Minimum wage commission recommends a basic £4.40 hourly rate

     
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 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.

An 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.