Minimum wage.

maninasia

There are a lot of posters here who seem to think money comes out of thin air. They think that we can set a high minimum wage and at the same time set high social welfare benefits and that is won't reduce work opportunities, that it will somehow maintain the money flow in society. Answer it won't.

Imagine a bath full of water being all the money in the Irish economy. Money needs to come into the economy to support the money going out of it. As the social welfare bill gets bigger with workers who should be working in productive industries but instead sit about on the dole (the hole gets larger) and the supply of water lessens (taxable income from workers pay and corporate profits from export oriented industries) the bath's water level decreases at an accelerating rate......

It's really a simple concept....you can try to argue but I don't see any holes in my logic.

It doesn't mean I believe in slave conditions, just that the minimum wage and social welfare (and everybody's wages, taxes, grates etc.) can be adjusted slightly down to make the country competitive in a GLOBAL sense. By doing this we maintain more jobs and more taxable income and in the medium to long term almost everybody benefits! Even if you don't agree with my monetary argument surely you can see the sense in people working and improving themselves and getting out in the world instead of sitting at home and being a drain on the economy. Ireland may be an island but it cant exist in it's own little world!

Some of you have big mortgages, perhaps the govt. can do something for you as they bailed out the bankers, I really sympathise, but I don't know where the money is going to come from to bail out everybody!

murphaph

The sad reality is that people who bought in the last few years will have great difficulty making their repayments and some will face repossession. We can't maintain a minimum wage that prices Ireland Inc. out of the global marketplace because of high mortgage repayments, just like landlords with high mortgages can't keep rent artificially high because they have big mortgages-the market decides the rent payable.

Perhaps this horrible lesson in reality was needed. Perhaps people will be a bit less hasty when considering purchasing property in future.

eamonnm79

Redistribute the wealth of the super rich and then we can look at lowering everyone elses standards too.
That sounds awfully like collectivisation/communism.




No it doesnt, it sounds like a properly functioning social democracy rather than state capitalism and socialism for the rich.

The arguement that there are not enough super rich is untrue.
Whats more, those that make it in the media know its untrue. Thankfully Vincent Browne has done the maths. Just look at his articles in the Irish times on a wednesday for the last 3 weeks.

The old answers that were right for the free marketeers in the past are not nessisarily going to be right in the future. Thats how much things have changed.

eamonnm79

maninasia wrote: »

There are a lot of posters here who seem to think money comes out of thin air. They think that we can set a high minimum wage and at the same time set high social welfare benefits and that is won't reduce work opportunities, that it will somehow maintain the money flow in society. Answer it won't.

Imagine a bath full of water being all the money in the Irish economy. Money needs to come into the economy to support the money going out of it. As the social welfare bill gets bigger with workers who should be working in productive industries but instead sit about on the dole (the hole gets larger) and the supply of water lessens (taxable income from workers pay and corporate profits from export oriented industries) the bath's water level decreases at an accelerating rate......

It's really a simple concept....you can try to argue but I don't see any holes in my logic.

It doesn't mean I believe in slave conditions, just that the minimum wage and social welfare (and everybody's wages, taxes, grates etc.) can be adjusted slightly down to make the country competitive in a GLOBAL sense. By doing this we maintain more jobs and more taxable income and in the medium to long term almost everybody benefits! Even if you don't agree with my monetary argument surely you can see the sense in people working and improving themselves and getting out in the world instead of sitting at home and being a drain on the economy. Ireland may be an island but it cant exist in it's own little world!

Some of you have big mortgages, perhaps the govt. can do something for you as they bailed out the bankers, I really sympathise, but I don't know where the money is going to come from to bail out everybody!

You have obviously never heard of quantitive easing.


Its really a simple concept???

More like its really simplistic, God awful, analogy. And Ive heard some bad ones.

Give me an example of an industry that pays minimum wage at the moment in Ireland that would increase the number of workers they would hire if the min wage came down to €6.50 in current economic circumstances?

The government have no intention of bailing out everyone, just the rich.
Dont think that governments bailing out banks is a new thing. Citibank went broke due to a guge number of defaulted loans they made in South America in the 80's The American governmen bailed them out.

murphaph

eamonnm79 wrote: »

No it doesnt, it sounds like a properly functioning social democracy rather than state capitalism and socialism for the rich.

Do you consider Germany to be a properly functioning social democracy?

murphaph

eamonnm79 wrote: »

You have obviously never heard of quantitive easing.

