Is it time for wage increases?

TheBigShort said:
According to OECD Ireland, after the US, has the highest percentage of low paying jobs in the world.

http://www.thejournal.ie/ireland-has-a-lot-of-low-paying-jobs-1696421-Oct2014/#comments

Is it time for wage increases?
Click to expand...
The data is 4 years old and refers to percentages, not actual income.
It tells us that there are large gaps between the highest paid and the lowest paid. That is a reflection of the large skills gap between the highest paid and the lowest paid, not what the low paid actually get in their pay packet. If you want to be paid more then make yourself more valuable or, in this country, get handouts from your neighbours through the tax they pay.

The "problem" of pay (labour value) disparity is balanced out by the fact that we have just about the most aggressive income tax system in the world which punished hard work and high skills by taking from the those who are skilled and work hard and giving to those who are unskilled and don't work hard.

You seem to think paying low skilled people more is a good thing. Why?
 
Of course, we have very low tax and PRSI on low earners, so their net wages tend to be higher than other countries.

Tax rate indicators on low wage earners, 2015 (%) YB17.png

 
Low-wage earners
Low-wage earners are defined as those employees earning two thirds or less of the national median gross hourly earnings. Hence, the threshold that determine low-wage earners is relative and specific to each Member State.

One in every six employees in the European Union is a low-wage earner

 
Net earnings and tax burden


Tax wedge
Information relating to the tax wedge measures the burden of tax and social security contributions relative to labour cost. This information is provided in relation to low-wage earners. The tax wedge for the EU-28 was 38.4 % in 2015 (see Table 1). The highest tax burdens on low-wage earners in 2015 were recorded in Belgium, Hungary, Germany, Austria, France, Italy, Latvia and Sweden (all above 40.0 %). On the other hand, the lowest tax burdens for low-wage earners were recorded in Malta, Ireland and the United Kingdom (all below 30.0 %).

The other three indicators presented in Table 1 provide information on the proportion of gross earnings that is ‘taxed away’ (higher tax rates and social security contributions and/or reduction or loss of benefits) when people return to employment or move from lower to higher incomes. In 2015, the overall proportion of income ‘taxed away’ when an unemployed person moved into employment stood at 74.0 % in the EU-28 (76.5 % for the euro area). The highest rate was recorded in Belgium (92.0 %) whereas the lowest was in Slovakia (44.7 %).

The UN trap seems to be the tax on moving from unemployment into a job, combined with loss of benefits.

The "low wage" trap is also known as the poverty trap, the extra tax on extra income, combined with loss of benefits.

For low wage earners seeking higher incomes a higher proportion of their earnings would be ‘taxed away’. In the case of a single-earner married couple with two children, the low wage trap was recorded at 59.8 % in the EU-28 in 2015 (58.0 % for the euro area), with the lowest rate observed in Italy (5.2 %) and the highest rates in Luxembourg (105.8 %). By contrast, in the case of a single person without children the low-wage trap for the EU-28 in 2015 stood at 44.6 % (44.9 % for the euro area); the highest rate was observed in the Netherlands (75.2 %) and the lowest in Bulgaria (21.6 %) and Greece (21.7 %).
 
Purple said:
You seem to think paying low skilled people more is a good thing. Why?
Click to expand...
The same question can be asked of you though; why is low skilled people the same or less is an inherently good thing? But personally I think have the discussion this way is somewhat pointless, if you ask a few different people the question you'll get different answers, same as you do when you ask should we pay less, the same or more tax, should or shouldn't the government provide a health service etc. It tends to be based on subjective opinion rather than taking a look at the facts.

I think a more relevant and productive question, from a discussion point of view, is what do you think the minimum standard of living for Joe Public working a low skilled job should be, then go from there on where wages should be, what taxes should look like, how house prices should ideally look.
- Should Joe (or Jill) be able to support their spouse and say two kids on a single income to allow the kids to be raised by one of the parents? For me, ideally yes, certainly two parents commuting an hour each way and working 8 hours all their children's life is not leading to the best outcome for those childrens' interactions with society in future.
- Should Joe be able to purchase a home and expect to have it paid off by the time he reaches retirement? For me, yes.
- Should Joe be able to purchase a house in the capital city and have it paid off by the time he reaches retirement? Absolutely not for me.
- Should Joe only be able to afford a house 2 hours commute from his job? No for me.
- Should Joe be able to put a few quid aside beyond the state pension? For me, ideally yes.
- Should Joe be able to afford a family health insurance policy or is relying on the public system OK? For me probably not.
- Should Joe be able to afford to put away money to save for one budget family holiday a year, maybe to Spain or somewhere like that? For me yes.
- Should Joe be able to buy a brand new car every 3 years? For me no.
- Should Joe be able to build up a rainy day fund of 6 months income over a 5-10 year period. For me yes.
- Should Joe expect to see higher-skilled workers etc. driving around in nicer newer cars, living in the affluent city centre and earning multiples of his earnings because of that extra skill level? For me yes within reason.

