd rather work under the price of the dole and get experience rather than getting depressed at home doing nothing.

Het-Field

Its part of the Government's package of "savings". It wont be cut now ! Slowly but surely ebbing away our competitiveness

Victor

murphaph wrote: »

It may surprise many to hear that there is no minimum wage in Germany

Not quite - there is no national minimum wage in Germany. However, the vast majority of employments are covered by industry / local agreements.

How about cuts in the maximum salaries and dividends that some busniess owners and managers have been taking?

TheInquisitor

Ireland has gotten way ahead of itself. The irish minimum wage is now the 2nd highest in europe. We should be at the most in line with the UK. The UK minimum wage is £5.71 which translates to roughly E6.40 and not the crazy hourly rate of E8.75. There is no justification for this ridiculously high cost. A minimum wage of 6-6.5 euro is where the minimum wage should be at. Unemployment beneft is also ludicrously high. 3 times the UK rate

nesf

TheInquisitor wrote: »

Ireland has gotten way ahead of itself. The irish minimum wage is now the 2nd highest in europe. We should be at the most in line with the UK. The UK minimum wage is £5.71 which translates to roughly E6.40 and not the crazy hourly rate of E8.75. There is no justification for this ridiculously high cost. A minimum wage of 6-6.5 euro is where the minimum wage should be at. Unemployment beneft is also ludicrously high. 3 times the UK rate

That's mostly due to Sterling being so bloody cheap at the moment in Euro terms. This situation is slowly reversing, though I wouldn't say that we'll return to the exchange rates of old necessarily. I don't think comparisons with the UK right now are very useful because wage rates and welfare payments there are still for the most part set by the old exchange rates.

Looking at other European countries is more informative:

Less than 300 Euros/Month

* Bulgaria - 113.17
* Romania - 132.70
* Latvia - 228
* Lithuania - 234
* Hungary - 261
* Slovakia - 268
* Estonia - 278
* Poland - 291

301-999 Euros/Month

* Czech Republic - 313
* Portugal - 426
* Slovenia - 538.53
* Spain - 600
* Greece - 605
* Malta - 612.29

Greater than 1,000 Euros/Month

* France - 1,280.07
* Belgium - 1,309.59
* Netherlands - 1,335
* United Kingdom - 1,361
* Ireland - 1,403
* Luxembourg - 1,570.28


Data: http://eeuropeanrussianaffairs.suite101.com/article.cfm/european_union_minimum_monthly_salaries_2008 Exchange rates were as of January 2008, which is why the UK is so high, its minimum wage used to be one of the higher ones in Euro terms not so long ago.

silverharp

Just to add that we are in a deflationary environment at the moment so pegging any wage too high is dangerous. Also with Stg. that is small comfort for any business in the border region. You probably have a crazy situation where retail employees and the like in the border region are shopping in the North , but will be scrathing their heads soon why their workplaces are shutting down and cutting back.

Belfast

There is no need for a minimum wage.
Nobody will work for less than they get on the dole.

murphaph

In Germany the long term unemployed single person with no dependents receives €351 per month + the cost of basic housing in your area. So the german state may be paying out as little as €550 a month for food and housing in the poorer parts of Germany whereas in Ireland the payment would be app. €840 + rent supplement (easily €400 in the poorest parts of Ireland). So Ireland pays app €1240 for the same person.

The federal government released set menus that provide a balanced nutritious diet that can be paid for with the so called Hartz IV payment. This stuff was very conroversial when it was going through parliament but Germany saw the fact it needed to reduce welfare payments and it did. If you lose your job you don't immediately go to the €351 payment of course, you go to a set percentage of your last salary and it slides downwards to encourage you not to be too fussy when considering other jobs.

This stuff doesn't add up. Germany is a G8 nation, the most productive nation on earth. Ireland has been overpaying itself for too long now and has to realign it's expectations in line with international (especially european) reality.

