CASE STUDY

CASE STUDY

CASE STUDY

The vulnerability of weaker sections of society becomes obvious in times of recession. Already it is clear that those who can least afford farther earnings reductions will be asked one time again to 'share the pain' in December. It is clear although, that sharing - in the eyes of the Government - is a fundamentally unequal process.The Taoiseach Brian Cowen asserted that our 12.5% corporation tax rate is 'non-negotiable'. It is interesting that such a fundamental aspect of our finances is not even up for discussion in a time when everything is supposedly on the table. Sadly, the incomes of the poorest persons in our society have yet to make it into the 'non-negotiatiable' column.

Calls for a decrease in earnings may be carefully masked, as were the reductions in social welfare payments at the last allowance (justified on the basis of a fall in the cost of living) but they can also be overt. The call for a decrease in the Minimum Wage is totally transparent and is based not on a assuring financial narrative, but rather on political expediency from well-resourced and vocal sectional interests.

Initially, the argument to decrease Ireland's smallest wage was articulated and encouraged by IBEC on the basis that we required to advance competitiveness. While there is certainly a require for the Irish finances to become more comparable and dynamic, it is disingenuous to present wage decrease as a panacea to the competitiveness problem. For instance, our Scandinavian neighbours manage to operate highly comparable economies while also maintaining relatively high and relatively equal earnings levels. Furthermore, the wage decrease argument ignores a multitude of other factors that negatively affect competitiveness encompassing underdeveloped infrastructure, high rates, chronically poor broadband and a lack of focus on research and innovation.

More lately, ISME and the catering-hospitality sector have taken up the cudgel, calling for a decrease of one Euro in the Minimum Wage on the basis of saving jobs in sectors experiencing a significant worsening in business - mainly retail services, restaurants and hotels. Holding the line on basic earnings is central to anti-poverty work, so it is heartening that a robust evidence-based argument has been evolved by TASC. The Real Cost of making a Meal in the Restaurant Sector' demolished the ISME argument for wage reductions in a sector that is dominated by reduced pay. Many of these reduced pay paid work sectors have been regulated for many years by Joint Labour Committees. These JLCs set wages and conditions in paid work sectors where normal negotiation and regulation processes are tough, so they act as a safeguard, especially in relation to defending the rights and entitlements of reduced paid employees.

Earlier in the summer, Michael Taft drafted an interesting response to Douglas McGregor's argument that wages in Muddles Corporation are unaffordable when compared to our European neighbours. Taft looked at three sectors; manufacturing, retail/wholesale, and public administration. In the case of manufacturing, Taft references clues from EU Klems Database - which measures labour costs, productivity and capital compensation ...