We can't use quantitive easing. Quantitive easing would require the ECB's involvement and they aren't going to 'print money' across the Eurozone to save our useless hides on our little island.

eamonnm79 wrote: »

Give me an example of an industry that pays minimum wage at the moment in Ireland that would increase the number of workers they would hire if the min wage came down to €6.50 in current economic circumstances?

You're so out of touch here eamon. We're not talking about job creation at this point, we're talking about desperately trying to prevent or reduce the predicted (ESRI report yesterday) 300,000 further job losses (on top of the 380,000 currently out of work) expected by year end 2010. We'll be doing very well to hold unemployment below 15% with the current rate of job loss.

Retail is an industry that pays minimum wage that is currently seeing massive job losses. This could be stemmed with a cut in minimum wage.

maninasia

As Murphaph said, quantitative easing or 'the printing of money' cannot be used by Ireland as we don't control our own currency in the same way that the US or UK does. The UK has gone down this route devaluing Sterling 30% and dealing a further blow to Irish companies competitiveness. Go to any online website in UK, look for bikes, chocolates, TVs, tools, food......look at the prices. A lot of them offer free delivery or low delivery rates. Tell me how that is not a big problem for local business in Ireland?I think Eamonn must be working in the dail or something, he thinks that money can come from nowhere to pay everybody what they want
You wanted an example of an industry that will hire more workers on minimum wage? -Restaurants, Hospitality and Tourism, Assembly and Packaging, Retail, Manufacturing. If they have a set budget for labour costs they can hire more workers. Granted it might not happen everytime but it gives them leeway when more workers are needed to either hang on to the employee headcount they have or increase it. This has been done with a commensurate drop in social welfare. I don't think the min. wage needs to drop so much as social welfare for longer term unemployed (more than 1 year) needs to drop. Push-pull factors!

eoinbn

maninasia wrote: »

As Murphaph said, quantitative easing or 'the printing of money' cannot be used by Ireland as we don't control our own currency in the same way that the US or UK does. The UK has gone down this route devaluing Sterling 30% and dealing a further blow to Irish companies competitiveness. Go to any online website in UK, look for bikes, chocolates, TVs, tools, food......look at the prices.

People keep forgetting that if you devalue a currency it's buying power is also reduced. Many items in the UK have gone up in price in the last 12 months- basically all items that aren't made in the UK or use a lot of imported materials. For example last june I built my PC using an english company to supply the parts. The Power supply cost me ~£90 and the case ~£95. Today the same components are £108 and £118 respectively.

Wages WILL drop by at least 20% over the next few years and that will include the minimum wage. Welfare will probably see bigger cuts. Anyone that thinks otherwise is kidding themselves.

eamonnm79

murphaph wrote: »

Do you consider Germany to be a properly functioning social democracy?

No, the best example is Sweeden.

eamonnm79

murphaph wrote: »

We can't use quantitive easing. Quantitive easing would require the ECB's involvement and they aren't going to 'print money' across the Eurozone to save our useless hides on our little island.


You're so out of touch here eamon. We're not talking about job creation at this point, we're talking about desperately trying to prevent or reduce the predicted (ESRI report yesterday) 300,000 further job losses (on top of the 380,000 currently out of work) expected by year end 2010. We'll be doing very well to hold unemployment below 15% with the current rate of job loss.

Retail is an industry that pays minimum wage that is currently seeing massive job losses. This could be stemmed with a cut in minimum wage.

I know Ireland cant use quantitive easing. TBTF
The original point said money doesnt come from thin air, well in quantitive easing it does.

MY point is that even reducing the minimium wage would not stop a reduction in the job losses. Now Sinn Feins Policy document from today, thats a good Idea(even though I woulldnt vote for them)
That policy could help.
Reducing the min wage will not!

murphaph

Unfortunately Sweden has natural resources and makes stuff the rest of the world wants (like cars, fighter planes, telecoms equipment). We are not Sweden unfortunately.

francish

murphaph wrote: »

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?

The minimum wage will be reduced, the question is how long will the government wait before implementing the reduction. My prediction, decision will be delayed until January 2010. Let's wait for unemployment to rise by a further 200,000 before we are foreced to change the rate.

ongarite

eamonnm79 wrote: »

No, the best example is Sweeden.

But are we prepared to pay the level of taxation that they pay in Sweden.

Looking at the figures, I would guess nearly every Irish person would baulk at what our new taxation figures and take home pay.
28% Corporation Tax
29-35% Lower Income Tax
60% Higher Income Tax payable at €30K
25% VAT

http://rppe.wordpress.com/2009/03/31/errata-swedens-tax-rates/

murphaph

People on minimum wage in Ireland probably have a much higher take home pay than people on minimum wage in Sweden. You want services-you pay for them. Ireland is unusual in a european context in having so many employees pay absolutely no tax. Even on a wage similar to our minimum wage in most continental countries, you pay tax. We can cut the minimum wage and still have people taking home more money than their european counterparts! If wages come down, costs of living can also come down (they are coming down anyway!).

eamonnm79

ongarite wrote: »

But are we prepared to pay the level of taxation that they pay in Sweden.

