Earlier this week, the inaugural Living Wage Forum was convened to explore the idea and potential of the concept of a Living Wage for the Republic of Ireland.
As part of a contribution from the Living Wage Technical Group, I outlined some of the implications of a Living Wage for employees, employers and the state. The presentation was based on an earlier NERI research paper (see below) which examined the international literature and experiences of Living Wages. In summary, I pointed out that:
The 2015 Living Wage has been calculated by the Living Wage Technical Group. It is €11.50 per hour. The new figure represents an increase of 5c per hour over the 2014 rate (€11.45). The increase has been driven by changes in the cost of living and changes in the taxation system over the past year.
The Republic of Ireland Living Wage was established in 2014 and is part of a growing international set of similar figures which reflect a belief across societies that individuals working full-time should be able to earn enough income to enjoy a decent standard of living.
The third annual NERI labour market conference was held on 1 May in Riddel Hall, Queen's University Belfast. The event was held in conjunction with the Queen's Management School and featured presentations on a wide range of areas. Details on the topics covered, including links to the slides, are available below. All at the NERI would like to thank everyone who attended the conference, particularly those who gave a presentation. The conference will be held south of the border next year and we will keep you up to date with the arrangements.
Slides from a number of presentations are exluded at the presenters' request.
As the economic recovery takes root, there are welcome improvements in the levels of employment and continued decreases in unemployment. Looking across 2015, the latest NERI projections (December 2014) suggest employment growth of 2.1% this year with unemployment falling to 10.4%.
In March of last year the NERI's Spring Quarterly Economic Observer analysed earnings and low pay across Northern Ireland. We highlighted the gender, age and geographical breakdown of low pay and the implications of these statistics for policymakers. In December of last year the latest figures from the Annual Survey of Hours and Earnings were released and they painted a bleak picture for pay in Northern Ireland across the board. In that Spring QEO we examined three measures of 'low pay' and the first of these was the minimum wage. The minimum wage is, quite obviously, the minimum legal hourly rate of pay for workers in the UK (with lower rates for younger workers). The Minimum Wage however, is not a subsistence rate for employees but a rate that is designed to cause minimum disruption to the behaviour of employers i.e. one that would not cause undue unemployment. The minimum wage is and was always meant to be a wage floor, an absolute minimum not a starting salary, but as the chart below shows, in 2014 in Northern Ireland 10% of workers earned just the minimum wage and increase of 1% from last year.
2015 looks set to be a year when those at the bottom of the earnings distribution receive increased attention. Government will shortly establish a low pay commission which will (among other things) review the minimum wage. Later this month the CSO will provide new data on incomes and earnings (SILC) and during the summer the Living Wage technical group will update its estimate of the hourly earnings required to provide a basic, yet decent, standard of living for a full-time worker. No doubt those described as the ‘working poor’ will be frequently mentioned.
Judged from an income taxation perspective, Budget 2015 was reminiscent of Budgets of ten years ago, or more - maybe a worrying starting point! Cuts to income taxes dominated the announcements, and policy implementation within the Budget. This was at the cost of other priorities, including securing a more stable basis for growth and recovery in the years to come.
The idea of a ‘living wage’ is gathering momentum in many parts of the world. It is conceived and measured as a wage rate which is adequate to meet the needs of workers and their families in a given society at a given time. But affordability of life for workers is one thing – what about affordability for companies and employers? Would the application of a ‘living wage’ across the economy lead to businesses closing or jobs being lost or young people failing to find employment? The answer depends on what level of increase is required to reach a ‘living wage’ (and how the latter is measured) as well as how different impacts play out in the economy with gains and losses added up.