Some of this is surely pie-in-the-sky, I get that, but I'd love to hear from those that think lower income earners should be paid less and contribute more tax, and whether they also feel that 'no' is the right answer to all those questions and are comfortable with that. Because with a median income of what, €25-28k, the answer will need to be no to most of the questions...
 

I'm broadly in agreement with you here but the follow on question is should the cost of that social burden be placed on the employer or should society, through taxation and income redistribution, level the playing field.
In general I do not think that any employer should be forced to pay anyone more than the value of their labour. Otherwise it is just a form of stealth taxation on the employer.
If that person cannot then have a reasonable standard of living then that's where social transfers come in. There was a time when men were paid more than women for the same job. Thankfully that doesn't happen anymore. There was a time when married men got paid more than single men. Thankfully that doesn't happen anymore either.
I accept that some social transfers can act as a form of employment subsidy but high minimum wages and wage increases based on broader social engineering desires are not the answer.
 
I think having a minimum wage is a good thing, but I agree that working towards improving inequality will not be solved with it, it's just there as a floor. So I would not be suggesting that employers (as I am myself) should just be forced to put up wages across the board.

I wouldn't really be in favour of going too much further down the social transfers route either. I don't think it's a good thing for society for there to be a large cohort of people who feel they are getting handouts and aren't necessarily earning their income, or for all the other people who watch this happening and feel they are supporting these cohort.

Having recently read Capital in the 21st Century (cannot recommend it highly enough!), it is clear to me that the balance has shifted too far from labour and towards capital, favouring those who already have wealth. So while I definitely would not want to see wages forced up across the board (which would crush smaller business, less profitable businesses etc.), I think something that ensures employees of businesses that are profitable share equitably in that success would be one solution. FWIW I am fairly strongly opposed to unions, so I'm by no means suggesting that route!

The next piece for me then would be to try and shift taxation towards capital (wealth), with less focus on income. As the book lays out very well, the more capital you have the more money you can make, which has only one possible outcome - the further concentration of capital. And those earnings come from only one place, labour. So take a larger and larger share of those earnings and labour sees a smaller and smaller share, ultimately keeping Joe Public on a smaller salary than he needs to live the life we'd like him to be able to live.

Again I know this cannot be fixed easily and there are loads of really big challenges, but I'd love to see more discussion about this and less about how he thinks taxes/wages/benefits should be higher, she thinks low and the other guy is happy where they are...
 
Zenith63, I agree with all of that, particularly the shift from taxing labour to taxing capital.
I also agree with ensuring that everyone benefits in a profitable company. A personal goal of mine where I work is to have everyone who is there more than two years earning a minimum of €30,000 a year. That should be achieved by running the company in a very efficient manner and training and investing in the employees so that their labour is worth €30,000 a year, not by just paying them more than they are worth.
 
Last edited:

Joe should look at the market and figure out how he can upskill for work that pays more!
 
Firefly said:
Joe should look at the market and figure out how he can upskill for work that pays more!
Click to expand...
That's sort of missing the point.

There are always Joe Publics out there upskilling and moving up the value chain, then another Joe comes along and takes that low-skilled piece of work. The point though is that there's always a Joe in that low-skilled work, because the low-skilled work doesn't go away when somebody moves up. So for the purposes of this discussion, lets assume that the Joe in question actually started out on minimum wage and has worked really hard, upskilled himself as much as he is possibly capable of and is in this median-paid relatively low-skilled job.
 
I'm glad you recognise that someone on low skilled income works their way up. Some people round these parts seem to think that it's a permanent outcome no matter what!

It's a difficult one for sure as it's all subjective and for each individual / family there could be a million factors at play.

At least with the market, they can get what they can afford, and you'll usually find, where the government gets out of the way, someone will provide a service / product at most price points. Walk into DFS and you'll get a cheap and cheerful sofa, go around the corner and you'll find a sofa maker charging a lot more for something bespoke.
 
That Joe is the person who should be in social housing near where he works/ grew up/ where his family infrastructure is. Unfortunately the home which could be provided for him is occupied by someone who is willfully unemployed/underemployed. That means that Joe has to buy or rent an hour from where he works. What should happen is the person who doesn't work is given a social house an hour away and Joe is given the house locally.
 
I don't think the government should be providing social housing to every Joe Public on or below the median wage, that's half the working population and puts us well on track for some sort of bizarre form of socialism. Surely the aspiration here should be that somebody on or around the median income should easily be able to afford to buy a home in their lifetime?
 
Are you suggesting the wealth inequality we're seeing is being caused by people spending beyond their means? There are certainly lots of cases of people who could improve their circumstances by not smoking, gambling, drinking, buying a new car every three years, but they're choosing that path and are in the minority of the people we're talking about I think.
 

I would agree. I think that buying a house near a large urban centre is becoming more and more difficult for the lower paid.
 
You must log in or register to reply here.
Menu
Log in
Register