SFA seeks minimum wage cut

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ivuernis

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The Small Firms Association has called for a €1 per hour cut in the minimum wage from €8.65 to €7.65 in order to preserve competitiveness in the workforce.

So, would a measure like this help the Irish economy regain some of its competitiveness or will lead to the exploitation of those workers in our society who can least afford it?
 
Theres no guarantee that any savings from cutting the min wage would be passed on to consumers in the form of lower prices. If anything, it would make many workers a bit poorer who will in turn have to cut back on their own spending, thereby further reducing consumer spending.

The SFA suggestion needs to be thought out a bit more regarding the knock-on effects.
Also, why 1Euro ? where did that figure come from ?
I'm always suspicious of nice, handy soundbite numbers.
 
Workers are currently being exploited in some areas of the economy. This has nothing to do with the minimum wage.
The real problem is not the minimum wage but negotiated wages within some sectors. I heard a builder being quoted on the radio this morning saying that his effective minimum wage is €13 per hour plus PRSI and a 10% compulsory pension payment. This means that his minimum cost per hour is over €16 per hour. In that context the minimum wage is not the problem but high minimum wage costs do have an indirect knock-on effect across the economy and this is a real factor.

People need to separate the effect that high wages have on the economy and the high cost of living that leads to high wages. Socially the two are connected but from a competitiveness perspective they are not.
 
redstar said:
Theres no guarantee that any savings from cutting the min wage would be passed on to consumers in the form of lower prices. If anything, it would make many workers a bit poorer who will in turn have to cut back on their own spending, thereby further reducing consumer spending.

The SFA suggestion needs to be thought out a bit more regarding the knock-on effects.
Also, why 1Euro ? where did that figure come from ?
I'm always suspicious of nice, handy soundbite numbers.
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The SFA make their case in the context of internationally traded goods and services. In this context it's a case of getting the work by meeting the market price or not getting it.
 
redstar said:
Theres no guarantee that any savings from cutting the min wage would be passed on to consumers in the form of lower prices. If anything, it would make many workers a bit poorer who will in turn have to cut back on their own spending, thereby further reducing consumer spending.
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I can't help thinking that this is closing the stable door after the wages horse has bolted. The continuous increases in the minimum wage over the years have fed into successive incremental increases for those on higher pay levels - increases that were in the long term unsustainable in my opinion. Reducing the minimum wage at this stage will not reverse these increases.

There is no way that the likes of Tesco, Dunnes, Woodies etc will get away with cutting the wages of existing staff by €1 per hour. It might incentivise them to replace the natural wasteage of existing staff on (comparitively) higher wages with new staff on a lower minimum. Or it might incentivise them to make large numbers of existing staff redundant, not a pretty prospect at all for those concerned.
 
it must be nearly impossible to live on the minimum wage with the price of everything going up....its always the weak that seem to get it in the neck.
 
ivuernis said:
The Small Firms Association has called for a €1 per hour cut in the minimum wage from €8.65 to €7.65 in order to preserve competitiveness in the workforce.

So, would a measure like this help the Irish economy regain some of its competitiveness or will lead to the exploitation of those workers in our society who can least afford it?
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Don’t worry they’re just posturing, it’s not unlike the unions demanding a 10% pay increase. After a month or two they’ll meet somewhere in the middle
 
It's a non-runner. As someone said, the SFA are postering but I think they could spend their time looking for other changes other than reducing the minimum wage. Employers PRSI contributions could be reduced? What about making more small firms VAT exempt by increasing the threshold? Other things could be looked at such the reasons for higher insurance costs for businesses here compared to other Countries. Energy and water costs need to be looked at. I think the minimum wage is an easy target but it is the wrong one.
 
Would'nt it be more in line to keep everyday expenses like ESB, insurance, fuel etc down for both the business and the householder, its hard enough for people to survive on wages as it is - do they want to increase the dole no's or have a nation of workers...
 
NHG said:
Would'nt it be more in line to keep everyday expenses like ESB, insurance, fuel etc down for both the business and the householder
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This is utterly unrealistic. How does the Government keep these costs down when fuel and energy costs are rocketing worldwide and the insurance industry internationally is facing a serious slump in profitability due to the collapse in equity values, at the same time that the Government's own tax receipts are facing potentially disastrous shortfalls?
 
The ESB looking for (and getting) an increase and reported €432m of a profit for 2007... The suggestion of the minimum wage being cut is crazy...
 
