Towards a ‘living wage’ – what does it mean and what are the parties saying?

EAPN Ireland Election Blog No. 7

By Robin Hanan and Paul Ginnell,  EAPN Ireland

One of the pillars of the EAPN Ireland proposals for 2016 to 2021 “Towards a new anti-poverty strategy is a strategy for quality jobs.

As well as job creation and training strategies, this also means decent pay and conditions.

This paper focusses mainly on pay, but it is important to remember that the key issue is to ensure that workers have an adequate take home pay.  In the last section of this blog, we look at other issues which impact on this.

The EAPN Ireland paper explains that:

“The strategy must improve the quality of work, which has been eroded during the recession. This means ensuring that those at work are paid at least the Living Wage rate of €11.50 per hour (for an individual working full time) and addressing the causes of precarious work, including zero and low hour contracts.”

EAPN Ireland was one of the group of organisations which campaigned for the restoration of the minimum wage level which was cut in 2009 and restored in 2011 by the new Government. This has since been increased again.

We also support calls for a living wage, to ensure that work genuinely lifts people out of poverty. (for more background see EAPN Ireland Submission to the Low Pay Commission, 2015).

 

A living Wage in Ireland

living wage levelThe Irish Living Wage Technical Group calculates the current level needed to live a life with dignity at €11.50 per hour for a single person working full time. This is reviewed annually by the group, made up of the Vincentian Partnership for Social Justice (VPSJ), the Nevin Economic Research Institute (NERI), Social Justice Ireland, SIPTU, TASC think-tank and UNITE the Union.

They explain that a living wage means:

“… a wage which makes possible a minimum acceptable standard of living. It is evidence based and grounded in social consensus. It is:

  • “based on the concept that work should provide an adequate income to enable individuals to afford a socially acceptable standard of living
  • “the average gross salary which will enable full time employed adults (without dependents) across Ireland to afford a socially acceptable standard of living
  • “a living wage which provides for needs not wants
  • “an evidence based rate of pay which is grounded in social consensus and is derived from Consensual Budget Standards research which establishes the cost of a Minimum Essential Standard of Living in Ireland today
  • “unlike the National Minimum Wage which is not based on the cost of living.

“In principle, a living wage is intended to establish an hourly wage rate that should provide employees with sufficient income to achieve an agreed acceptable minimum standard of living. In that sense it is an income floor; representing a figure which allows employees afford the essentials of life. Earnings below the living wage suggest employees are forced to do without certain essentials so they can make ends-meet.”

EAPN working for a ‘living wage’ across Europeliving wage 2

At European level, the EAPN Awareness Raising Action on Decent / Living Wages focusses on ensuring quality of work and employment for all those who are able to work, which has  always been a cornerstone of EAPN’s action in the fight against poverty and social exclusion.

EAPN says:

“The question of adequacy of wages is a crucial one. Statutory minimum wage rates (which, according to Eurostat, exist in 22 out of 28 Member States) do not often come with a guarantee of providing income adequacy for all workers.

“The term “living wage” emerged from the recognition of the need to focus on the provision of decent wages through paid work, which surpasses the rather low limits often set for a minimum wage rate, in order to provide a worker with an acceptable standard of living.”

The EAPN campaign page includes a useful background note on the Living Wage.

This paper explains clearly how the Living Wage relates to the Minimum Wage:

 “…More than the biological minimum

A Living Wage level will be distinct from a subsistence level, because it goes beyond a biological minimum and calculates a ‘low cost, but acceptable’ standard of living, which will cover housing and other incidentals, such as clothing and nutrition. In the UK and in some states of the US, the standard generally means that a person working full-time, with no additional income, should be able to afford more than the basics for quality of life, such as  food,  utilities,  transport,  health care, and minimal  recreation, as well as one course a year to upgrade their education and childcare. Different states in the US use varying criteria for the calculation of the Living Wage. In the UK, a single methodology is used. Its starting point is for members of the public to identify what items people need for a minimum acceptable standard of living.

living wage affords“Not a Minimum Wage

“A Living Wage is distinct from a National Minimum Wage, because the latter is set by law and typically in most countries has failed to meet the requirements to have a basic quality of life, leaving the employee to rely on Government programs for additional income. Minimum wages tend to reflect accommodations between employer interests and the State, reflecting a number of competing factors, including impact on the labour market, competitiveness etc, whereas a Living Wage should allow a human being in a civilized community to have a decent living estimated by current standards, irrespective of the employer’s willingness to pay. The target is to ensure a worker’s earnings are sufficient to meet a social norm of decency, rather than over reliance on welfare payments to supplement pay from work. The concept of a ‘living wage’ is also being used into negotiations over raising minimum wage level.

“Different from collectively agreed wage rates and sectoral bargaining

“Negotiations between trade unions and employers, and in some cases public bodies, will continue to set wage rates for particular professions and sectors. In many cases, rates agreed will be higher that the Living Wage, reflecting economic value, skills, and other factors. In sectors where some or all employees are paid less than the Living Wage, trade unions may wish to use the set Living Wage figure as a minimum bargaining demand, or to identify it as a future goal to be achieved incrementally, reflecting the realities of the bargaining process.

