Welfare benefits allow bosses to maintain low rates of pay for employees

Employers are getting away with maintaining low pay and insecure jobs because welfare payments buffer workers from the worst effects, a report claims.

Welfare benefits allow bosses to maintain low rates of pay for employees

Employers are getting away with maintaining low pay and insecure jobs because welfare payments buffer workers from the worst effects, a report claims.

Child benefit, family income supplement, and jobseekers’ allowance for part-time workers mean the State, in effect, subsidises a low-pay economy.

“Government transfers, in addition to aiding struggling households, also enable poor work practices to continue,” says the report, released today by TASC, the Think Tank for Action on Social Change. It says Ireland has “an institutional environment favourable to employers”.

Just one in three Irish workers is covered by a trade union or collective bargaining arrangement, one of the lowest rates in the EU.

According to the report, Ireland ranks 22nd out of 23 EU countries studied in terms of labour market protection and 20th for temporary-contract regulation.

“Though severance pay is reasonable, crucially Ireland performs poorly given the ease with which employers can lay off employees — for instance, comparatively little notice has to be given,” it states.

Legislation coming into effect next month will make it harder for employers to insist on zero-hour contracts, which have been notorious for creating precarious conditions for workers, but it will not completely ban them.

The report looks at the wider issue of inequality in Ireland and says it remains a major problem despite the recent improvements in the economy.

The working class and lower middle class struggle disporportionately compared to other countries, mainly because they make up the majority of what are termed “invisible and undervalued” workers.

Low pay is part of the problem — 23% of the workforce are in low pay employment, the highest proportion in the EU apart from Romania and Latvia.

So too is the high cost of living in Ireland compared to other EU countries, and the lack of universal provision in public services, in particular health, childcare, and housing.

“In many incidences, the working to lower middle classes find that they are above the thresholds for access to these services, adding to their burden of inequality,” it says.

In terms of national income distribution, the bottom 40% of the population receives 22% while the top 10% receives 25%. The top 1% gets more than 5% of total national income.

The report notes that almost half of the bottom 40% work in retail and wholesale, which has a higher proportion of women workers than other sectors and a high incidence of zero-hour contracts. Overall, more than 25% of female workers are in low-paid jobs — a slight increase on the figure a decade ago.

It also finds a high proportion of the population to be at risk of poverty and deprivation — 24% of the population as a whole and 27.3% of children. Women, adults with disabilities, and lone parents are particularly vulnerable groups.

Employment rates among the least educated in Ireland fell over the past decade to 32% which is “well below European norms”.

“A decade or so previously there was no discernible difference in employment for low-education groups in Ireland compared with Europe as a whole,” says the report.

“This points to an incomplete employment recovery for low-education groups or a structural problem which was papered over by the boom of the 2000s.”

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