Victor

murphaph wrote: »

In Germany the long term unemployed single person with no dependents receives €351 per month + the cost of basic housing in your area. So the german state may be paying out as little as €550 a month for food and housing in the poorer parts of Germany whereas in Ireland the payment would be app. €840 + rent supplement (easily €400 in the poorest parts of Ireland). So Ireland pays app €1240 for the same person.

I'm not sure where you are getting your figures from. AFAIK full unemployment benefit is €204 per week (€884 per month) and the highest rent allowance is under €400 for a single person or a couple in shared accommodation. Rent allowance is means assessed.

The German system used to pay two thirds of your salary (I don't know for how long).

TheInquisitor

nesf wrote: »

That's mostly due to Sterling being so bloody cheap at the moment in Euro terms. This situation is slowly reversing, though I wouldn't say that we'll return to the exchange rates of old necessarily. I don't think comparisons with the UK right now are very useful because wage rates and welfare payments there are still for the most part set by the old exchange rates.

Looking at other European countries is more informative:

Less than 300 Euros/Month

* Bulgaria - 113.17
* Romania - 132.70
* Latvia - 228
* Lithuania - 234
* Hungary - 261
* Slovakia - 268
* Estonia - 278
* Poland - 291

301-999 Euros/Month

* Czech Republic - 313
* Portugal - 426
* Slovenia - 538.53
* Spain - 600
* Greece - 605
* Malta - 612.29

Greater than 1,000 Euros/Month

* France - 1,280.07
* Belgium - 1,309.59
* Netherlands - 1,335
* United Kingdom - 1,361
* Ireland - 1,403
* Luxembourg - 1,570.28


Data: http://eeuropeanrussianaffairs.suite101.com/article.cfm/european_union_minimum_monthly_salaries_2008 Exchange rates were as of January 2008, which is why the UK is so high, its minimum wage used to be one of the higher ones in Euro terms not so long ago.

Even when we look at when the British pound was at its strongest versus the euro at roughly £.7 to E1 at £5.71 which is their current minimum wage, translates to E8.15 which is still 50c cheaper than ireland. But the important thing is the UK exchange rate is at .9 and not .7 and it won't go back to the .7 mark for a very long time if ever.

ynotdu

how weird some comments on here are.no dispute that we are now a high cost economy to the point we are no longer competitive,but whats so annoying is how many want to target the lowest wage and social welfare rates as almost a first resort not a last.

exemption from the min wage for small buisness would make sense to save jobs,with the provider that the workers see for themselves th

e company are in trouble and by vote volunteer a pay cut.

there is no doubt some social welfare payments got too genorus during the boom but leaving other schemes aside the basic rate of e204 for a single person or e360 for a married couple is at our current basic food and utility bill costs not going to leave genuine people in the lap of luxury?

min wage in mediom to large large industrys could easily be left alone if the higher paid within the company took big pay cuts.

those who complain about how much basic payments are on social welfare I would ask during the boom did you just buy what took your fancy without looking at the price tag?if so you are guilty of the need for such high welfare costs.

supply and demand means a retailor builder etc will charge what people are prepared to pay.by people who were on a roll just buying without wondering was it value for money it caused inflation,as a result just to have the most basic of items welfare payments had to increase just for people to survive.

murphaph

Victor wrote: »

I'm not sure where you are getting your figures from. AFAIK full unemployment benefit is €204 per week (€884 per month) and the highest rent allowance is under €400 for a single person or a couple in shared accommodation. Rent allowance is means assessed.

The German system used to pay two thirds of your salary (I don't know for how long).

Sorry, I thought dole was 210 but if you say it's 204 I'll accept that. My figures are still pretty close though and it is clear that an unemplyed single person with no dependents and no other income or assets (apart from dole) living in the 'poorest' parts of Ireland will receive well over twice the equivalent payment of their german counterpart.

The 2/3 rule lasts for 1 year IIRC and then slides down until you end up on Hartz IV (€351 per calendar month).

murphaph

ynotdu wrote: »

how weird some comments on here are.no dispute that we are now a high cost economy to the point we are no longer competitive,but whats so annoying is how many want to target the lowest wage and social welfare rates as almost a first resort not a last.

