We should abolish the minimum wage..

nesf · 21-02-2011 03:32AM #1

... and strengthen the Family Income Supplement and extend it to single people. Hear me out on this, we can all agree that we want a basic level of income for the low waged, the question is how to provide it. Now I think the best way to do this is to shift the emphasis off the employer and redistribute tax to make up the gap. Perhaps setting a very low minimum wage as a floor to prevent abuse of the system. The idea being that instead of screwing over small business who may not be in a position to hire someone at a high minimum wage the Government steps in to bump up the incomes of the low waged ensuring that these people aren't suffering overly.

Thoughts?

Scofflaw · 21-02-2011 03:34AM

nesf wrote: »

... and strengthen the Family Income Supplement and extend it to single people. Hear me out on this, we can all agree that we want a basic level of income for the low waged, the question is how to provide it. Now I think the best way to do this is to shift the emphasis off the employer and redistribute tax to make up the gap. Perhaps setting a very low minimum wage as a floor to prevent abuse of the system. The idea being that instead of screwing over small business who may not be in a position to hire someone at a high minimum wage the Government steps in to bump up the incomes of the low waged ensuring that these people aren't suffering overly.

Thoughts?

A little too open-ended, surely? What prevents every small business paying lower wages and relying on the government to fill the gap?

cordially,
Scofflaw

nesf · 21-02-2011 03:35AM

Should explain Family Income Supplement for those who haven't come across it. Basically the Government has a set level of ideal income for a particular family size. If you earn below this income the Government gives you a payment equal to 60% of the difference between your wage and the ideal wage.

It's an excellent welfare supplement that encourages people off the dole and into work even when they would not earn very large wages provided they have a few kids. It is especially effective with families that have 3 to 4 kids and above.

nesf · 21-02-2011 03:36AM

Scofflaw wrote: »

A little too open-ended, surely? What prevents every small business paying lower wages and relying on the government to fill the gap?

cordially,
Scofflaw

Comes down to the Supplement not being too large. You'll still want to pay more than the Supplement level to skilled workers to encourage them to work harder.

Overheal · 21-02-2011 03:50AM

Employers complain that they cant employ people but the fact is if they are doing to business, they will hire the employees. Employees are an Investment, not an outright expense. The complaints about minimum wage seem to apply in a few circumstances, not the many.

nesf · 21-02-2011 04:04AM

Overheal wrote: »

Employers complain that they cant employ people but the fact is if they are doing to business, they will hire the employees. Employees are an Investment, not an outright expense. The complaints about minimum wage seem to apply in a few circumstances, not the many.

Conversely though at the very low end of the wage scale is precisely where employees aren't an investment because the work is so unskilled that there's not much return on experience after the first few months of employment. I'd definitely agree with you further up the pay scale that employees are an investment generally.

Nehaxak · 21-02-2011 06:26AM

FIS is not guaranteed forever, it's reviewed every 12 months far as I know and it's also frustrating to go through the process of applying and re-applying for it along with being complicated for the average small family to understand it's complications.

It is however an initially good social idea, it's just implemented badly and too much red tape and complications within it's system. It's hard to compute and understand the benefits or drawbacks of utilising FIS as a small family at all.

For a small family with 2 kids, one adult in average paying employment and the other on JSA, no single parent allowance here, they claim as a cohabiting couple - it can end up if you apply for FIS, that the family comes out the same as what they get from the dole (which is not much anyway usually when one adult is working) but the unemployed person in that family ends up signing on every week for what could amount to only €10 and It's hardly worth the effort and hassle. I would guess that's why most families don't bother at all with it.

If those in charge of overall operation and administrating of FIS overhauled the whole thing to be less complicated and confusing - then maybe your idea would be approachable as a basis to start your idea from.

The minimum wage only needs to be as high as it currently is because the cost of living, no matter how many lies are told by politicians and their media lapdogs to say otherwise, is still considerably high in this country and has barely if at all lowered since the start of the recession.
Lower the cost of living, the cost for businesses to do business in the first place, commercial rates and rents, insurance, utility costs and so forth - and over a number of years the cost of living should come down, assuming businesses don't drive up the cost of living again themselves by being greedy.

There are many right and proper ways to reduce the costs of doing business in this country, the minimum wage is the very very last thing I'd even consider touching.
It's also I feel a kind of snobbery to suggest those that are on the minimum wage somehow don't deserve it because, well, they didn't go to college to learn to wait on tables or clean toilets/whatever - why should I as a small business out for profit, usually profit for one person or small group, have to pay these working class people so much money in wages when it should be going into my pocket instead ? That's the whole point of business isn't it ?

Your idea sounds like capitalism looking to socialism again to bail it out because it can't make ends meet to provide enough profit for the business owner. Someone has to foot the bill somewhere, why should the population at large be lumped with the costs to make up the low wages for a commercial business ?

Capitalism is capitalism, if you can't run your business well enough or survive in business and make a profit, then tough luck, shut yourself down and stop looking to socialism to bail you out.

It's not the scale of the minimum wage in Ireland that's destroying small businesses, it's the disgraceful costs of everything else that's doing it, what with out of control rents, rates, charges for utilities and not to mention the horrible high taxes. Make it cheaper and easier for businesses to set up and run here for a start and when all that is being done right, then and only then should the minimum wage be considered as an option to be reviewed.

