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Tag Archives: minimum wage

There’s no point in attacking Frank Flannery or indeed Angela Kerins. His argument needs to be addressed. What he is saying is that because Rehab is a private company which sells to the HSE among others, the State has no business looking into its internal affairs. The problem is that the way things are he’s right.

Let’s leave aside the question of supplying citizen services through a private company and consider implementing public policy by way of placing conditions on the awarding of state contracts. We do this already in that companies seeking state contracts have to prove they are tax compliant.

If ludicrous salaries paid within companies working for the state are to be addressed, it will have to be a condition of the contract. A condition of a state contract could be that no employee or director or pensioner of the company has an income in excess of some multiple of the lowest paid employee or perhaps the legal minimum wage or the median wage in Ireland.

It’s really a matter of deciding whether or not we want to do anything about ludicrous salaries. If we do, it will necessarily mean discussing and deciding on an amount above which we do not want our state to facilitate.

Apart from stratospheric incomes like those of the top 1%, rich people tend not to consider themselves rich or to be in receipt of ludicrous salaries. They think their pay is moderate and that they’re worth it. They need to be disabused of that view.**

They also tend to resort to “fairness” to oppose any move to reduce inequality. They argue that it would not be fair to do anything to anyone until all of those similarly situated can be treated equally. Like all forms of “whataboutery” this argument should be vigorously resisted.

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* http://www.irishexaminer.com/analysis/faith-hope-and-clarity–the-rehab-saga-276392.html#.U9DIpmjKHkg.facebook

** https://colummccaffery.wordpress.com/2014/01/16/limited-outrage-discussion-of-the-crc-scandal-avoids-the-central-problem/

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Here is Tom Lyons, Senior Business Correspondent at the Irish Times, reporting on a new league table on “competitiveness”:
http://www.irishtimes.com/business/economy/ireland-moves-up-to-15th-in-competitiveness-rankings-1.1804264

The headline reads, “Ireland moves up to 15th in competitiveness rankings”

He tells us about his source: “The World Competitiveness Yearbook is compiled annually by Swiss-based business school IMD and measures how countries manage economic and human resources to increase prosperity based on statistical criteria and a survey of 4,300 international executives.”

Here’s the problem. For citizens the debate about competitiveness has been about keeping wages low so that Ireland can compete with low wage economies. Tom’s report, however, tells us that Ireland is ranked at 15th, while China, India and Brazil are ranked 23rd, 44th and 54th respectively.

He also notes that Japan has moved up to 21st place and quotes the W.C. Yearbook: “helped by a weaker currency that has improved its competitiveness abroad”.

Clearly competitiveness is not primarily to do with low wages. Indeed it may have little to do with wages.

It might be argued that it is unreasonable to expect Tom Lyons writing for specialists in the Business and Technology supplement to explore or even mention this but “competitiveness is not primarily to do with wages” is a mere eight words. Moreover, an article could be written in the main newspaper itself advising citizens not to confuse professional measurements of competitiveness with data for use in debates about the minimum wage and other low earnings.

Michael Taft writing in Unite’s Notes From the Front reports favourably on Switzerland’s 1:12 initiative and other moves to reduce inequality of income.* This is really good stuff from Switzerland and it’s the sort of approach the Irish Labour Party and the left generally should be taking: Link top pay to the minimum wage or the pay of low paid staff members. Moreover, every initiative, every policy, every budget should be evaluated with reference to inequality of income. I might add that every cut in public expenditure should be similarly evaluated. Since 2012 this kind of equality audit has been Labour Party policy but it’s a well-kept secret and labour’s critics on the left show not the slightest interest in it.**

The notion of limiting top pay to a multiple of the lowest pay appears in the thinking of even the British Conservative Party.

I put forward an argument that the first cut in the public service pay bill should be a cap on pay and extras of 100k and a 50k ceiling on pensions. It was met with hostility to the extent that I couldn’t get my own branch or constituency Labour Party to put it on the 2012 conference agenda.*** How about now putting it to a plebiscite now?

There were other proposals. One was to call the bluff of those who said that increases in the minimum wage would close businesses especially in the hospitality industry. The suggestion was that the minimum wage would be payable only within companies whose top earning staff member or director had an income of less than, say, three times the minimum wage; all other firms would pay the minimum wage plus, say, three euro per hour. Another was that state contracts would be confined to companies whose top earning staff member or director had an income of less than, say, three times its lowest paid staff member or, say, four times the lowest paid staff member in any of its contractors.