I agree that the better paid should lead by example but if you're a small business (or even a big one) the minimum wage is DEFINITELY a barrier to job creation.

ynotdu wrote: »

exemption from the min wage for small buisness would make sense to save jobs,with the provider that the workers see for themselves the company are in trouble and by vote volunteer a pay cut.

This wouldn't be legal. Each employee must agree to the pay cut asked of them. They can refuse and stick to their contract. Check out the entrepreneurs forum-there's a poster there who's employees have been shown the books of the struggling business but who still refuse to accept a pay cut to keep them all in employment. He's left with one option-making a few of them redundant to cut costs.

ynotdu wrote: »

there is no doubt some social welfare payments got too genorus during the boom but leaving other schemes aside the basic rate of e204 for a single person or e360 for a married couple is at our current basic food and utility bill costs not going to leave genuine people in the lap of luxury?

But that's why I brought Germany into it-these payments are seen as the bare minimum needed to live. That's what they are supposed to be. You shouldn't be able to afford 2 weeks in Majorca on your dole money and if you can, it's too high. I don't mean to sound harsh here but these payments should be subsistence payments that allow you to buy basic foodstuffs and no more.

ynotdu wrote: »

min wage in mediom to large large industrys could easily be left alone if the higher paid within the company took big pay cuts.

True but there also needs to be an incentive for the entrepreneurs to actually start a business. If they take on the risk of starting a business and then employ people, they should (by natural justice) make the most money.

ynotdu wrote: »

those who complain about how much basic payments are on social welfare I would ask during the boom did you just buy what took your fancy without looking at the price tag?if so you are guilty of the need for such high welfare costs.

supply and demand means a retailor builder etc will charge what people are prepared to pay.by people who were on a roll just buying without wondering was it value for money it caused inflation,as a result just to have the most basic of items welfare payments had to increase just for people to survive.

We're not in a boom now and prices are falling. People in employment, even secure, are being more prudent and frugal (at last). In any case, baisc foodstuffs can be bought at reasonable prices in discount retailers.

rugbyman

I would like to introduce a few facts here. some have been touched on.

In france minimum monthly salary is 1280, but unemployment payment are around 900 euro. so a job only pays the worker approx 7o euro per week to work. if it involves travel costs he is likely to choose to stay at home.
the total cost to the employer ,who is paying this minimum wage is much, much higher than the cost to the Irish employer.

i was told in FRANCE last week that a student, having left school cannot get unemployment money untill he has worked for six months. True/untrue i dont know.


In Belgium figures are around the same but the cost to the employer is 107 % more than the take home pay. To pay a man 500 euro per week net costs about 1100 euro.


In Ireland, from the employers point of view, the excess costs of hiring someone on the minimum wage are not nearly as high as either of the above.

however, i agree that our minimum wage is too high, but untill the "dole" is cut, it would not be so easy to cut the minimum wage. I have always felt that the introduction of the minimum wage ,along with its many increases did away with lots of jobs.
If a young person ,living at home and therefore not getting the 204 euro/week unemployment money could get a run of the mill job at 250 per week, would he not be glad of it.


To conclude ,on this rambling rant.., Our O A P S are grossly overpaid at 430 euro per couple per week.. In the north the equivalent is 160 Pounds, even at a traditional exchange rate of 1.20 that is less than 180 euro.
250 euro per week more.

Regards Rugbyman

the_syco

TheInquisitor wrote: »

The UK minimum wage is £5.71 which translates to roughly E6.40 and not the crazy hourly rate of E8.75. There is no justification for this ridiculously high cost. A minimum wage of 6-6.5 euro is where the minimum wage should be at. Unemployment beneft is also ludicrously high. 3 times the UK rate

Interesting you use a recent exchange rate... could you give the euro equivalent from two years ago? I'm sure back then, the difference to our minimum wage wasn't that much.

ynotdu

hi murphaph,there is a lot of smoke and mirrors going on about deflation.
Lenihan said in the supplementry budget that inflation/deflation is being closely watched with a view to cutting rates in the november budget.
the reality is their is very little evidence that the price of basic foodstuffs is coming down at anything like the rate they inflated to in the boom years(cant deny fuel prices are though)

lot of deflation is on non essential items and loss leaders by supermarkets.
still a long way to go before deflation counteracts the inflation of the crazy years,
Regards

eamonnm79

ynotdu wrote: »

how weird some comments on here are.no dispute that we are now a high cost economy to the point we are no longer competitive,but whats so annoying is how many want to target the lowest wage and social welfare rates as almost a first resort not a last.