If you want a perfect example of an economy done right for small businesses and entrepreneurs, look at Hong Kong and what they've done. The country is flippin' booming because they embraced capitalism in it's fullest, they took a huge risk with their tax laws but the theory behind what they wanted to do was sound, it was just never done before. Barely anyone is unemployed there and not because there's no social welfare but because there are so many places to work, so easy to set up and run a business, barely any taxes/charges unless you hit a very high wealth ceiling and the businesses and economy in general is respected and allowed to flourish without people being dependent on socialist ideals to bail them out if they fail (even if they're now part of China again).
If they fail, they just go out of business and another takes their place with ease and those that are made unemployed walk into another job or go set up a business themselves.

The only way socialism should be used in this country for the benefit of businesses is if the government buys or leases land to businesses at significantly lower current market rates in order to help make it easier and cheaper for businesses to start up and continue running. There's plenty of dead land and buildings around these days anyway, and that available from NAMA, put it to good use for the society in general and make it easier and cheaper for existing and new businesses to start up and continue running. Hell, I'd even go a step further and help to relocate business out of their current premises if their landlord won't match the socialised rates.
The country wouldn't lose anything by doing something small like this, it's only got everything to gain by helping to improve and spur on the economy.

If it were up to me, I'd forcibly take over the land back into government hands, then lease it back out to businesses operating on that land, 95% cheaper than what they were paying in the first place.
Talk about burning the bondholders, I'd burn the greedy landlords first.

Sorry for the long reply, something close to my heart this as I'd like to start a business myself in Ireland but I'm resigned at the moment to thinking of starting and operating it out of China instead with a base in Geneva for banking needs.
Shame too, I'd love nothing more than to be able to open the same business here and pay my share of taxes here too but the upfront and ongoing costs of doing that in Ireland are an absolute disgrace and the minimum wage doesn't even bare any significance in those costs either.

nesf · 21-02-2011 06:40AM

Yeah but you're neglecting in your analysis the effect the minimum wage has on the cost of doing business and the cost of living. The minimum wage sets a floor and all other wages lie above it by a %. If minimum wage is increased it tends to bump up all other wages lying about it by a certain amount.

The core idea here is to create more low paid jobs to help get people off the dole (hopefully combined with measures to make long term dole unattractive to people). The State gets a discount on such people because the opportunity cost is having them on the dole and being fully financed by the State rather than part financed by the private sector.

I agree fully with you on the poor implementation of FIS and the problems with the amount of red tape involved at present though. It's a good scheme in principle that badly needs reform.

Nehaxak · 21-02-2011 08:10AM

nesf wrote: »

Yeah but you're neglecting in your analysis the effect the minimum wage has on the cost of doing business and the cost of living. The minimum wage sets a floor and all other wages lie above it by a %. If minimum wage is increased it tends to bump up all other wages lying about it by a certain amount.

Wasn't an analysis Nesf, just my point of view. I didn't delve that deep into the minimum wage really and while I understand it could possibly impact on other wages that would lie above it by a percentage - there's actually very few people on minimum wages plus benchmarking was widely introduced across many a sector some years back, which probably needs to be revisited before the minimum wage does.
What I was saying though, in short, was that there are many other proper and long overdue ways to lower the operating costs of businesses other than hitting the minimum wage.
If a business is failing or thinks they're failing due to the costs of employing people on the current minimum wage, then really, they're a failed business, badly run and managed and should probably just get it over with and fold so someone else can step into that market and run another business properly.
If you looked at their business plan and financial figures even during the boom times, you'd probably see how much they wasted or overspent on unnecessary items, upgrades, improvements, purchases and so on, not to mention possibly furnishing the business owners personal debts of one sort or another, whether that be mortgage(s), credit card debts or personal loans.
Just close down, move on, your business is failed, you failed, no big deal, that's what happens.
It's capitalism, embrace it fully and you'll do well in future endeavours, learning from your mistakes and past failings. Mix it with socialism or expect socialism to bail you out in one way or another when you fail is wrong and as a business you're not deserving of any success imo. With that, there's also the point to be made in regards there shouldn't be a minimum wage at all in the first place - but it's 8am and I haven't slept again now for 2 nights in a row, I'm not really willing to get into that one right now

The core idea here is to create more low paid jobs to help get people off the dole (hopefully combined with measures to make long term dole unattractive to people). The State gets a discount on such people because the opportunity cost is having them on the dole and being fully financed by the State rather than part financed by the private sector.

While I can understand that point of view in principal, you'd have to be careful also not to drive more people into the black economy, that no amount of policing will ever combat.
Making people work for (want of a better word) shítty wages does not give an incentive to get people back to work.
Create proper meaningful jobs in a wide diversity of area's and spur the economy itself on by improving access and lowering costs, rates, rents and taxes for businesses to set up and continue to operate in, would be much more of a help.
Lower wage jobs will go hand in hand with those created anyway, directly or indirectly, giving the option for casual/part time/younger adult/whatever jobs.

Victor · 21-02-2011 08:19AM

Surely this proposal is merely a form of business welfare (it gives the most subsidy to business employers* who are willing to pay the least) and not worker human welfare?

* Will people be able to pay their maid €1/hour and get a sate subsidy for the balance?

professore · 21-02-2011 08:37AM

Personally I think it would make more sense to reduce welfare, as this is what puts a floor on prices rather than the minimum wage. There are enough people on welfare now to influence the minimum price of things here. However this should be coupled with reduced housing costs.

I agree 100% with Nehaxak on the socialisation of land for business purposes, I would go one step further and say that the apartments and houses in NAMA should be sold off at a lower level (50 K for a one bed apartment, 100 K for a 3 bed semi) or rented at a low rent to people as the biggest driver of costs in this economy is not the minimum wage, it's the COST OF HOUSING.

