Minimum Wage Increase

[Purple]

The National Minimum Wage is to increase to €12.70per hour from the 1st of January.
While this looks like a measure to tackle poverty it isn't. Most people who earn the minimum wage live in middle to high income households and social transfers are a much better way of dealing with poverty.

What it will do is cause more wage inflation across the economy, particularly in the services sector which employs a large cohort of the low skilled, low value adding, low paid part of the workforce. This in turn will cause inflation in that sector and make middle income people feel poorer.

In some sectors it will make low skilled people unemployable because their economic value is less than €12.70 an hour.

Edited to correct the by error saying that the new hourly rate was €11.30.

 

[Mrs Vimes]

Not to disagree with your point @Purple, but the minimum wage is increasing to €12.70 per hour

 

[joe sod]

There is large segment of the work force on not that much above the new minimum age maybe 15 ,16 euros an hour working for the multinationals. However they might be commuting to do this so incurring high transport expenses. Some of those could make the calculation that they are better off now getting a lower paid job closer to home given that the new minimum wage at 12.70 euros. The multinationals employ an awful lot of blue collar workers, most are not the high skilled Google techies
The multinationals are in a retrenchment phase now trying to cut their cost base, they are not up for giving large pay rises to blue collar workers because the government has increased the minimum wage so much.
The government are not reading the room regarding the multinational appetite for paying the ever increasing cost basis in Ireland.
The intel chief shot across the bow of Leo varadker at the fab34 opening when varadker said that this proves intel is here for decades, he quickly retorted but ireland needs to compete for every future investment. I believe getting fab34 completed turned out to be a nightmare for intel

 

[Purple]

Most people getting paid the minimum wage are young and/or part time employees.
Most of them are not blue collar jobs, rather they are in retail and services. The knock-on impact on wage rates is the big issue.

 

[joe sod]

Most people getting paid the minimum wage are young and/or part time employees.
Most of them are not blue collar jobs, rather they are in retail and services. The knock-on impact on wage rates is the big issue.

But the minimum wage now at 12.70 is now close to what many blue collar workers earning in logistics, cleaning , retail etc. There is a huge swath of the Irish workforce earning 30 to 40k , that's 15 to 18 euros per hour. So the minimum wage is now approaching those wages. The median wage in Ireland last year was 40k so that bears this out. The politicians and talking heads love quoting average salaries which is distorted by very high salaries earned at the top level in tech and by the public sector, it also does not include part time workers like women etc

 

[Purple]

But the minimum wage now at 12.70 is now close to what many blue collar workers earning in logistics, cleaning , retail etc. There is a huge swath of the Irish workforce earning 30 to 40k , that's 15 to 18 euros per hour. So the minimum wage is now approaching those wages. The median wage in Ireland last year was 40k so that bears this out. The politicians and talking heads love quoting average salaries which is distorted by very high salaries earned at the top level in tech and by the public sector, it also does not include part time workers like women etc

Exactly, so now all those people on 15 to 18 euro an hour will want a pay increase, and so on up the line until everyone gets a pay rise and nobody is better off.

 

[joe sod]

Exactly, so now all those people on 15 to 18 euro an hour will want a pay increase, and so on up the line until everyone gets a pay rise and nobody is better off.

Yes and this could be a problem for jobs in that then these become too expensive for employers and they reduce their headcount. Because politicians and talking heads are all on large salaries and have never worked in normal jobs , jobs that are not WFH and are a few euros above the minimum wage, they think that this will have no consequences.
Maybe because they gave so much away in welfare payments they thought, oh we have to raise the minimum wage or people will quit their minimum wage jobs and go on welfare . A raise to 12 euros minimum wage and a 6 euro welfare increase should have been the rise

 

[Purple]

Yes and this could be a problem for jobs in that then these become too expensive for employers and they reduce their headcount.

Where I work we've reduced our headcount by more than 20% by investing in Robotics and automation.
The return on investment was 5 months. Soon it will be less. This, along with the shambles the State has made of what used to be a good apprentice training system means that we import skilled employees and automate out the low skilled locals.

 

[Protocol]

Here is some earnings data:

 

[Protocol]

Weekly earnings data:

 

[DazedInPontoon]

In some sectors it will make low skilled people unemployable because their economic value is less than €12.70 an hour.

I guess this won't be a problem for long as the *real* value of €12.70 continues to decrease.

 

[cremeegg]

@Protocol

2022 median annual earnings male €45,537
2022 median weekly earnings male €741.86

€741.86 times 52 weeks is €38,576 (not €45,537)

Am I missing something ?

 

[Purple]

I guess this won't be a problem for long as the *real* value of €12.70 continues to decrease.

What do you mean?

 

[Protocol]

It could be something to do with the comment below.

Only employees who work more than 50 weeks are included in the annual data.

 

[joe sod]

It could be something to do with the comment below.

Only employees who work more than 50 weeks are included in the annual data.


View attachment 8057

do they say then how many workers were actually included in this statistic, the size of the dataset they used?
I had a look at the cso methadology there now,
under section "survey size" it has N/A, surely they should publish the actual size of the data set, why would this be Not Applicable , it is crucial to any important statistic the size of the data set used given that the work force is 2.4 million workers?

 

[Purple]

I suspect that most people on the minimum wage are young, working part time, and do not have other major financial commitments.

 

[joe sod]

Just 11.4% of minimum wage workers in Ireland at risk of poverty

New report finds Ireland has the highest percentage of highly educated minimum wage employees

www.irishtimes.com

In this article, old one where minimum wage was 10.30 euros, and 10% of employees were on it, and ireland had the highest proportion of workers on minimum wage that were third level educated in Europe.
However this is based on self reporting that you are on minimum wage rather than hard data.
All in all the cso is lacking in proper data of how many workers are earning what wage and the distribution of wages in the workforce. Surely this is crucial data that they should be publishing.
I pointed above that the mean and average wage calculation is lacking in the details of how many workers were used in the statistic. It says NA when you look for this on the cso website

 

[Purple]

In this article, old one where minimum wage was 10.30 euros, and 10% of employees were on it, and ireland had the highest proportion of workers on minimum wage that were third level educated in Europe.

That suggests that increasing the minimum wage as a method of reducing the risk of poverty is 90% ineffective.

 

[joe sod]

That suggests that increasing the minimum wage as a method of reducing the risk of poverty is 90% ineffective.

I suspect that there are an awful lot more than 10% on minimum wage or a euro or two above it especially now that it has been raised to 12.70 euros. The self reporting statistic is bound to be understated in that for pride reasons people would not admit to being on minimum wage if asked in a survey

 

[Purple]

I suspect that there are an awful lot more than 10% on minimum wage or a euro or two above it especially now that it has been raised to 12.70 euros. The self reporting statistic is bound to be understated in that for pride reasons people would not admit to being on minimum wage if asked in a survey

That's the point though, isn't it. People with a low economic value risk being priced out of the labour market if the minimum wage gets too high. It's also inflationary.