SUBMISSION TO LOW PAY COMMISSION
National Women’s Council of Ireland
10th April 2015
Submission Drafted by : Alice-Mary Higgins
Policy and Campaigns Officer
National Womens Council of Ireland
100 North King Street
Dublin 7
Email : [email protected]
Phone: 01-6790100
SUBMISSION TO LOW PAY COMMISSION
National Women’s Council of Ireland
10th April 2015
Introduction
Established in 1973, the National Women’s Council of Ireland (NWCI) is the leading national women’s
membership organisation in Ireland. NWCI represent a membership of over 180 groups and
organisations across a diversity of backgrounds, sectors and locations and are committed to the
promotion of full equality between women and men. We also have a growing individual membership.
NWCI believe the establishment of a Low Pay Commission is a positive step and a very welcome
recognition of a serious problem around low pay in Ireland and we greatly appreciate this opportunity to
contribute to its deliberations. We also welcome the gender balance within the Commission and
congratulate all of the Commissioners on their appointment to this important role.
It is we believe appropriate and critically important that the Low Pay Commission include a strong
equality perspective in line with the new Positive Duty for all Public Bodies and specifically that it place a
gender equality analysis at the very heart of its deliberations and recommendations.
We know, both from the testimony of our members and from the figures, that low pay is a problem which
particularly affects women. According to the Nevin institute, over 60% of those on low pay are women
while the CSO Men and Women in Ireland report found that 50% of women in Ireland were earning
€20,000 or less.
Many sectors where women predominate such as hospitality or retail have been at the frontline of
aggressive casualisation and job and wage erosion, with low pay compounded by precarious work and
non-fixed hour contracts.
We now have a worrying situation where Ireland’s gender pay gap is actually widening from 12.6% in
2009 to 14.4% in 2013. Historically one of the main measures to narrow the gender pay gap was the
introduction of a Minimum wage and NWCI therefore look with great interest at the proposals to increase
that wage for the first time in many years.
Benchmarking with inflation, comparative wage ratios, income equality measures such as the Ginicoefficient, and cost of living will be important aspects in the calculation of this wage level. NWCI are also
very supportive of the detailed research of the Vincentian Partnership into a Living Wage - we would
however highlight that their figure of €11.45 an hour is based on a single adult and any minimum wage
which sought to genuinely reflect the reality of current childcare costs in Ireland would need to be set at a
far higher threshold. This figure also assumes full time work and there is a real danger that a narrow
focus on just the minimum hourly rate will fail to address the reality of many workers, particularly
women, who are in part time work or affected by the worrying rise in non-fixed hour contacts.
In-work poverty levels and the pressure which low wages can place not only on workers but on our social
support systems should also be acknowledged within any wage setting debate, along with the impact
which any increase might have in direct consumer spending on local goods and services.
I include as an addendum NWCI’s recent presentation in relation to the Low Pay Commission legislation.
Income Distribution, Gender and Equality
NWCI believe that it is crucial that the Low Pay Commission identify gender and other equality factors as
an explicit named aspect of its deliberations. This would be particularly appropriate in light of the recent
introduction of a new ‘Positive Duty’ which requires each Public Body to mainstream active measures
towards the promotion of equality within all aspects of their work.
However, a wider consideration of ‘changes to income distribution’ does nonetheless highlight a number
of the serious concerns in relation to equality.
We know that in terms of income distribution, women are hugely concentrated on lower incomes,
According to NERI, 60% of low paid workers are women, CSO figures tell us that 50% of women earn
€20,000 or less per annum and new ESRI research has found that in terms of changes to income during
the recession, women in couples experienced a 14% drop in income as opposed to a 9% drop for men in
couples.
However one of the most crucial ‘changes in income distribution’ which should be recognised and
addressed by the Commission must surely be the widening gender pay gap between men and women in
Ireland – a gap which has moved from 12.6% in 2009 to 14.4% in 2013.
Historically, some of the most significant narrowing of Ireland’s gender pay gap was in response to the
initial introduction of a national minimum wage. A large increase in the current minimum wage could
have a similarly important impact.