“Relationship with the Minimum Income Standard

“In the UK and Scotland, the Living Wage is related to the Minimum Income Standard (MIS). However, it does not seek to establish a level of pay which would be acceptable in all household circumstances. It recognizes that in certain circumstances (primarily where an individual has dependents), State support might still be required to reach an acceptable standard of living. The MIS is also referred to by NGOs as the base line for minimum income support.  Existing  in-work  benefits  and tax  credits  are  also  often taken  into  account  in calculations of a Living Wage, to reflect the reality that otherwise the rate would be elevated to a level that would be unattractive to business….”

What the parties and candidates are saying in this election

The Irish Congress of Trade Unions is running a campaign for a Charter of Fair Conditions at Work.  This includes a demand for a Living Wage:

“…A living wage affords an individual sufficient income to achieve an agreed, acceptable minimum standard of living, taking account of the need for food, clothing, heating, accommodation, transport and other essential costs. Currently, it is estimated that in order to earn a living income from full-time work -taking account of taxes and welfare – it would be necessary for a single adult to earn at least €11.50 per hour….” For more on the living wage, click here.

They report thatictu wage

“…Labour, Sinn Fein, Fianna Fail, the Social Democrats and Socialist deputies (have signed) up, while there was little or no support for the Charter in either Fine Gael or Renua….”

The issue of a ‘living wage’ and the minimum wage has featured heavily in the campaign.  Checking the main ‘headlines’ on the parties’ websites, we see that al have mentioned the issue.

  • The Anti Austerity Alliance and People Before Profit propose to Increase the minimum wage to a living wage immediately and outlaw zero hour and “if and when” contracts
  • Fianna Fail states that the living wage forms part of their commitment to creating decent jobs across the country and specifically proposes to make the Living Wage mandatory across all government departments, at an estimated cost of €9.7m
  • Fine Gael proposes ‘sensible affordable increases in the minimum wage to €10.50 over a 5-year period
  • The Green Party supports legislation which would link the hourly rate of the minimum wage to changes to the Consumer Price Index, with a base floor of €9.15, below which the wage could not fall
  • The Labour Party wants to lift the Minimum Wage to 60% of median earnings by 2021, equivalent to €11.30 per hour in today’s value.  They also propose to make the State a living wage employer by 2018 and to progressively extended the living wage to State procured services in onsite areas such as security, cleaning and catering. They say “Labour in Government has increased the National Minimum Wage by €3,000 per year for those in full time work, reinstated Joint Labour Committees and Sectoral Employment Orders and began the process of unwinding public sector pay cuts”
  • Renua does not mention the issue directly
  • Sinn Fein want to increase the National Minimum Wage to €9.65 and .make the public sector a Living Wage employer
  • The Social Democrats propose to introduce a living wage, which is based on the real cost of living as envisioned by the Living Wage Campaign, in consultation with employers and based on affordability.

 

Other factors income from Work

Policy on minimum wages and living wages have to be understood in the broader context of policies to provide decent working conditions and making work pay.

The Irish Congress of Trade Unions Charter of Fair Conditions at Work, mentioned above, covers five areas:

  • A Living Wage
  • Fair Hours of Work
  • Right to Representation & Collective Bargaining
  • Respect, Equality & Ethics at Work
  • Fair Public Procurement

We will return to some of these issues in a future blog.  It is worth noting, however, that several parties focus on conditions on training schemes, zero-hours contracts and precarious work.  For example:

  • AAA/People Before Profit call for the abolition of JobBridge, Gateway, Jobpath, described as “exploitation of the unemployed” and their replacement with a Real-Jobs scheme based on proper education, apprenticeship schemes and public investment in jobs.
  • Fianna Fail advocates banning ban zero hour contracts and changing the remit of the Low Pay Commission to put forward legislation on banded-hour contracts for those on low pay, as well as clamping down on exploitative bogus self-employment contracts
  • Fine Gael proposes to replace Family Income Supplement for new entrants with a new Working Family Payment to ensure that every parent working 15 hours or more per week takes home at least €11.75 per hour.
  • The Labour Party says it will end abusive terms and conditions of employment including zero hour and insecure contracts, low pay, casualisation, and enforced and bogus self-employment. It also says that anyone who works regular hours for a minimum period of 12 hours per week will be legally entitled to a written contract, and create better protection for workers who provide contracted services.
  • Sinn Fein proposes introducing legislation that provides for fair hours contracts.
  • . and ensuring activation schemes are of high quality and support job creation by shutting down the JobBridge and Gateway schemes and making greater use of the JobsPlus and Community Employment Schemes, providing 1,000 additional apprenticeship places for trainees and 500 additional places on the Momentum scheme for jobseekers with disabilities and extending Community Employment to recognise it as a path to regular employment and also in recognition that community employment and services are ends in and of themselves.
  • The Social Democrats also propose a ban on zero hour contracts, as well as addressing the prevalence of ‘if and when’ Contracts, extending the terms of reference of the Low Pay Commission to include a proper oversight framework for internships, low hours and precarious work in the wider economy, reforming Irish labour activation policy by ensuring schemes are better regulated and targeted for different groups with very distinct needs, providing far better information to jobseekers and scrapping JobBridge and introduce a new internship programme.
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