If it was cheaper to rent then people on low incomes could live much better on them and would not need to push for higher salaries. We also need to do something about all the people with mega mortgages out there. I am not sure what, and I know all the moral arguments, but as long as they are saddled with huge mortgages they won't spend in the economy. By the way I am not in that situation thankfully.

the_syco · 21-02-2011 09:09AM

nesf wrote: »

Should explain Family Income Supplement for those who haven't come across it. Basically the Government has a set level of ideal income for a particular family size. If you earn below this income the Government gives you a payment equal to 60% of the difference between your wage and the ideal wage.

How will they pay this? If you earn less, you pay less tax, and thus this idea will make it cheaper for businesses, and dearer for the government. We loose out.

Whilst you may think this is a good idea, ask yourself if your employer would screw you over if they could?

=-=

On another note if min wage goes up, all people get paid more but if min wage goes down, peoples wages stays the same, as the min wage only effects the newcomers. After a while, prices go up, as costs increase, so reducing the min wage doesn't guarantee lower costs.

Crucifix · 21-02-2011 09:20AM

As you increase the amount of people recieving some kind of welfare you increase the bureaucracy needed to administer it. If the income supplement was fairly wide spread compared to the dole you'd be bumping up the amount of money spent to give out the same amount of money.

I think I'd stick with a minimum wage. The "family" part of the equation is interesting...there's the idea of tiered minimum wages based on living situations. But again that would increase the bureaucracy needed, be open to exploitation, etc.

ei.sdraob · 21-02-2011 10:21AM

Scofflaw wrote: »

A little too open-ended, surely? What prevents every small business paying lower wages and relying on the government to fill the gap?

cordially,
Scofflaw

As opposed to businesses not hiring and the person remaining on the dole

@nesf is onto something at the moment minimum wage acts as a form of "welfare" and is paid by companies who in turn pass on the costs onto everyone else (or worse case scenario don't startup/grow as fast), shouldn't "welfare" be the job of the state?

Permabear · 21-02-2011 10:26AM

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OhNoYouDidn't · 21-02-2011 11:42AM

So we abolish the minimum wage. Then what?

Employers hire more people and the cost of goods and services fall?

Yeah. Right. The wage differential goes straight into the back pocket of the employer. A direct transfer of wealth from the poorest to the richest.

The minimum wage was put in place to stop the exploitation of workers as union penetration decreased. There is no evidence that the Irish business class have suddenly become trustworthy enough to be allowed set their own wage levels.

OhNoYouDidn't · 21-02-2011 11:44AM

Permabear wrote: »

This post had been deleted.

Is there ANY evidence that this is the case?

Sounds like a cut and paste from an IBEC press release to me...

Permabear · 21-02-2011 11:54AM

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ei.sdraob · 21-02-2011 11:55AM

OhNoYouDidn't wrote: »

Is there ANY evidence that this is the case?

Sounds like a cut and paste from an IBEC press release to me...

beginAnecdotalEvidence();

I have some periodic data input work available, its very mundane I automated what i could by making programs and scripts but human intervention is still required.
It is simply not worth paying anyone 8-9 euro an hour to do it, so i outsource the work instead
this is something that could be easily done by someone unskilled and an internet connection + computer

this is just example from top of my head

a relative runs a chain of supermarkets, wages and related taxes are one of the main costs, he would happily take on more people but he simply cant afford it, thats another example, the work is not exactly high skilled

Permabear · 21-02-2011 12:05PM

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OhNoYouDidn't · 21-02-2011 12:53PM

ei.sdraob wrote: »

beginAnecdotalEvidence();

I have some periodic data input work available, its very mundane I automated what i could by making programs and scripts but human intervention is still required.
It is simply not worth paying anyone 8-9 euro an hour to do it, so i outsource the work instead
this is something that could be easily done by someone unskilled and an internet connection + computer

this is just example from top of my head

At what point would it be worth it to you paying to get the work done? €7? €5? €2? €1? See where this is going?

Why not offer someone €100 to do the job by a certain date?

ei.sdraob wrote: »

a relative runs a chain of supermarkets, wages and related taxes are one of the main costs, he would happily take on more people but he simply cant afford it, thats another example, the work is not exactly high skilled

Are you telling me that if he could halve what he pays he would double his workforce? Or that he would increase by 50% and cut prices?

There has been a significant chop in the min wage. Employment hasn't increased. Prices have not fallen.

Permabear · 21-02-2011 01:04PM

This post has been deleted.

ei.sdraob · 21-02-2011 01:11PM

OhNoYouDidn't wrote: »

At what point would it be worth it to you paying to get the work done? €7? €5? €2? €1? See where this is going?

Why not offer someone €100 to do the job by a certain date?

Do you know the paperwork involved in hiring someone here? and then the headaches in paying taxes etc

nono Amazon Mechanical Turk for the win :P

OhNoYouDidn't wrote: »

Are you telling me that if he could halve what he pays he would double his workforce? Or that he would increase by 50% and cut prices?

a bit of both, he is still in business by undercutting the competition, for some products including the major supermarkets.

one of the shops is aimed at eastern europeans and requires people with east european languages to work (of course the local Irish dont know much else but English), the relative in question even went as far as learning Polish

to tap this market (which is shrinking now

due to them going home)

you make out anyone who runs a business as some sort of evil greedy capitalists scrooge types :rolleyes: then you wonder why people are discouraged from going into business, its this type of Irish backward begrudgery thats damned scary.