In looking at equality concerns is important to note that migrant workers are another group who are
disproportionately affected by low wages and precarious work, with migrant women particularly
vulnerable – as seen in areas such as domestic work or care services.
Further Equality Indicators
There is increasing international evidence to suggest that more equal societies perform better across a
wide range of social and economic indicators. In this context it should be a matter of serious concern that
in Ireland the gap between rich and poor appears to be widening. Recent research from TASC has for
example, highlighted that a third of all income is concentrated in the hands of just 10 per cent of earners.
Indicators such as the Gini-Coefficient could provide one important reference point for the Commission in
ensuring that an annual review of the minimum wage recognises and narrows income inequality ratios.
Appropriate benchmarking should also be developed to ensure that the minimum wage can increase in
line with any inflation or increase in wider wages.
‘Income’ is of course only one indicator of economic inequality. The economic reality for many Irish
citizens is also reflected in wealth figures and in their flipside, the deprivation statistics.
CSO annual SILC figures have shown that deprivation levels for many vulnerable household types are
rising, with a shocking 63% of one parent families experiencing material deprivation. The SILC figures also
show us that consistent poverty levels have almost doubled over recent years, currently standing at 8.2%.
NWCI believe such indicators should be key considerations for the Low Pay Commission. There is no
doubt that inadequate wages do contribute to deprivation and consistent poverty as many households
have had to supplement reduced incomes by using up savings or other resources. Moreover a raise in the
minimum wage could and should make a significant contribution to reduction of deprivation and
consistent poverty levels.
Cost of Living, Income Adequacy, and the Living Wage
It is absolutely essential that when making a recommendation as to wage levels, the Commission would
give deep consideration to the cost of living as experienced by workers. The principle that the wages of
work should be adequate to afford the worker a basic decent standard of living was clearly identified as
one of the motivations behind both the initial introduction of a minimum wage and the establishment of
the current Low Pay Commission. NWCI are however concerned that this goal is inadequately expressed
within the proposed legislative framing – something which we address in more detail in the final section
of this submission.
The fact that 16% of those living below the poverty line are in work is one stark indicator that current
wage levels are not adequate to meet the cost of living and the deprivation levels discussed in the
previous section provide further insight into the shortfall experienced by many workers.
The Living Wage
While Deprivation statistics are based on a basket of just 11 items, a more comprehensive picture of the
cost of living is provided in the excellent research from the Vincentian Partnership. They have looked at
real world costings for over 2,000 goods and services as part of their calculation of ‘Minimum Essential
Living Standards’ for a number of household types based on needs rather than wants.
The Vincentian Partnership have used these standards to calculate a ‘Living Wage’ for workers in
contemporary Ireland. A lot of the debate around the Living Wage has focused on the proposed hourly
figure of €11. 45. However it is important to note that this calculation of €11.45 is based on a Single
Adult working full time with no childcare costs. The Vincentian Partnership recognise this and have and
also provided a series of weekly or monthly calculations for different household types.
Crucially the Partnership have recently developed significant research into how the extraordinary costs of
childcare can raise the cost of living and indeed the cost of working to unsustainable levels.
The Childcare Crisis
Ireland spends less on publicly subsidised childcare and early year’s education than any other European
country – 0.4% of GDP compared to an EU average of 0.7%. Partly as a result of this public shortfall, we
are consistently shown to have the second most expensive childcare in the entire OECD. Childcare
effectively represents a second mortgage for many families and as a result we see huge numbers of often
very qualified women pushed out the workforce or facing huge obstacles if they wish to reenter that
workforce. The still unrecognised fact is that Care Always Costs and at the moment, that cost is out of the
reach of most workers on a minimum wage.
Recent research by the Vincentian Partnership found for example that a one parent family with two
children would need to be earning at least €40.000 per annum just to cover the cost of childcare.
NWCI suggest that it would be appropriate for the Commission to consider whether they believe the very
real costs of childcare as experienced by working families should be reflected in a very large increase to
the minimum wage, far beyond the €11.45 living wage proposed for those without children or whether it
might be better to recommend greater public investment of tax revenue from workers and business in
the provision of affordable, accessible childcare.