Sunny said:
It's a non-runner. As someone said, the SFA are postering but I think they could spend their time looking for other changes other than reducing the minimum wage. Employers PRSI contributions could be reduced? What about making more small firms VAT exempt by increasing the threshold? Other things could be looked at such the reasons for higher insurance costs for businesses here compared to other Countries. Energy and water costs need to be looked at. I think the minimum wage is an easy target but it is the wrong one.
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This is where we should be looking to make cuts - leave the minimum wage alone, its probably inflated but nowhere near as inflated as the cost of living.
 
There is no way the min wage will be altered. In fact, there is little likelyhood of any potentially upsetting decisions being made. Our politicians have never been leaders in this regard.
The reality will be a long term erosion of purchasing power through inflation and wage freezes, lasting the next 4-5 years and thus bringing us back more in line with European prices and wages - the slow and easier way (for government) to correct wages and high prices.
 
uiop said:
It's exploitation if you ask me. It would make more sense for someone on such a minimum wage to go on the dole and work in the black economy and get 12 hours sleep a day than to stress for a pittance and pay for travel costs (obviously someone on such a wage wont afford somewhere central thereby commuting for hours every day) and lunch costs out of this. Just add up the price of a sandwich every day or a packet of tayto. In a shop near my work a packet of tayto is 80 cents for god sake. I bought a pack of 20 Tayto in Dunnes for just over twice that. I'd be against paying someone such a degrading wage as it would only produce a more unequal society. As Purple said (if I read Purple correctly) its the benchmarking fiasco which is getting us into this mess and also in my view the greed and high cost of property forced everyone to be again serfs to landlords and driving up the cost of everything. How is someone supposed to start a business or employ anyone if they cant afford premises or paying most of your income on rent. No matter how good your idea is, straight away youre screwed . I think shops which have had way too high prices for years can find savings elsewhere before we even look at paying someone a subhuman wage. Just my two cents.
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I do not for a minute accept that it is exploitation. Only about 5% of the population are on the minimum wage and I strongly suspect that the vast majority of those are not running a home on that wage. If they are they are entitles to income support etc so the suggestion that they are commuting from the outer suburbs in their droves just doesn’t stack up.
That said the fact that so few are on that wage means that is does not really factor on the list of things that have caused our lack of competitiveness. I agree with ubiquitous that this is a case of closing the door after the horse has bolted.
What does need to be addressed is pay increases in the public sector and other protected sectors like semi-state bodies and state run monopolies. The construction sector has been the main culprit driving wage inflation over the last 10 years but as it’s part of the open economy it is self-correcting.
As land and building values drop insurance and rent should also drop. This will help to reduce inflation and improve our competitiveness.
 
The uncontrolled and unchecked property boom was the primary driving force behind the boom economy. Whatever happens to construction sector, it won't correct the massive mortgages and resulting cost of living, it has left in its wake. You won't see the developers & builders who have made millions, being asked to give 5% back. No its the person on minimum wage or the social worker. Nice.
 
You won't see the developers & builders who have made millions, being asked to give 5% back.
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Is there any need to ask them? I doubt there's anyone in the building industry who's not earning significantly less than in previous years. Even some of the guys at the top may be finding themselves fighting bankruptcy.

There's no way we can simply reduce minimum wage as the SFA have asked (provocatively I assume), it will have to be brought into mid EU table levels over the next 10 years or so via painfully small increases.

While it's nonsense to ask it to be reduced it was also less obviously nonsense to have it increased above inflation in the boom years by politicians who'd clearly no idea of the effects of their "generosity". They boasted about the minimum wage level, they may as well have boasted of having a high cost economy.

Highest politician pay and highest minimum wage, two neat brackets surrounding the government side of the wage bubble.
 
ashambles said:
Is there any need to ask them? I doubt there's anyone in the building industry who's not earning significantly less than in previous years. Even some of the guys at the top may be finding themselves fighting bankruptcy.
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After 10 yrs of making money hand over fist I think a lot of them can afford to tighten their belts a lot more than low paid workers, who have been low paid over the past 10yrs. Ditto theres a lot of low grades in the public sector, who earn very little.
 
aircobra19 said:
After 10 yrs of making money hand over fist I think a lot of them can afford to tighten their belts a lot more than low paid workers, who have been low paid over the past 10yrs. Ditto theres a lot of low grades in the public sector, who earn very little.
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Very few people are on the minimum wage (as of 2005 it was under 4% here whereas it was 16% in France). Of this small percentage the majority are young and/or casual workers. The idea that there are anything more than a handful of households in Ireland where the main earner is on the minimum wage is nonsense so viewing it in those terms is spurious.
 
It is also nonsense to suggest that any significant number of people have been on the minimum wage for 10 years.
 
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