OhNoYouDidn't wrote: »

There has been a significant chop in the min wage. Employment hasn't increased. Prices have not fallen.

Thats because it applies to NEW hires, anyways thats only one side, there are also employer taxes and then the paperwork

edit: i have an employee doing 20 hrs (specifically 20 hours requested by the employee....) at 8.65, who is still on 8.65...

Dublin_Gunner · 21-02-2011 02:13PM

Hmm. Lets get everyone to work for €1, and let social welfare make up the difference to the 'minimum'.

Yeah, great idea :rolleyes:

evercloserunion · 21-02-2011 02:46PM

Is this not basically tantamount to the state becoming an employer of last resort?

It's corporate welfare at its most blatant, private enterprise gets all the benefits of a strong workforce for free while the state picks up the tab. Business owners get something for nothing, while the taxpayer loses out.

The only solution is a very slow, gradual reduction in the minimum wage to sensible levels. Permabear's arguments may have been relevant back before we had a minimum wage. Now that we have had a minimum wage for so long, getting rid of it in one foul swoop would have disastrous consequences for lower-paid workers.

Soldie · 21-02-2011 03:10PM

OhNoYouDidn't wrote: »

So we abolish the minimum wage. Then what?

Employers hire more people and the cost of goods and services fall?

Yeah. Right. The wage differential goes straight into the back pocket of the employer. A direct transfer of wealth from the poorest to the richest.

The minimum wage was put in place to stop the exploitation of workers as union penetration decreased. There is no evidence that the Irish business class have suddenly become trustworthy enough to be allowed set their own wage levels.

The owner of supermarket A, much like the owner of supermarket B, benefits from a reduction in the minimum wage in that his overheads are reduced. The owner of supermarket A (I'm guessing this is what you think he looks like) rubs his hands together gleefully, as he maintains his current prices, and pockets the extra revenue as profit. The owner of supermarket B, on the other hand, lowers his prices to become more competitive. It doesn't take Nostradamus to predict how customers will react to this.

ei.sdraob · 21-02-2011 03:16PM

evercloserunion wrote: »

Is this not basically tantamount to the state becoming an employer of last resort?

the state is already that by providing welfare

anyways dont mix employment with welfare, two different concepts

evercloserunion wrote: »

It's corporate welfare at its most blatant, private enterprise gets all the benefits of a strong workforce for free while the state picks up the tab. Business owners get something for nothing, while the taxpayer loses out.

The only solution is a very slow, gradual reduction in the minimum wage to sensible levels. Permabear's arguments may have been relevant back before we had a minimum wage. Now that we have had a minimum wage for so long, getting rid of it in one foul swoop would have disastrous consequences for lower-paid workers.

Like I said why should "welfare" be the problem of employers?

aint it the job of the state to "provide welfare and entitlements" or so we hear that all the time around these parts

the minimum wage is used as an instrument by the state to relive itself of responsibility and pass on the cost to someone else, which becomes yet another cost in doing business, more barriers == less employment and we sort of need employment now.

anyways min wage is not the biggest problem its the various industry agreements, for example all this talk of using unemployed construction workers to build schools etc we hear, the problem is if they are hire they would have to be paid (by the state. ie all of us) a min of ~15/hr as thats the min wage for that sector

the_syco · 21-02-2011 03:33PM

Dublin_Gunner wrote: »

Hmm. Lets get everyone to work for €1, and let social welfare make up the difference to the 'minimum'.

Yeah, great idea :rolleyes:

I believe this happens in Germany. My german colleague says that if you're on their dole, and you're given a €1/hour job, if you don't take it, you loose all benefits.

Dublin_Gunner · 21-02-2011 03:39PM

the_syco wrote: »

I believe this happens in Germany. My german colleague says that if you're on their dole, and you're given a €1/hour job, if you don't take it, you loose all benefits.

Er... that's not the same at all......

What the OP is proposing is this:

Employer pays - €2 per hour
Gov pays - €6.65 per hour

Employee receives €8.65 per hour

(just using these figures as examples, I know its the old minimum wage).

ei.sdraob · 21-02-2011 03:41PM

Dublin_Gunner wrote: »

Employer pays - €2 per hour
Gov pays - €6.65 per hour

Employee receives €8.65 per hour

which is better than

Employer doesn't create a job (or worse creates it elsewhere)
Govt pays dole

"Employee" sits on ass

OhNoYouDidn't · 21-02-2011 03:41PM

Soldie wrote: »

The owner of supermarket A, much like the owner of supermarket B, benefits from a reduction in the minimum wage in that his overheads are reduced. The owner of supermarket A (I'm guessing this is what you think he looks like) rubs his hands together gleefully, as he maintains his current prices, and pockets the extra revenue as profit. The owner of supermarket B, on the other hand, lowers his prices to become more competitive. It doesn't take Nostradamus to predict how customers will react to this.

That assumes an open market in Ireland. Long experience is that supermarket owner a will trouser the cash, supermarket owner b will do the same and the will compete around the edges with loyalty cards and the odd special offer. And both will fire their unionsed workers and replace them with vunerable non nationals who will work for a great deal less. As numerous hotels and a ferry line have famously done.

We pay more for groceries than any other EU state. There is no competitive edge to the supermarket monoliths here. Compare and contrast with Britain for example.

nesf · 21-02-2011 03:43PM

evercloserunion wrote: »

Is this not basically tantamount to the state becoming an employer of last resort?

