Minimum wage only the first step
Minimum wage commission recommends a basic £4.40 hourly
rate
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A minimum wage that rewards people fairly for their
labour is just one small step towards a more just
economic system. The proposals from the Commission are
in fact a small part of what is actually needed.
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The Mitchell Paper was not the only document rejected
within hours of publication this week. The Report of
the National Minimum Wage Commission was rejected by
the three employers organisations, IBEC, ISME and the
SFA. The centrepiece of the report is a recommendation
for a minimum hourly wage of £4.40.
``Bin this report and demonstrate your commitment to the
low-paid by elimination of the punitive tax on low
pay,'' was the reaction of Small Firms Association
chairperson Lorraine Sweeney.
The Irish Small and Medium Sized Enterprises
organisation claimed that the minimum wage proposal was
giving ``a hostage to fortune''. The Irish Business and
Employers Confederation provided the most detailed
response but still maintained emphatically that they
rejected the report and found its conclusions
``unacceptable''.
The conclusions and recommendations that the employers'
organisations found so unacceptable are included on
this page in a separate box.
Phoblacht contacted IBEC and asked them to expand on
why they had objected to the Commission's findings.
IBEC economist Aebhric McGibney explained that the idea
of a minimum wage ``sounds great, but will not affect
poverty''. He argued that some jobs ``have a low wage
value'' and asked whether workers who are now earning
only £4.40 an hour would seek wage increases after the
new minimum rate was implemented.
A statement from IBEC argued that ``Any statutory
minimum wage sets artificially-determined wage prices
and so risks pricing certain jobs out of the market''.
We asked Aebhric McGibney whether he believed that many
employers were actually setting wages below their
competitive level by abusing their powers in the labour
market? He argued that if such practices do exist the
report finds that they only apply to a small sector of
the economy.
IBEC's argument against the minimum wage is a very
simple one They believe that the 26-County economy has
prospered ``in recent times through good industrial
relations and the widespread recognition that pay rates
must be sustainable in the international marketplace''.
The proposed minimum wage rate is, they say, ``nearly
20% higher in absolute terms than is currently
applicable in the world's strongest economy, the United
States'' and ``at the very top of the European league
table''.
They believe a minimum wage will cause job losses, push
up public sector wage bills, exert pressure on the
social welfare system and fuel inflation.
However, there is a central flaw in the IBEC argument.
They have misunderstood why there is so much public
support for a minimum wage. The general public support
the idea because of an underlying recognition that the
current position in Irish labour markets is one where
there are huge inequities. There is in many cases an
absence of economic justice.
A minimum wage that rewards people fairly for their
labour is just one small step towards a more just
economic system. The proposals from the Commission are
in fact a small part of what is actually needed. The
Irish Congress of Trade Unions wanted a minimum wage of
£5 and even though a fair minimum wage is absolutely
necessary so are proper working conditions, sick pay
and pension entitlements.
The Irish employers' organisations have to decide
whether they want to remain blindly defending
inequitable vested interests and fighting each
progressive measure step by step or do they want to
participate fully in a just economy.
A vibrant competitive international economy is
meaningless if its workers are not enjoying the fruits
of its economic growth.
Wage Commission Conclusions and Recommendations summary
- That more large scale surveys of employees earnings be
carried out to assist in identifying, in more detail,
the characteristics of the low paid;
- The introduction of a National Minimum Wage (NMW) and
the level at which any rates might be set must,
therefore, be sensitive to the employment effects of
the initiative: At a minimum this should not result in
a decrease in employment;
- Claims for wage increases on the foot of the
introduction of the NMW should not be entertained;
- While the unemployed may not benefit from the
introduction of a NMW we can assume that as there is
movement between employment and unemployment those who
are unemployed now may benefit in the future;
- The Commission recommends that a Minimum Wage
Commission be established on a statutory basis with
representatives from unions, employers, government and
independent members;
- There should be a separate rate for under 18s set at
70% of the full rate and a separate training rate for
job entrants without experience regardless of age;
- To allow for an adequate lead-in time and to permit
employers to make any necessary adjustments the NMW
should not be introduced before the end of Partnership
2000. The initial rate for the NMW should be set at
around two thirds of median earnings. and should take
into account employment, overall economic conditions
and competitiveness;
- In today's terms, two thirds of median earnings would
represent £4.40 per hour. It is estimated that 23% of
employees currently earn less than this amount.
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