Slashing the hated USC is a better way to reward workers and businesses
Published 21/07/2015 | 00:00
WHILE much attention in recent months has been focused on water charges and the 'revelations' coming from the banking enquiry there is another hugely important ongoing debate which has, until very recently, flown under the radar.
That is the current discussion on Ireland's minimum wage. An issue which could potentially have a massive impact on many thousands of lives and on businesses across the length and breadth of the country.
The low pay commission is due to report back to government by the end of summer and it is now widely expected that the expert group will probably recommend some modest increase in the minimum wage rate.
While discussion of the rate, which currently stands at €8.65 an hour, has been ongoing for some time it is only in the last week that the debate came to the fore of public discussion with the Restaurants Association of Ireland coming out strongly against any increase while trade unions are crying out for an increase.
Most expect the Low Pay Commission will increase the rate, by about 50c an hour, to just above €9.
Given the potential impact on businesses and the needs of Ireland's working poor it is clear a balance needs to be struck, but the expected 50c increase is unlikely to please either of these groups.
For businesses, many still struggling after years of recession, the hike will see their wage bills jump upwards at a time when many are still barely surviving, thanks to high rates and other costs.
Meanwhile those actually earning the minimum wage, most of whom fall into the bracket of the 'working poor', will not actually see any great benefit from the increase.
Several social research agencies have pointed out that in Ireland a worker needs to be earning over €11 an hour just to keep themselves above the breadline, with many who are earning less than that officially classed as living in poverty.
As such an increase to just above €9, while welcome, is not really going to make all that much difference to minimum wage workers' wallets and their ability to pay their bills and feed their families.
The mooted 50c increase, sadly, seems like more of a pre election sop from the government that is aimed more at appeasing and placating various lobby groups, businesses and unions than a decisive move aimed at making a real difference to struggling workers.
Perhaps then a better solution may be the one put forward by the RAI, that of slashing the hated Universal Social Charge.
A move to cut the USC, by around one per cent, would not impact negatively on business but it would potentially have a much greater impact on workers' take home pay than a taxable 50c increase on the minimum wage.
Better still a cut to the USC would benefit every worker in the country potentially freeing up more spending money which, if pumped back into the economy, could help create some of those tens of thousands of new jobs that the government keep telling us are just around the corner.