The State is already that. That is what the welfare state is.

evercloserunion wrote: »

It's corporate welfare at its most blatant, private enterprise gets all the benefits of a strong workforce for free while the state picks up the tab. Business owners get something for nothing, while the taxpayer loses out.

The only solution is a very slow, gradual reduction in the minimum wage to sensible levels. Permabear's arguments may have been relevant back before we had a minimum wage. Now that we have had a minimum wage for so long, getting rid of it in one foul swoop would have disastrous consequences for lower-paid workers.

It depends on how you look at it. The minimum wage can be looked at as the private sector being forced to do the State's job (i.e. provide a basic level of welfare).

A few points:

a) Yes, you'd need to put some kind of floor on wages to stop the minority of employers who would take the piss with it.

b) The Dole provides a floor anyway since no one sane will work for less money than what the dole gives. If they really feel the need to work they'd probably just volunteer somewhere.

c) The idea is to maximise job creation at the lower end of the scale. A minimum wage costs jobs. Conversely we want some degree of welfare here because we want to make working attractive for people. This is where the State can come in.

d) You don't get all wages plummeting to the floor because basically people won't work for a company who does that. Only the most unskilled of labour will put up with such low wages. It also would help areas like our hospitality sector drive down prices to stay competitive with the rest of Europe.

e) Anyone taken off the Dole and given this supplement along with a low wage saves the Government money.

f) This is exactly the same as slowly decreasing the minimum wage in terms of effect on employers while minimising the effect on incomes for the low waged. Just flat removing the minimum wage would devastate low paid workers, there needs to be some mechanism in place to mitigate the effect.

whydoibother? · 21-02-2011 03:45PM

There might be something in it, but I think it would need very strong safeguards to prevent abuse.

I see where you're going. If an employer can afford to pay 7 euro per hour, they are currently prevented from employing somebody. This plan might get people working.

I would want detailed financial accounts produced proving that they couldn't pay the last euro and a half, otherwise it will be abused.

Of course then there's the question of how high would the subsidy go? If the going rate for the job is 12 euro an hour and the employer can afford 7 does the state pay 5? I don't think it would make economic sense to take it to a point where it's more expensive than social welfare payments (after the person's tax payments are taken into account).

Dublin_Gunner · 21-02-2011 03:47PM

ei.sdraob wrote: »

which is better than

Employer doesn't create a job (or worse creates it elsewhere)
Govt pays dole

"Employee" sits on ass

No. it's just not.

In my eaxmple, €6.65 p/h is €266 p/w paid by the government. That's more than dole.

Secondly, this would put even more people under the welfare bracket, as employers use those rules to employ low paid staff, with the Welfare making up the difference.

You'd have the government paying 'dole' as well as paying minimum wage.

How anyone would ever think this is a reasonable solution needs their head checked.

This would put a HUGE strain on our already over burdened social welfare system.

Where it may work is if people currently on the 'dole' are given these low paid positions.

Emploer pays, say €3 per hour (€120 per 40hr week), and gov makes up the difference to the level of 'dole'. This would maybe help reduce social welfare payments, provided those jobs are created. It would mean the person who was in receipt of €196 from 'dole' is now only in receipt of €76.

There are a LOT of big 'if's though

nesf · 21-02-2011 03:48PM

Dublin_Gunner wrote: »

Er... that's not the same at all......

What the OP is proposing is this:

Employer pays - €2 per hour
Gov pays - €6.65 per hour

Employee receives €8.65 per hour

(just using these figures as examples, I know its the old minimum wage).

No, not at all. Employer pays €2 an hour, States gives 50% (or whatever) of the difference between that and some level. Let's say €10 an hour.

So case one:

Employer pays €2 an hour, employee gets €6 an hour.

Case two:

Employer pays €4 an hour, employee gets €7 an hour.

Because of the % mechanism there is actually a benefit to higher wages here. A system where the State just gave 100% of the difference would be horribly open to abuse by employers because employees couldn't "feel" the rate they're being paid but a % system allows this and encourages workers to seek higher wages in the low paid sector. Similar to how right now employers pay a % above the minimum wage for low skilled work because it attracts better employees and employees do seek and search for work that pays a bit more than minimum wage if they're low skilled/whatever.

A system where the State just makes up 100% of the difference between the wage and the minimum wage would just be dumb.

nesf · 21-02-2011 03:50PM

Dublin_Gunner wrote: »

No. it's just not.

In my eaxmple, €6.65 p/h is €266 p/w paid by the government. That's more than dole.

Secondly, this would put even more people under the welfare bracket, as employers use those rules to employ low paid staff, with the Welfare making up the difference.

You'd have the government paying 'dole' as well as paying minimum wage.

How anyone would ever think this is a reasonable solution needs their head checked.

This would put a HUGE strain on our already over burdened social welfare system.

Genuine question and not being cheeky but: can you think of a fairer way to remove the minimum wage? (Assume for a moment that you agree it is a problem)

Dublin_Gunner · 21-02-2011 03:53PM

nesf wrote: »

No, not at all. Employer pays €2 an hour, States gives 50% (or whatever) of the difference between that and some level. Let's say €10 an hour.

So case one:

Employer pays €2 an hour, employee gets €6 an hour. Where did the difference go??

Case two:

Employer pays €4 an hour, employee gets €7 an hour. Where did the difference go??

The wage in your examples never reaches €10 per hour, so I have no idea what you're talking about.

