And you thought Sinn Féin had silly economic policies. Young Fine Gael dropped a policy document on Thurdsay which included lots of wordy and worthy-sounding proposals. Including this innocuous little number:
Lower businesses (sic) costs by introducing an Earned Income Tax Credit for low paid workers
A classic way to be shly about kicking the poor: talk about tax. Sure none of them earn enough to pay tax. No way they’ll pay attention.
What they really want to do is slash the minimum wage.
restructure the minimum wage businesses pay to workers by €2
Yeah, they actually said ‘restructure’. We must assume somebody who actually has worked for the minimum wage was in the room because then they turned around and decided this:
these workers would still receive the same amount of pay as the government would subsidise the difference in earnings through an earned income tax credit
(They must have let one of those ‘working-class Tories’ in by accident.)
Ah well, I suppose it’s only public money. Nobody in YFG seems to have been bothered with a costing, so here we go. I’m about to do some sums, so please stand behind something sturdy and put on your safety glasses.
YFG’s proposal would subsidise an employer by €4,160 per year in the case of a single worker on minimum wage working a forty-hour week — but that same worker is only paying about €3600 in gross tax, and already has at least €1,650 in tax credits This leaves Mister Forty-Hour Week with €2210, or about eight weeks’ take-home pay, tied up a Revenue slush fund. YFG’s proposal would have such a worker either wait until the end of the tax year for a refund, or have Revenue start making weekly payments to one in every twenty Irish workers. The former is grossly unfair, and the latter would presumably create a humongous amount of admin for Revenue.
So what way would it work? They don’t say. Since most passing thoughts seem to end up in policy documents, it’s fair to say it never occurred to them. And why would it? Only someone who has never really worried about money — someone who has never relied on the minimum wage, or will have to, could suggest this.
And cost? It’s hard to say, so that might be why they didn’t put numbers on it. Nobody seems to have put a number on minimum wagers in Ireland since 2007, when it was 83,700. This is going to be rough. Service sector workers don’t all work a forty-hour week like my hypothetical forty-hourer above. Since the downturn, they’ve seen their rostered hours decline as demand falls. According to a study by the trade union Mandate, its members in the retail, bar and service sectors work an average of just 26 hours per week.
26 x 83,700 x €2 = €4,352,400. That’s per week. It’s more like €226,324,800 annually. So, Young Fine Gael wants about a quarter of a billion a year for this lark., and that’s before the bosses, acting as rational consumers of labour, decide to buy all of their workers’ labour at the new minimum wage instead of the smidgen extra they were getting until now. This is a conservative estimate, and it’s half the size of the hole in this year’s health budget. But gosh darn it, they’re just certain €8.65 an hour is holding back a torrent of foreign direct investment.
These are among some of the highest minimum wage rates in Europe
[our minimum wage rates] act as a barrier to job creation.
Maybe they do, maybe they don’t. Contrary to popular belief, the laws of classical economics aren’t quite as literal as gravity. Economists are still fighting it out, and as with all the best social science problems, lots of clever people just can’t agree about it. YFG would have you believe the minimum wage and Ireland’s cost base is like the suspension on a low rider — drop it, and Enda can cruise around and just pick up FDI like it ain’t no thang.
Let’s be real: the minimum wage is more like tyre wear on Enda’s low-rider. Economist Nat O’Connor called out the divide between good and not-so-good jobs in the Irish labour market last Friday at TASC’s annual conference. On one side, you have lab coats and briefcases and lines of code, and on the other, the people who mix their cocktails, and the gap is wide.In this context, the minimum wage is really just a red herring. We pay lawyers too much (and have for years). We have the fourth-highest electricity prices in Europe. Don’t even get me started on property prices.
That’s what I’d call a target-rich environment, so why the hell is Stephen Spillane hell-bent on kicking the poor?
YFG propose a different and unique solution… a ‘third way’ between lowering living standards for those on low incomes and maintaining the current uncompetitive rates.
Might just be for the attention, and I suppose hearing the bright young things say positive things about the direction of your youth jobs policy is the kind of thing senior political types are into.
The thing is, the proposal is not unique. JobsPlus, JobBridge, and the Wage Subsidy Scheme all subsidise an employer for hiring an extra worker, either with free labour or a direct cash payment. In the broad context of pro-business active labour-market policies like Pathways to Work which establish idleness as deviance, it’s the logical progression.
Consider this: your skills aren’t in demand, you don’t have a professional qualification and you don’t know how to talk to computers, so you work in a restaurant or a shop for minimum wage. You are the 5%. Your employer doesn’t think you’re worth €8.65 an hour, but two quid less. A quarter of your pay is a government handout. and some people will resent you for that. Suddenly, it’s not enough to do a day’s work. Why don’t you upskill? Then you could get off the minimum wage and stop being a drain on society. You’re not an idler mind, but you’re still a scrounger.
That’s what Young Fine Gael want to call you.
Want to know what my solution to the minimum wage? Index-link it as suggested in that NPR piece. When there’s deflation the Right gets to see the poor hurting, and when there’s inflation, the Left gets to see a few Gombeen men squirm. Maybe set it to €10 an hour first to make the maths easier and provide a bit of economic stimulus.
I’ve already linked to it once in this piece, but I’m going to do it again. You have to read Tom Boland on welfare as a system of social control.
And when you’re done, listen to this NPR report about the minimum wage debate, paying close attention to how unimportant the guy thinks it all is.