Looking at the figures, I would guess nearly every Irish person would baulk at what our new taxation figures and take home pay.
28% Corporation Tax
29-35% Lower Income Tax
60% Higher Income Tax payable at €30K
25% VAT

http://rppe.wordpress.com/2009/03/31/errata-swedens-tax-rates/

You are right most Irish people would balk, because we are greedy.
High taxes in exchange for good public services is a good deal.

eamonnm79

murphaph wrote: »

People on minimum wage in Ireland probably have a much higher take home pay than people on minimum wage in Sweden. You want services-you pay for them. Ireland is unusual in a european context in having so many employees pay absolutely no tax. Even on a wage similar to our minimum wage in most continental countries, you pay tax. We can cut the minimum wage and still have people taking home more money than their european counterparts! If wages come down, costs of living can also come down (they are coming down anyway!).

Wasnt that addressed in the last budget? You have to pay tax starting at 15,000 now.
The unfortunite reality is that we are going to be paying the european rates of tax without deacent services for the next X years. We are going to be growing our national Debt massively in the next 5 years and then we will have to strt trying to pay it back so x could be a big number.

ongarite

eamonnm79 wrote: »

You are right most Irish people would balk, because we are greedy.
High taxes in exchange for good public services is a good deal.

Problem is Irish public want both at the same time which isn't possible.
We want low taxation & good/great public services.

We have got to pick one and stick with it for the future and accept the other.

francish

ongarite wrote: »

Problem is Irish public want both at the same time which isn't possible.
We want low taxation & good/great public services.

We have got to pick one and stick with it for the future and accept the other.

Takes someone on €40K, on the last euro they earn, they take home 49% and the taxman takes 51%. If you factor in Employer's PRSI, 55% of the cost of the wage goes to government and 44% goes to employee.

How higher than 55% do you want to go?

irish_bob

eamonnm79 wrote: »

You are right most Irish people would balk, because we are greedy.
High taxes in exchange for good public services is a good deal.

higher taxes are no guarentee of better services

with the situation we have at present where the goverment more or less ask the unions for permission on everything , all that would result in higher taxes is , 10 people changing those light bulbs in the garda station instead of 3 or whatever it took

irish_bob

ongarite wrote: »

Problem is Irish public want both at the same time which isn't possible.
We want low taxation & good/great public services.

We have got to pick one and stick with it for the future and accept the other.

you could also have said , our public servants want the bulk of the money spent on wages , the teachers on wages instead of classrooms , the nurses on wages instead of beds

both are among the highest paid in europe

francish

irish_bob wrote: »

higher taxes are no guarentee of better services

with the situation we have at present where the goverment more or less ask the unions for permission on everything , all that would result in higher taxes is , 10 people changing those light bulbs in the garda station instead of 3 or whatever it took

+1

eamonnm79

irish_bob wrote: »

higher taxes are no guarentee of better services

with the situation we have at present where the goverment more or less ask the unions for permission on everything , all that would result in higher taxes is , 10 people changing those light bulbs in the garda station instead of 3 or whatever it took

I could give pleanty of examples of private sector mistakes that cost us a lot more than that.