Because of the % mechanism there is actually a benefit to higher wages here. A system where the State just gave 100% of the difference would be horribly open to abuse by employers because employees couldn't "feel" the rate they're being paid but a % system allows this and encourages workers to seek higher wages in the low paid sector. Similar to how right now employers pay a % above the minimum wage for low skilled work because it attracts better employees and employees do seek and search for work that pays a bit more than minimum wage if they're low skilled/whatever.

Who's gonna pay them the higher wages? Everyone seeks higher wages do they not, no matter the sector.

A system where the State just makes up 100% of the difference between the wage and the minimum wage would just be dumb. A system where the government makes up ANY of the salary is dumb.

Why would someone want to work for €6 per hour when they can just claim 'dole'??

A fairer way to remove minimum wage?? Don't remove it. There is 0 reason to remove a minimum wage. If an employer cannot afford to pay an employee minimum wage, well then their business is doomed to failure tbh.

Paying wages for those who have jobs is NOT the responsibility of the state. The state should be earning taxes from employers / employees, not pay them to 'not' be on the dole.

The only people this has advantages for, are scabby employers.

Its a ridiculous idea IMO.

nesf · 21-02-2011 03:57PM

Dublin_Gunner wrote: »

Why would someone want to work for €6 per hour when they can just claim 'dole'??

A fairer way to remove minimum wage?? Don't remove it. There is 0 reason to remove a minimum wage. If an employer cannot afford to pay an employee minimum wage, well then their business is doomed to failure tbh.

Paying wages for those who have jobs is NOT the responsibility of the state. The state should be earning taxes from employers / employees, not pay them to 'not' be on the dole.

Its a ridiculous idea IMO.

Ah but lowering the minimum wage means a business that would be forced to go out of business (or more realistically, one that would be forced to work with fewer employees than would be optimal) could continue to be in business and continue to create employment for people.

The State already pays wages for people, look at the Family Income Supplement.

And yes, no one rational will work for less than the dole pays, putting a hard floor on what wages the private sector can set. An employer couldn't get away with paying €2 in my example because the employee would say "**** you" and go on the dole. And generally an employer will have to pay more than the dole to make it attractive for people not to take the dole.

We effectively have two minimum wages in this country, the dole and the minimum wage. This is bizarre.

Dublin_Gunner · 21-02-2011 04:03PM

nesf wrote: »

Ah but lowering the minimum wage means a business that would be forced to go out of business (or more realistically, one that would be forced to work with fewer employees than would be optimal) could continue to be in business and continue to create employment for people.

The State already pays wages for people, look at the Family Income Supplement.

And yes, no one rational will work for less than the dole pays, putting a hard floor on what wages the private sector can set. An employer couldn't get away with paying €2 in my example because the employee would say "**** you" and go on the dole. And generally an employer will have to pay more than the dole to make it attractive for people not to take the dole.

We effectively have two minimum wages in this country, the dole and the minimum wage. This is bizarre.

True, because the Dole is paid at too high a level. (and I'll probably get lambasted for that statement). While yes, some employers may be able to stay in business if that was the case - for the vast majority that closed down, minimum wage wasn't the issue.

And with regard to Family Income Supplement - your plan doesn't take ANYONE out of that bracket, but may in fact put more people into it. So the gov would be paying their wage difference, AND FIS.

This would also just be abused by large employers paying minimum wage for low skilled work. They get to decrease their overheads, massively increase revenue, while effectively strangling the social welfare system.

Employers have to pay wages. That is an essential part of business.

nesf · 21-02-2011 04:09PM

Dublin_Gunner wrote: »

True, because the Dole is paid at too high a level. (and I'll probably get lambasted for that statement). While yes, some employers may be able to stay in business if that was the case - for the vast majority that closed down, minimum wage wasn't the issue.

And with regard to Family Income Supplement - your plan doesn't take ANYONE out of that bracket, but may in fact put more people into it. So the gov would be paying their wage difference, AND FIS.

This would also just be abused by large employers paying minimum wage for low skilled work. They get to increase their overheads, while effectively strangling the social welfare system.

Employers have to pay wages. That is an essential part of business.

I agree with your points but the problem is that minimum wages tend to be set too high by Governments (because it's a no-cost vote buyer) at the cost to the private sector. A different system that cost the Government money instead would keep the Government honest and would discourage low level wage inflation by having the setter of wages being the same entity that pays them.

The problem with a minimum wage is that it's extremely hard politically to reduce once it's set and this floor on wages in society is a bad thing because a country can inflate its wage base too much and does need the ability to deflate it.

I'd have no problem with a minimum wage if I trusted politicians not to use it as a vote buying device but bluntly you can't trust our politicians not to do this.

Victor · 21-02-2011 04:11PM

Permabear wrote: »

This post had been deleted.

This just shows you to be somewhat uninformed.

http://www.citizensinformation.ie/en/employment/employment_rights_and_conditions/pay_and_employment/pay_inc_min_wage.html

Sub-minimum rates

Since 1 February 2011 the National Minimum Wage Act provides the following sub-minimum rates, see also 'Rates' below:

* An employee who is under 18 is entitled to €5.36 per hour (this is 70% of the minimum wage)
* An employee who is in the first year of employment since the age of 18 is entitled to €6.12 per hour (80% of minimum wage)
* An employee who is in the second year of employment since the date of first employment over the age of 18 is entitled to €6.89 per hour (90% of the minimum wage)

This phasing in of the national minimum wage also applies to employees who are over 18 and enter employment for the first time.
Trainees

The National Minimum Wage Act also provides sub-minimum rates which apply to employees who are over 18 and undergoing a course of structured training or directed study that is authorised or approved of by the employer.