Minimum Wage Standards - Beyond the Hourly Rate
In much of the discussion around minimum wage and indeed in much of the legislative framing around
the work of the Commission there is a strong focus on the “minimum hourly rate of pay”.
However there is growing international recognition of the need for a wider perspective in relation to low
and minimum pay. Any calculation of an hourly Minimum Wage based on an assumption of full time
work will fail to reflect the reality of 36% of women workers are in part time work. Looking beyond an
‘hourly’ approach is particularly important given the increasing prevalence of insecure and non-fixed hour
contracts. Women are particularly vulnerable to such contracts as sectors such as hospitality and retail in
which women predominate have been at the frontline of aggressive casualisation, where an erosion of
wages going hand in hand with an erosion of hours. Many do not know from week to week or day to day
how many hours they might work. Recent research from Mandate trade union in one major retail store
found that 76% were on part time flexible contracts, 98% would like more stable hours and 85% feel
insecurity of hours used as method of control. This is very much matched by the testimony which NWCI
has heard at our own well-attended member’s forums on economic inequality
NWCI are aware that this issue has already been recognised by Government as a concern and that the
Dept. of Jobs, Enterprise and Innovation is currently conducting research into low or non-fixed hour
contracts. It is however crucial that the Low Pay Commission also address this issue in its
recommendations to Minister –recognising the need for a wider approach to Minimum Wage measures,
such as the setting, for example, of basic banded standards for predictable full or part-time weekly
income.
In addition to a minimum income, workers, including low-paid workers, should also be able plan for the
future and expect a certain level of progression in their working life. In this context NWCI believe it is
important that the Low Pay Commission would reflect on the wider issue of low pay and emphasise in any
recommendations that a minimum wage should not be seen as adequate substitute for active
engagement of employers and employees in formal wage setting mechanisms such as the Joint Labour
Committees.
The Wider Economic Context
While there is much to be learnt from both the successes and the self-identified problems faced by the
Low Pay Commission in the UK it is also important that in terms of international comparators,
Commission look to Europe and the OECD in terms of best practice and standards. Eurofound has for
example produced excellent research on contract type in Ireland.
NWCI also believe it is crucial that no unproven assumptions such as any implied ‘trade off’ between ‘job
creation’ and ‘decent wages’ be accepted without concrete and impartial evidence. It is also important to
emphasise while many agencies and state bodies are rightly focused on that important question of job
creation – the specific added value and focus of the Low Pay Commission should really be around the
quality of such jobs.
Consideration of macroeconomic indicators such as employment levels and currency valuation should be
placed alongside other concrete indicators such as the Gini-coefficient, in-work poverty levels and the
gender pay gap.
Most importantly, NWCI believe that the Low Pay Commission should give very serious consideration to
the wider socio-economic impact of wage levels and the associated cost or benefit to the state.
For example, we know that a large and growing number of families who do have employment must
nonetheless rely on Family Income Supplement from the Department of Social Protection to keep
themselves out of poverty, at considerable cost to the State. The increase in the minimum wage should
therefore be of a sufficient level to reduce pressure on this social safety net.
Many businesses who are under pressure may themselves avail of supports and exceptions such as the
‘inability to pay clause’ or ‘short time’ working. However these measures are necessarily time-limited.
This is for the very good reason that extending such exceptional measures represents unfair competition
for those who are attempting to meet standards and ensure that their employees receive a decent wage.
Neither reliance on Family Income Supplement nor ‘inability to pay’ should be allowed to set a new norm.
While everyone may appreciate that there are times when businesses may struggle – that should be
addressed through targeted supports rather than becoming the main determiner of overall national wage
policy. It would for example be unfortunate to if specific financial challenges faced by a small local shop
were used as a rationale to allow profitable national fast food chains to keep wages low– negatively
affecting the incomes of those who might be the customers of that local shop and/or treat public subsidy
for their workers as part of the balance sheet calculations.