I couldnt agree more.
Anyone who has posted demanding a reduction in the minimum wage and has not made any posts withregard to closing off the huge tax loop holes for the very wealthy in society are IMHO morally bankrupt.

However not only is it the morally bankrupt one could also argue its economicly a very weak arguement too.

People on the minimum wage are not the type of people who save or invest. nearly 100 % of their income goes straight back into the economy. Poorer people proportionately do more for the general economy than those who can afford to save or invest their money. Taking money from these people would have an emidiate effect on our GDP.
I am not so sure I even buy the arguement that it would create that many more jobs.
I'm 30 but I remember before we had a minimum wage. I was earning €2 an hour as a lounge boy plus tips.
My lecturer in used to argue that if there was a minimum wage then many of the jobs like lounge boys, and other forms of casual work would be far less.
When the min wage came in and my hourly rate went up to 3.45 no one got the sack!
Ok maybe the prices in the hotel went up a little but because it was the same for every hotel it didnt have comparitive advantage for anyone.

silverharp

eamonnm79 wrote: »

People on the minimum wage are not the type of people who save or invest. nearly 100 % of their income goes straight back into the economy. Poorer people proportionately do more for the general economy than those who can afford to save or invest their money. Taking money from these people would have an emidiate effect on our GDP.

I have to disagree with that, there is no way to measure such a statement? unless pay reflects productivity and profitability then there will be a price to pay.

murphaph

eamonnm79 wrote: »

I couldnt agree more.
Anyone who has posted demanding a reduction in the minimum wage and has not made any posts withregard to closing off the huge tax loop holes for the very wealthy in society are IMHO morally bankrupt.

Eh? I don't think on an adult forum that one should need to qualify every point with another just in case people are going to start namecalling. I think most people on here would AUTOMATICALLY accept that tax loopholes for very high earners should be closed off.

eamonnm79 wrote: »

People on the minimum wage are not the type of people who save or invest. nearly 100 % of their income goes straight back into the economy. Poorer people proportionately do more for the general economy than those who can afford to save or invest their money. Taking money from these people would have an emidiate effect on our GDP.I am not so sure I even buy the arguement that it would create that many more jobs.
I'm 30 but I remember before we had a minimum wage. I was earning €2 an hour as a lounge boy plus tips.
My lecturer in used to argue that if there was a minimum wage then many of the jobs like lounge boys, and other forms of casual work would be far less.
When the min wage came in and my hourly rate went up to 3.45 no one got the sack!
Ok maybe the prices in the hotel went up a little but because it was the same for every hotel it didnt have comparitive advantage for anyone.

Your example works on a small scale. Unfortunately our hotels aren't just competing with each other any more, they're competing with hotels in other countries. Ireland is very uncompetitive now and we have no reason to be arrogant as we developed precious few indigenous industries during the boom years. we went from FDI to construction and forgot to develop irish exporting companies. Now we're screwed and we need to cut costs rapidly to keep what remains of our FDI and grab as much of the scarce stuff as possible. Wages have to be cut and our standard of living must fall.

A foreign multinational doesn't give a rats ass whether or not the wages they pay all go back into the national economies of the countries they operate in. They just care about the cost to them. We failed to break away from dependence on FDI and now we must cut our cloth to suit our measure and try to compete with central and eastern Europe (and Germany).

TheInquisitor

the_syco wrote: »

Interesting you use a recent exchange rate... could you give the euro equivalent from two years ago? I'm sure back then, the difference to our minimum wage wasn't that much.

