Go For It, Eamon, You’re On To a Good Thing 1: The Extent of Low Pay

Last week the Labour Party leader, Eamon Gilmore, TD, made the first tentative steps towards putting the party on the economic policy ‘map’ in his speech before the SIPTU National Executive. Tentative, because his speech didn’t break any new ground that he hadn’t addressed before (higher education spending, tax incentives to high-tech investment, retraining construction workers, etc.). Nor did he put forward an over-arching framework but that is not surprising; Labour and the Left has to do a lot of economic homework before it can start putting forward ‘frameworks’.

But there is one issue he has been touching upon of late, an issue which, if aggressively pursued, can unlock a lot of ‘policy’ doors, help lay the foundations of an alternative economic critique and (and party leaders always love this) become politically popular. And that is the issue of low pay.

Mr. Gilmore stated to the SIPTU executive:

In the US the change in the distribution of income between 1980 and 2004 means that the top 1% of income earners is now $640 billion dollars better off, at the expense of the bottom eighty per cent. One US study last year found that a CEO in a Fortune 500 company can expect to earn as much in one day as the average American worker does in a year. It was interesting to see the issue of pay has become part of the US presidential contest this week. It has also been looked at in France, Germany, and a number of other European countries. I think it should be an issue in Ireland too.

Yes, it should become an issue in Ireland. It should become a leading issue. It is an issue which only the Left can benefit from. It is our issue – and it affects hundreds of thousands of people. It can – along with other platforms such as universal health insurance, educational investment, family issues (childcare, family leave, community and nursing home care) – become a breakthrough issue for the Left. Quite literally, it can become a winner.

I discussed previously the relatively low incomes of the vast majority of people (even that famed ‘middle-income group’ which doesn’t come in much higher than low-income groups). The CSO’s recently-published National Employment Survey throws up even more insights into the general level of pay. This allows us to assess the extent of low-pay. There are two key figures to keep in mind. 

Let’s first focus on the median wage - that level where half of employees earn more than this amount and half earn less. 50% of all private sector workers earn below €13.82 per hour. This half-way point is a staggering 29% below the average national wage. This tees up our second statistic.

The EU’s Low-Pay Threshold (it’s called the ‘Threshold of Decency’ by the Council of Europe), is a little over €11 per hour. Below that amount, you are officially low-paid (the Threshold is 2/3 of the full-time median wage). While the CSO data doesn’t provide the detail to assess precisely how much of the workforce is low-paid, it does show that in the private sector 23% earn below €10 per hour – which is well below the threshold.

These are ‘very low-paid’. Extrapolating from the data, we can reasonably estimate that approximately 31% - or nearly one-in-three employees – in the private sector are officially low-paid.

This one-in-three figure, if anything, probably underestimates the number of low-paid. The CSO data excludes wages in very small enterprises (less than three employees) which, on average, pay less than larger enterprises. Furthermore, the data excludes wages from the agricultural, forestry and fishing sectors where, again, wages are lower than average.

In any event, it should be noted that earning 10% above the low-pay threshold is no great shakes. It only amounts to an extra €44 per week – and that’s before tax. You wouldn’t get much change out of a film followed by a couple of pints with your lover on that extra amount.

There are, of course, particular sectors which are especially vulnerable to low wages.  50% of young workers (below the age of 24) earn less than €10 per hour. For women in the Sales sector, it’s €10.35, while 50% in the overall Sales sector still earn below the EU-Low Pay threshold. In the worst sector for pay – the hospitality sector – up to as much as 60% can be officially categorized as low-pay.

It isn’t surprising that women, young people and workers without a Leaving Cert are the most vulnerable. But we should keep in mind that one-in-three of all workers in the private sector is officially low-paid. Irish employers are striving to provide equal-opportunity exploitative wages to all – without regard to age, gender or race.

It’s hard to be precise about the total number of low-paid but, again, we’ll extrapolate. Granted, this an extremely crude extrapolation. But upwards of 500,000 people are low-paid or just above the threshold (the nearly 300,000 earning €10 or below is a hard number provided by the CSO). If I’m off by a few thousand, it still doesn’t change the picture.

That is a sizeable social sector. That is a lot of households affected by low-pay. Some may argue that a considerable number of these people – especially young people – are living in well-to-do households and they work for pocket change; ergo, we don’ have to worry about them. But when 70% of households earn less than the average household income, when the average income from work for that vast middle income group comes to only €572 per week – that nonchalant argument only goes so far which is not very far at all.

In my next post I’ll examine the strategies and campaigns the Left can pursue to both raise this issue up the agenda and provide concrete solutions. But I’ll leave the last word to the Dublin City Council. In 2006 they passed a motion put forward by the indefatigable Cllr. Eric Byrne (and which was vehemently opposed by Labour’s erstwhile coalition partner – Fine Gael). Part of that motion, which is now the official position of Dublin City Council, reads:

‘An alarming number of workers in Dublin and Ireland suffer from low-wages and that such low-wages are a threat to the prosperity and public welfare of society;

As a consequence, many workers cannot participate in civic life or pursue educational, cultural and recreational opportunities because they either do not have the income or because they must work such long hours in order to meet their households’ most basic needs;

There is a substantial social cost associated with the phenomenon of low-pay and the resulting denial of full participation in civic and economic life;

All democratic-elected authorities and public agencies should play a vital role in ensuring the public welfare and that public welfare requires adequate wages and benefit to ensure a decent and healthy life for workers and their families . . . ‘

Yes, Dublin City Council is correct: low wages are an economic and social crime.

Comments

[WorldbyStorm]

I always worry that the trend in contemporary politics is that speeches like this whicha re good from EG, are made specifically to the audience they're given to and don't constitute a broader progressive agenda. I'd hope he'll demonstrate otherwise. I think the way that the LP ignored the Phil Hogan stuff in the Dáil was heartening, perhaps they realise there's more to dealing and engaging with Irish society and a left agenda than that sort of nonsense...

[Michael]

Hopefully.

[Chris Bond]

Yep theres something wrong when Barack Obama and Hillary Clintons rhetoric is more challenging to the status quo in their country than the Labour partys rhetoric is in this country. We need to move away from consensus on competitiveness taxation and wages, and start to frame the debate ourselves.