Since 1 February 2011 the trainee rates provided by the Act are as follows, see also 'Rates' below:

* First one-third of training course €5.74 per hour (75% of national minimum wage rate)
* Second one-third of training course €6.12 per hour (80% of national minimum wage rate)
* Final one third of the training course €6.89 per hour (90% of national minimum wage rate)

Note: each one third period must be at least 1 month and no more than 1 year.

The Act provides certain criteria which the training course must meet if the trainee rates are to apply. For example, the training or study must be for the purposes of improving the work performance of the employee; the employee's participation on the training or study must be directed or approved by the employer; at least 10% of the training must occur away from the employee’s ordinary operational duties; there must be an assessment and certification procedure or written confirmation on the completion of the training course.
Exemption for employer

If an employer cannot afford to pay the national minimum wage due to financial difficulty the Labour Court may exempt an employer from paying the minimum wage rate for between 3 months and 1 year. Only 1 such exemption can be allowed.

The employer must apply to the Labour Court for the exemption with the consent of a majority of the employees, who must also agree to be bound by the Labour Court decision.

The employer must demonstrate that he/she is unable to pay the national minimum wage and that, if compelled to do so, would have to lay-off employees or terminate their employment.

An exemption may only be sought from paying the full rate of the national minimum wage, not for cases covered by the reduced rate, for example, employees who are under 18 years of age.

Soldie wrote: »

The owner of supermarket A, much like the owner of supermarket B, benefits from a reduction in the minimum wage in that his overheads are reduced. The owner of supermarket A (I'm guessing this is what you think he looks like) rubs his hands together gleefully, as he maintains his current prices, and pockets the extra revenue as profit. The owner of supermarket B, on the other hand, lowers his prices to become more competitive. It doesn't take Nostradamus to predict how customers will react to this.

You do realise that supermarkets pay about 20% over the minimum wage?

nesf wrote: »

a) Yes, you'd need to put some kind of floor on wages to stop the minority of employers who would take the piss with it.

nesf wrote: »

And yes, no one rational will work for less than the dole pays, putting a hard floor on what wages the private sector can set. An employer couldn't get away with paying €2 in my example because the employee would say "**** you" and go on the dole. And generally an employer will have to pay more than the dole to make it attractive for people not to take the dole.

Isn't this contrary to your basic thesis in the thread title?

b) The Dole provides a floor anyway since no one sane will work for less money than what the dole gives.

But if they don't take the work (without good reason), they'll lose their benefits.

We effectively have two minimum wages in this country, the dole and the minimum wage. This is bizarre.

Many countries have different levels of minimum wage.

Lockstep · 21-02-2011 05:43PM

Worked for a few supermarkets. Usually got between €9-10 an hour (as an over 18 year old with the 2 years experience)

nesf · 21-02-2011 05:55PM

Victor wrote: »

Isn't this contrary to your basic thesis in the thread title?

Not really since I'm referring to the minimum wage as in the figure rather than the minimum wage set by the dole. Can't argue for no minimum wage at all without arguing for no welfare provision which is really far from my position.

Victor wrote: »

But if they don't take the work (without good reason), they'll lose their benefits.

Eh, not really. Refusing a job that paid below the dole in income would be defensible. Also, in general, to attract workers employers would have to offer more than the dole to be sure of getting people which is my basic point.

Victor wrote: »

countries have different levels of minimum wage.

Yup, and it's a bad idea. Similar to how minimum wages for many of the trades are a bad idea in this country.

Victor · 21-02-2011 06:30PM

nesf wrote: »

Not really since I'm referring to the minimum wage as in the figure rather than the minimum wage set by the dole. Can't argue for no minimum wage at all without arguing for no welfare provision which is really far from my position.

That sounds awfully like back-tracking. Who would ever say "We should abolish the minimum wage and introduce a lower one"? Thats neither logical nor proper English.

Eh, not really. Refusing a job that paid below the dole in income would be defensible.

So dole = new minimum wage? But you do realise that jobseekers allowance is quite a bit below minimum wage?

Yup, and it's a bad idea. Similar to how minimum wages for many of the trades are a bad idea in this country.

The registered employment agreements have their uses - it sets a figure for a job and employers don't have to negotiate with every individual employee.

Of course, before the minimum wage, it was very much a division whereby unionised employees / industries /trades were guaranteed a better income than non-unionised ones, which isn't in line with the spirit of employment law.

nesf · 21-02-2011 06:34PM

Victor wrote: »

That sounds awfully like back-tracking. Who would ever say "We should abolish the minimum wage and introduce a lower one"? Thats neither logical nor proper English.

More the distinction is between the minimum wage and the dole setting a minimum wage. Two different things. Perhaps a better way to phrase it is that I want to abolish the current minimum wage system rather than abolish the idea of a minimum wage.

Victor wrote: »

So dole = new minimum wage? But you do realise that jobseekers allowance is quite a bit below minimum wage?

Indeed, that's why I'm suggesting in such a situation the FIS be expanded to increase the wage of people. Jobseeker's allowance also isn't that far under the current minimum wage once one starts to take account of the various allowances available.

Victor wrote: »

registered employment agreements have their uses - it sets a figure for a job and employers don't have to negotiate with every individual employee.

Of course, before the minimum wage, it was very much a division whereby unionised employees / industries /trades were guaranteed a better income than non-unionised ones, which isn't in line with the spirit of employment law.

They distort the market though, discourage price competition and are inflexible when the economy needs a decrease in wages. This makes them a bad thing. Also there's nothing stopping a business offering a particular rate to all employees of a particular type working for them, there is no need to have companies negotiating with each tradesman individually.