I did if you read the comments further down . Even using rates when the UK's currency was at its strongest we still have a minimum wage over 50c per hour more than the UK

eamonnm79

murphaph wrote: »

Eh? I don't think on an adult forum that one should need to qualify every point with another just in case people are going to start namecalling. I think most people on here would AUTOMATICALLY accept that tax loopholes for very high earners should be closed off.


Your example works on a small scale. Unfortunately our hotels aren't just competing with each other any more, they're competing with hotels in other countries. Ireland is very uncompetitive now and we have no reason to be arrogant as we developed precious few indigenous industries during the boom years. we went from FDI to construction and forgot to develop irish exporting companies. Now we're screwed and we need to cut costs rapidly to keep what remains of our FDI and grab as much of the scarce stuff as possible. Wages have to be cut and our standard of living must fall.

A foreign multinational doesn't give a rats ass whether or not the wages they pay all go back into the national economies of the countries they operate in. They just care about the cost to them. We failed to break away from dependence on FDI and now we must cut our cloth to suit our measure and try to compete with central and eastern Europe (and Germany).

You are justifying a race to the bottom. Ireland will loose this race if it tries to enter. There is no way we can compete on price with eastern Europe. We have a different product them them here in Ireland inc. We need to differentiate and find our niche. Some people visit Sweeden , Norway and Denmark even though its a more expensive than Ireland.
If we make all the people in europe poorer and pay them less who is going to be the people who buys all the consumer goods that the europeans can no longer afford?

The free marke arguement about reducing wages to create jobs has always been overrated in my opinion. We created many many jobs in Ireland in the last 10 years during a consistant increase in the minimum wage.

murphaph

eamonnm79 wrote: »

You are justifying a race to the bottom. Ireland will loose this race if it tries to enter. There is no way we can compete on price with eastern Europe. We have a different product them them here in Ireland inc. We need to differentiate and find our niche.

Sorry Eamon-I've been hearing this same line for too many years now. How many years of prosperity does a country need to "find its niche" exactly? My point is that we had a chance and failed to do it. Now we must go cap in hand to the FDI crowd and work for less money. We simply don't have the luxury of time to develop niche products as our country is hemmoraging money (€60,000,000 a day!) just to pay the wages/welfare bill.

Long term we do need to develop high value export businesses but my point is that this process takes many years and we don't have time. We need people in employment, any employment, at any price to keep them off welfare.

eamonnm79 wrote: »

Some people visit Sweeden , Norway and Denmark even though its a more expensive than Ireland.

Going somewhere on holidays is hardly comparable to a business deciding where to locate!

eamonnm79 wrote: »

If we make all the people in europe poorer and pay them less who is going to be the people who buys all the consumer goods that the europeans can no longer afford?

I'm not talking about the rest of Europe. Most of the rest of Europe is already operating on a much lower cost basis. The scandinavians can afford to be expensive-the Norwegians have oil, the swedes have iron ore and other natural resources, the finns have forestry and ship building and all of them have still developed high value export driven companies ALREADY (Nokia, Ericsson, ABB, Saab-Scannia, Volvo, Statoil etc. etc. etc.). We can't afford such expense because we make very little that the world wants (unless it's made by mostly US companies who happen to be located here).

eamonnm79 wrote: »

The free marke arguement about reducing wages to create jobs has always been overrated in my opinion. We created many many jobs in Ireland in the last 10 years during a consistant increase in the minimum wage.

You do realise though that the last 10 years was a credit fueled mirage of prosperity across the globe don't you? The bubble has burst!!!

Victor

TheInquisitor wrote: »

I did if you read the comments further down . Even using rates when the UK's currency was at its strongest we still have a minimum wage over 50c per hour more than the UK

You conjured up this image for me: http://icanhascheezburger.com/2008/05/15/funny-pictures-scary-baby-panda-oooooooooh/

ardmacha

Irish economic growth has not been all fake, there was a real increase in our living standards, especially in the late 1990s. But some of the increase in recent years has simply been based on borrowed money. The minimum wage should be reduced by 10% forthwith and by more for young people. This is not a race to the bottom, Ireland should identify profitable niches and we can do then. When we do so we can then raise the minimum wage.