doolox

In any properly governed and functioning economy the minimum wage should be seen as a starting point in a persons career, a foot in the door, a base level which the person should be encouraged to improve on by increasing productivity and versatility to allow for incremental increases in wages over time in order to allow for increasing responsibilities that one encounters as one grows older.
In other words it is right for lounge boys and other starting off jobs to get around €6 per hour and work up over 2-3 years to about €7 or €8 per hour at age 18-20 or so.
At this stage in life they are living at home, have no kids, do not need private transport as their parents can get them to and from work or elsewhere if public transport is not available. I have known employers who will stump up for taxis when they need someone to work hours after public transport has ceased so it can be done.
The trouble with minimum wage jobs is when society expects married, middleaged people to accept them as the norm and when it attempts to patch up for the deficiencies in the economic system with things like family income supplement, medical cards and the like to make up for poorly paid peoples inability to provide for themselves.
We as a society should look at providing development plans for each person now on minimum wage, worked out between them, their bosses, representatives of their industry or economic sector and the government to transition as many of them to a higher wage as possible. Given human nature and our different abilities and failings there will be some who will remain on minimum wage for a long time, just as there will be others who will move up rapidly through development and coaching and training by good, well intentioned employers ( there should be no other kind, but there is).
People should no longer be slaves to fortune in being lucky with their employment and their bosses. Exploitation needs to be wiped out. Shirking and avoiding development by an employee needs to be wiped out. Dysfunctional labour relations procedures, which we saw recently by a small number of bus drivers needs to be wiped out.
We need to learn to trust one another again and this need to be earned by both sides.
Unfortunately there is no way of certifying and accrediting employers and job placings at the moment, no way of sorting out the abusers from the genuine people who will train, develop and increase the worth of their employees.
The current economic turmoil will only increase the race to the bottom for people in moderatly skilled jobs without legal or structural protection for their wages and conditions.
This thing can only be solved by adopting long planning horizons and developing everything upwards over a long time. Our government can only think to the next election, five years which is way too short. Most of our institutions, Educational, Judicial, Health etc are in crisis mode struggling to cope with the presentnot mind the future.
It will be up to every person to work it out for themselves in as calm a way as possible.

Driseog

murphaph wrote: »

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?

Yea but the German governmant can also control the price of goods aswell so that wages don't need to be increased. You see the problem in this country is we only hear half of a story and the next thing we have a minimum wage cut with the lowest paid not able to keep themselves alive.

murphaph

Driseog wrote: »

Yea but the German governmant can also control the price of goods aswell so that wages don't need to be increased. You see the problem in this country is we only hear half of a story and the next thing we have a minimum wage cut with the lowest paid not able to keep themselves alive.

What goods have the german government got price controls on?

Germany is a diverse country. Where I live, it's cheaper because there are fewer jobs and more poor people. All the major retailers have regional pricing policies so my €0.19 2 litre of mineral water or €2.15 (the same product costs €7 in a Lidl in Ireland btw) 6 pack of beer cost a bit more in say, Bavaria. The supermarkets price to what the german public will pay...and in general that's "not much". Germans are just more frugal-they spend money on cars and holidays and save money on day to day expenses.

eamonnm79

murphaph wrote: »

What goods have the german government got price controls on?

Germany is a diverse country. Where I live, it's cheaper because there are fewer jobs and more poor people. All the major retailers have regional pricing policies so my €0.19 2 litre of mineral water or €2.15 (the same product costs €7 in a Lidl in Ireland btw) 6 pack of beer cost a bit more in say, Bavaria. The supermarkets price to what the german public will pay...and in general that's "not much". Germans are just more frugal-they spend money on cars and holidays and save money on day to day expenses.

I see Tesco are doing the same thing here. Cheaper prices in shops near the boarder

djpbarry

eamonnm79 wrote: »

Redistribute the wealth of the super rich and then we can look at lowering everyone elses standards too.

So it’s the responsibility of the wealthy to bail out the rest of the population?

eamonnm79 wrote: »

MY point is that even reducing the minimium wage would not stop a reduction in the job losses.

Suppose the minimum wage was reduced to €0.01 per hour; do you think that could help prevent job losses (hypothetically speaking, of course)?

eamonnm79 wrote: »

The unfortunite reality is that we are going to be paying the european rates of tax without deacent services for the next X years.

Not sure about that. What I am sure of is that over the last number of years people in this country have been expecting top-class public services while paying bottom dollar to finance them. Something had to give. The tax increases we’re seeing now are just there to make up the shortfall that has accumulated.

francish wrote: »

Takes someone on €40K, on the last euro they earn, they take home 49% and the taxman takes 51%.

On the last euro? What about the other 39,999?

Comparisons of tax rates across the OECD (in 2007) are available here. Total “tax wedge” for employees on average wage in Ireland and Sweden were 34.1% and 63.4% respectively.

freemarketeer

Wrote this piece a few weeks ago on why Ireland should reduce the minimum wage. Thought it might contribute to the debate.

http://thefreemarketeers.wordpress.com/2009/04/23/minimum-wage-maximum-unemployment/

eamonnm79

freemarketeer wrote: »

Wrote this piece a few weeks ago on why Ireland should reduce the minimum wage. Thought it might contribute to the debate.

http://thefreemarketeers.wordpress.com/2009/04/23/minimum-wage-maximum-unemployment/

I think your time would be better spent esposing other freemarket beliefs like why the government should not be bailing out the banks and allowing them to fail
The government took 7 billion from the Irish people to prop up the 2 big banks last month. They could have bought the 2 of them for 1.3 million. Its socialism for the rich and the amount of money wasted is way more than Lowering the minimum wage will make the gov.