The multiples can be debated and indeed changed periodically. The important point is that inequality of income becomes a matter of public controversy.
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* http://notesonthefront.typepad.com/politicaleconomy/2013/10/a-few-referenda-ideas-that-just-might-succeed.html
** https://colummccaffery.wordpress.com/2012/10/08/inequality-of-income-can-labour-put-it-on-the-public-agenda-and-achieve-some-reduction-while-in-government/
*** https://colummccaffery.wordpress.com/2012/05/08/prioritising-public-spending-and-reducing-income-inequality-in-the-public-sector-a-motion-which-failed-to-make-the-agenda-for-the-labour-party-conference-2012/

One of the best courses I took at UCD years ago was John Baker’s course in Political Argument. I opted to do an essay on Fairness. It turned out to be complex and interesting. Don’t worry, I won’t give details. However, I’ve lately been commenting on how “fairness” has come to be such a weasel word, used to signal virtue without saying anything very much.

This morning I heard Micheál Martin interviewed on RTE Radio and he was stressing the importance of “fairness”. Needless to say, the interviewer didn’t ask what was meant by the term. If it retains any meaning in political discourse, it now means doing nothing that would change the existing structures of economic inequality. It means that if there are to be charges or cuts, then everyone will pay and perhaps the rich will pay a little more but their income must remain so many multiples of the minimum wage.

What it boils down to is this: “I’m paid ten times the minimum wage because I’m worth it and the market says so. We live in tough times and I’m prepared to do my bit but it wouldn’t be fair to reduce me to five times or even eight times the wage of a café worker.”

Jesus wept! The interviewer didn’t even ask!!!

Leaving aside mathematical quibbles, in common speech we normally associate the middle with the average or thereabouts. However, when it comes to talking about income, the use of “middle” becomes so strange that it distorts public discussion.

Someone on, say, three times an average wage cannot sensibly claim the term “middle income”. The meaningful term is “high income” or “rich”. Those on greater multiples can be described as “very rich”, “filthy rich”, “obscenely rich” etc. etc. but NOT “middle income”.

Now, some rich people lay claim to the term “middle income” because they spend their money in a praiseworthy way (e.g. school fees, their home etc.) leaving little to spend on, say, entertainment and holidays. Such spending decisions might attract the terms, “prudent”, “sensible”, “family oriented”, but they have no bearing on categorization of income.

There really isn’t much engagement in the debate over reducing pay in Ireland. A small part of the reason is that the protagonists retreat into their terminological camps. One side uses the value-free lexicon of competitiveness and the other side emotes with reference to a “race to the bottom” in wages.

The truth is that the boom years had two parts: an internationally competitive, largely exporting part and a property boom. The former helped fuel the latter but the former ended years ago and industry has been moving to exploit cheaper labour abroad. This movement certainly is not recent.

Let’s face facts. Ireland flourished by WINNING a race to the bottom. Holding on to the jobs necessitated staying below the competition. Other than state subvention which would not be allowed under EU rules, holding on would have meant workers accepting that their income could not rise unless international competitor wages rose first or worse accepting a decrease in line with international competition.

The Irish government wants to reduce the public pay bill by 10%, about 20Bn. Discussion about how this might be done has been limited to familiar themes. The only nod to decency has been mention of leaving the salaries of poor public workers untouched but even this has been challenged as “unfair” to poor people employed by private companies. In these strange economic times why not indulge in the luxury of radical thought?

 

If we open discussion to hitherto unthinkable possibilities, it might lead us to reconsider our values. There may be a progressive but challenging way to reduce the public pay bill. Let’s consider putting a ceiling on the income of rich public employees. This course has advantages beyond reducing the total pay bill. It makes a statement about and begins to address excessive inequality in Ireland but it will make no one poor. Moreover, the conventional argument for outlandish pay, that high earners will defect to jobs in the private sector, no longer applies. Let’s calculate. How much would be saved if no public worker received in excess of, say, E200k per annum? Perhaps the number of workers that well paid is too small to make a significant saving. Let’s then calculate for 150 and 100. Going any lower might begin to push into the terrain of radical egalitarianism but 100k is more than twice the average industrial wage and five times the minimum wage.