Denerick · 21-02-2011 07:57PM

Its hard to live on 39 hours @ 7.65. I'm certain many of the people suggesting it should be abolished have no experience of working for such low rates (Less than 5% of the population work at this wage level - the inflationary argument is bullshít, to be frank)

the groutch · 21-02-2011 08:02PM

I can understand why certain people would like to see the minimum wage lowered further to reduce the cost of creating new jobs.
The problem I see tho is you'll have to decrease social welfare payments further and further, to stop dragging more people into a position where they are better off on the dole, and have no incentive to work (I'm not even including the spongers who have no intention of ever working), to a point that you have half the country living in poverty.

nesf · 21-02-2011 08:20PM

Denerick wrote: »

Its hard to live on 39 hours @ 7.65. I'm certain many of the people suggesting it should be abolished have no experience of working for such low rates (Less than 5% of the population work at this wage level - the inflationary argument is bullshít, to be frank)

Have done it. The wage inflation argument is based on the floor of wages pushing up the wages above it. Increase the minimum wage by 1 Euro and you'll push up wages above it too, they won't remain static etc.

Denerick · 21-02-2011 09:14PM

nesf wrote: »

Have done it. The wage inflation argument is based on the floor of wages pushing up the wages above it. Increase the minimum wage by 1 Euro and you'll push up wages above it too, they won't remain static etc.

I'm working full time in a supermarket that pays 9.13 euro per hour to new intakes. The wage eventually hits a ceiling of 14.13 after five years service. Every so often, the senior staff will get a little raise in line with inflation, nothing spectacular. The higher rate of 14 euro per hour is designed to retain staff who over the years are capable of performing a semi skilled task with a high degree of consistency and reliability. The primary aim of the rate is to limit staff turnover.

Shops and other employers of unskilled labour who routinely pay at the very minimum rate are eternal victims to staff turnover (Prior to the recession, of course) Hence it already makes logical sense to pay workers over and above the minimum rate, even for entry level workers. Some bigger organisations already do this, but many of the centra's and spar's of this world don't bother. I can understand your cost base argument, but as it stands many providers of low paying jobs adopt a policy of paying above the minimum rate, for clear and distinct economic reasons. Abolishing the minimum wage, and allowing employers to pay peanuts to workers may lead to job creation, but it will threaten those of us who are just above the minimum rate and are relatively secure in our jobs.

In short, what you are suggesting will lead to a massive deflation of base rates for low paying workers, and will only serve to deepen inequality in this economy and add to the general delfationary spiral we have entered into.

nesf · 21-02-2011 09:52PM

Denerick wrote: »

I'm working full time in a supermarket that pays 9.13 euro per hour to new intakes. The wage eventually hits a ceiling of 14.13 after five years service. Every so often, the senior staff will get a little raise in line with inflation, nothing spectacular. The higher rate of 14 euro per hour is designed to retain staff who over the years are capable of performing a semi skilled task with a high degree of consistency and reliability. The primary aim of the rate is to limit staff turnover.

Shops and other employers of unskilled labour who routinely pay at the very minimum rate are eternal victims to staff turnover (Prior to the recession, of course) Hence it already makes logical sense to pay workers over and above the minimum rate, even for entry level workers. Some bigger organisations already do this, but many of the centra's and spar's of this world don't bother. I can understand your cost base argument, but as it stands many providers of low paying jobs adopt a policy of paying above the minimum rate, for clear and distinct economic reasons. Abolishing the minimum wage, and allowing employers to pay peanuts to workers may lead to job creation, but it will threaten those of us who are just above the minimum rate and are relatively secure in our jobs.

In short, what you are suggesting will lead to a massive deflation of base rates for low paying workers, and will only serve to deepen inequality in this economy and add to the general delfationary spiral we have entered into.

Well I agree with you. Paying absolute minimum wages is not a very good plan in the retail sector because precisely it results in heavy turnover of staff and loss of skills. There's similar problems with very low wage sales work and similar. Smart employers will in almost all cases pay a premium above the minimum wage for even low skilled work because the benefits in productivity are worth the extra cost. This is why so few people are on the minimum wage.

Thing is, two points:

a) Places like your's won't cut wages down to the bone because it'll cost them good staff.

b) We need to bring down wages all over the economy. We inflated wages too much during the boom and now need to fix things which means bringing down wages for everyone since we can't devalue our currency (which would do the same indirectly but is not an option for us).

Shea O'Meara · 21-02-2011 10:16PM

Again, minimum wage workers are private tax paying citizens. It really grates on me the way those not currently on minimum wage blithely talk of reducing it or doing away with it.

On one hand we are to cut/abolish it to help small business create jobs. On the other, can we expect these companies to raise employee salaries and/or tax to the state based on any success derived from such a move?

It is no myth that every employer in Ireland would pay as little as possible should we have no minimum wage. They wouldn't give a toss about the cost of living.

If your business cannot afford new staff, don't hire. If your business collapses, tough. Get a job for a euro an hour, should your wish come to flourishion.
That's capitalism, roll with it.

Hey, lets all work for minimum wage, at a lower than current rate so we can help the small businessman:rolleyes:

Also, why do we think big business won't avail of this?
As mentioned, even if the argument for doing it was moral and would work...it would be a drop in the ocean of the nations finances.

If your business isn't turning a profit, it's not working out. You can't change the goal posts to suit. It's not how business works.

We should abolish the minimum wage..

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