Ciarán Nugent: Minimum wage lags the living wage of €12.90 an hour, even before inflation
More than a third of Irish workers earn less than the living wage which is estimated to be €12.90 an hour, or €503 a week
Discussions on competitiveness usually focus on minimum wages even though in developed economies minimum wages are only relevant in low-value-added sectors. In Ireland's case that applies almost exclusively to hospitality, and the one-in-12 workers who are employed in the sector.
Here, more than a third of Irish workers earn less than the living wage which is estimated to be €12.90 an hour, or €503 a week.
However, for the separate minimum wage, the Low Pay Commission, which is obliged to consider "national competitiveness" issues, has recommended a 30% increase to €10.50 an hour.
That's a 3% rise, which given where inflation is heading, represents a hefty pay cut, in real terms.
It means an even bigger cut for the many people who rent their homes.
Hospitality pays, by some way, the lowest of all the 13 sectors.
One-in-five people in the industry is on a temporary contract, and almost half of the group is working part-time.
And Ireland has one of the highest shares of low-wage employment in the developed world.
There has been an international shift in economic orthodoxy away from austerity and towards more targeted state-led investment.
The focus on competitiveness in the low-wage economy in the Irish economic discourse shows a vision of the economy that is at odds with the aspirations of the majority of Irish people, and the highly educated and younger generations, in particular.
One striking feature of the Top 10 "most competitive" economies in the world is that they are exclusively high-wage economies: Switzerland, Sweden, Denmark, the Netherlands, Singapore, the US, and Hong Kong make it on the Top 10 lists for both competitiveness and high wages.
Ireland ranked 13th of 64 countries in 2021, falling behind in a number of areas, including digital competitiveness in 20th place, infrastructure (31st), technological infrastructure (19th), and scientific infrastructure (20th). Ireland's worst relative performance was for prices, in 46th place.
The Top 10 list, by foreign direct investment in terms of population, are also all high-wage economies, where Ireland is in second place.
The Nevin Economic Research Institute, or Neri, was founded amidst the last recession.
Solutions from a workers’ perspective were drowned out in 2008.
The recession was due to a failure of financial regulation and capital, a fact that was successfully obscured and replaced with a false narrative on high wages and wage competitiveness.
As we’ve seen, competitiveness in high-value and high-wage sectors should be the focus of investment. Such investment includes infrastructure, education and training, and research and development.
It also involves building up services and bringing down the high costs associated with Irish housing, childcare, and transport.
It also means having levels of taxation typical of a developed economy, when Irish employers pay some of the lowest PRSI rates in Europe. Bringing this up to European norms would bring in over €6bn.
Here's hoping that the mistake of austerity is a thing of the past.
