The Living Wage is now €11.70 per hour, which means that is how much a single person would have to earn if he or she was working 39 hours/week in order to afford a minimum essential standard of living. Unlike the national minimum wage, which is a legal requirement, the Living Wage is a standard that is calculated on the basis of the actual cost of living, with prices checked in regular shops and services across Ireland.
The national minimum wage of €9.25 is significantly lower. If a person works 39 hours for €9.25, he or she will have a gross pay of €360.75 at the end of the week, but will actually receive €333 per week after tax and social insurance is paid. Someone on the Living Wage working 39 hours would have gross pay of €456.30, which is €401 per week after tax and social insurance. The difference to the worker and to the employer is significant.
The worker receives €68 per week more on the Living Wage compared to the minimum wage. That is small beans to many Irish people, but a huge difference to those who are working full-time but still experiencing material deprivation. The extra cost to the employer is €95.55 per week in gross pay, and a little more in employer's social insurance too. It is understandable that small retailers find the idea of the living wage challenging. But failing to pay a living wage to people raises major questions about our economy and the assumptions that we make about what is fair pay.
The cost of living in 2017 is higher, largely due to rents. Food and clothing are probably cheaper than ever (although the lack of decent working conditions abroad contributes to this). The actual cost of living at the margins is typically rising faster than the consumer price index (CPI), yet policy decisions like the minimum wage seem to get informed by the CPI rather than the real evidence of living costs, which can be seen item-by-item on budgeting.ie.
The Living Wage is frugal by most people's standards: 2 litres of milk per week, 3 eggs, a jar of coffee every six weeks, and so on. It does allow for fresh food and healthy portions of fruit and veg, and it also allows for 'social inclusion', which means meeting a friend for coffee once a week and downloading a song from itunes every few weeks. The minimum wage is significantly lower, which implies that a single person on the minimum wage is forced to experience deprivation or else to work far in excess of full-time hours. (Whereas the reality is that many low wage workers can't even get regular, full-time hours from their employer).
The social welfare system in Ireland has been re-focused on 'labour market activation' and pushing people to take up work, with training and upskilling assistance from the new Intreo offices and other agencies. There are good reasons to encourage higher employment. But many people may assume that the national minimum wage (paid by many of the jobs people are being pushed into) is based on evidence of the cost of living. It isn't, and the €2.45 gap between the minimum wage and the Living Wage demonstrates this.
In theory, social welfare does not support workers as this would be a subsidy to the employer. When children or adult dependents are involved, low wage workers can get welfare supplements. However these typically fall far short of the extra costs associated with dependents. The Living Wage webite also includes information on typical family income requirements.
Dublin City Council has launched a plaque scheme, where employers can display a Living Wage plaque if they pay their workers and contractors accordingly. (More info on Dublin City Council's website, and The Irish Times).
Dr Nat O'Connor @natpolicy
Nat O’Connor is lecturer in social policy in UCD’s School of Social Policy, Social Work and Social Justice and part-time policy specialist at Age Action Ireland. Previously Director of TASC, Nat also led the research team in Dublin’s Homeless Agency.
He has taught politics and social policy since 1999. He has a PhD in Political Science from Trinity College Dublin and a MA in Political Science and Social Policy from the University of Dundee. He is a Fellow of the Higher Education Academy (UK), a member of the National Economic and Social Council (NESC) and chairperson of the Irish Social Policy Association (ISPA). You can find him on LinkedIn (natoconnor) and TwitterX @natpolicy
Share:
