I am so at home in Dublin, more than any other city, that I feel it has always been familiar to me. It took me years to see through its soft charm to its bitter prickly kernel - which I quite like too.

The Low Pay Trap

 

Marie Sherlock writes: Looking from the outside in, Ireland is a paradox of plenty. Despite the havoc wreaked by the pandemic, our economy expanded last year by almost 13.5%. Our national income grew just below that figure, and that was still a huge rise of €32.8 bn in just twelve months. Despite the enormous and entirely justified cost of having to subsidise workers and workplaces, the state’s borrowing agency, the NTMA, forecast that they will need to borrow less over the 2021-2025 period than over the previous 2017-2020 period. These are years that include some of the fastest growth in the history of the state. During the same period, the total volume of household savings grew substantially, with the value of deposits in Irish banks rising by €30 bn in the twelve months to February 2022.

Despite all of this, there is poverty in this country ‑ a growing poverty induced by the enormous cost of housing, in which low-income workers will be permanently reliant on the private rental market, a hardship caused by the lack of affordable childcare, which is causing some families to reduce their hours or leave employment. There are recent forecasts by the ESRI that see fuel poverty rising to over 903,000 or 43 per cent of all households if fuel costs rises by a further 25 per cent (Barrett, Farrell and Roantree (2022), Energy poverty and Deprivation in Ireland, ESRI, Dublin. While many see the problems of this country relating, in the main, to the high cost of living, what is all too often overlooked is that Ireland has an exceptionally high number of people working in low-paid employment.

The latest available data from the CSO’s 2019 Survey of Income and Living Conditions tells us that 22 per cent of all workers in this country can be classified as low-paid. One in five of all men are low-paid but what is more shocking is that almost a quarter of all women workers are in low pay. Some 24 per cent of women earn less than two-thirds of median earnings per hour. Furthermore, we know that 32 per cent of lone parents are in low-paid employment compared to just 16 per cent of two-parent households.

The obvious question is why are the rates so high among women and lone parents? There is a significant link between part-time work and low pay. Women are almost three times more likely to be in part-time employment in this country than men and we have to look to the very high cost of childcare combined with the patchy availability of flexible working conditions across sectors to explain why so many women are in part-time work.

Given what we know from the economic research about the low-paid traps that so many of these workers find themselves in and the so called “stickiness” of low wages, there is an enormous challenge in trying to overcome low pay in this country.

As the Irish Human Rights and Equality Commission succinctly put it, “work is core to people’s livelihood, their identity and their well-being. (McGinnity, Russell, Privalko and Enright (2021), Monitoring Decent work in Ireland, IHREC, Dublin). Secure, decent employment has a fundamental role in providing dignity and autonomy to people’s lives in enabling them to provide for themselves and their families.

In recent years, attention has rightly been given to the rise of precarious work, the use of if and when contracts and zero hour contracts and the appalling insecurity associated with those conditions. But it would be a mistake to believe that low pay and in work poverty are confined to those workers. The CSO’s labour force survey data from 2019 tells us that 65.2% of all national minimum wage employees are in permanent employment. Furthermore, we know from that same survey data that 22 per cent  of minimum wage workers are on that rate for four or more years. This puts paid to any notion of the minimum wage as a labour market entry wage or stepping stone to better wages.

I recently stood with a group of workers on a picket line on their first day of strike. Many described the frustration of having received no pay increase in fourteen years and how no one is willing to take responsibility for their pay (the government insist it’s the responsibility of the organisation which employs these workers, but the organisation itself is funded by the government to provide disability services). One worker took me aside. She wanted to confide that she had spotted two of her colleagues with their kids one evening outside the GPO. They were queuing for food and their mortification upon being spotted was horrendous. These were two workers on full-time hours, in secure employment and with significant years of service for a state-funded organisation.

With employment at all-time high and with apparently severe labour shortages in hospitality and in construction, there is a simplistic notion that it is a worker’s market and that workers can command their rates of pay. That mistakenly assumes that workers have high levels of inter-sector mobility. The evidence suggests otherwise. For those working in the care sector, the workers referred to above and others remain in their jobs because they hugely value the work they are doing in caring for the most vulnerable, even when the state and society does not.

It is also important to highlight that the key difference between the low-paid workers cited above and the majority of low-wage workers is that at least the careworkers were in a trade union and could take a stand and in time hopefully collectively bargain for better terms and conditions. Low-paid work is heavily concentrated in the retail, hospitality, care and leisure sectors, where for the most part, union density is extremely low and not helped by the absence in this country of a right to be recognised for collective bargaining purposes. This goes to the heart of why we have such high levels of low pay in Ireland. There is a fundamental imbalance of power between workers and employers.

The EU’s Directive on Adequate Minimum wages is hoping to change that and if enacted in the full spirit and intent which EU Commission president Ursula von der Leyen has set out, it could be a game-changer for low-wage workers in Ireland. It will force countries like Ireland to put in place a framework to ensure collective bargaining of wages within sectors. Unfortunately sectors like hospitality and retail have bitterly resisted any attempt to come to the table in recent years to form what are called joint labour committees. These were originally established in the 1940s to agree wages and conditions between employers and unions. If low-paid workers are to have any hope of dignity and decent working conditions, enabling them to bargain for their wages will be the single most important measure.

1/7/2022

Marie Sherlock is the Labour Party’s spokesperson on employment affairs.

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