An increase in the minimum wage and other wage setting measures are also a way to ensure significant
Government concessions, for example the preferential vat rate for the hospitality industry, which has a
large number of women workers, are reaching more people and having the widest possible social benefit.
Low pay and precarious work can also limit access to mainstream credit, creating further social pressures
and reducing home ownership. On the other hand, those on lower or average incomes are more likely to
spend their incomes on local goods and services and it is important to consider the geographically spread
economic stimulus which an increase in wages could provide to local business and services.
NOTE RE LEGISLATIVE HEADS OF BILL
I attach as an addendum to this submission a recent presentation made by NWCI to the Joint Oireachtas
Committee on Jobs Enterprise and Innovation addressing the proposed legislation around the
establishment of the Low Pay Commission and offering a number of suggested amendments which we
believe could strengthen its mandate and impact.
One particularly serious concern is that the Bill does not currently explicitly name ‘cost of living’ within
points (a) to (f) as an overall issue which the Commission “shall have regard to” in developing an order
but rather only mentions it within the much narrower focus of point (g) which looks at the potential
effects of an order. It is our concern that as currently constructed, the emphasis is not on the impact that
cost of living should have on minimum wages but rather on the impact that minimum wage levels might
have on cost of living. NWCI believe this is a serious concern and against the guiding spirit of the Bill. We
have therefore suggested an amendment to ensure ‘cost of living’ be named as a separate area which the
Commission should have ‘regard to’.
ADDENDUM
PRESENTATION TO JOINT OIREACHTAS COMMITTEE ON JOBS, ENTERPRISE AND INNOVATION
Alice-Mary Higgins Policy Officer with National Women’s Council of Ireland
24th March 2015
“We have been asked to focus our comments today on the Heads of Bill currently before the Committee.
NWCI do have a number of serious concerns and suggested amendments around the wording of this
legislation which we believe should be considered to ensure the Bill truly supports delivery of the publicly
stated goals and ambition of the Low Pay Commission.
NWCI would like to make a number of recommendations under Head 2 of the Bill
Specifically Section 12 which sets out functions of the Low Pay Commission and under Part 2 lists a number of
items which “In making a recommendation….the Commission shall have regard to”
1 > Firstly, Given the serious gender concerns around low pay with a large majority of low paid workers being
women and a widening gender pay gap. It is crucial that the Low Pay Commission be mandated to “have
regard to” gender and other equality factors as a named aspect of its deliberations and that the potential
impact of any order on gender equality also be considered. Explicit ‘regard to’ equality is also important and
appropriate in light of the new ‘Positive Duty’ which requires each Public Body to mainstream active measures
towards the promotion of equality within all aspects of their work. NWCI would therefore suggest the addition
below (all recommendations thereafter inset in bold italic).
()The promotion of equality and specifically gender equality (NWCI Proposed Addition under Head 2 Section
12 Part 2 – to be included as stand alone point and also under subsection (g)re potential impact of order.)
2 > It would seem absolutely essential that when making a recommendation as to wage levels,the Commission
would give consideration to the cost of living as experienced by workers. However, as currently phrased, the
Bill does not name ‘cost of living’ within points (a) to (f) as an overall issue which the Commission “shall have
regard to” in developing an order and instead it is only mentioned within the much narrower focus of point (g)
which looks at the potential effects of an order.
The Commission shall have regard to …
…… (g) the likely effect that any proposed order will have on
(i) levels of employment and unemployment
(ii) the cost of living
(iii) national competitiveness
In other words, as currently constructed, the Commission are not being asked to consider the impact that cost
of living should have on minimum wages but rather the impact that minimum wages might have on cost of
living. This is clearly a serious concern and against the spirit of the BIll. NWCI suggest an amendment to ensure
‘cost of living’ be explicitly named as an essential area to have ‘regard to’ in developing a recommendation and
indeed be placed high within that list.
( b ) the cost of living - ( NWCI Suggested Amendment Head 2, Section 12, Part 2)
3 > With regard to point (d) International comparisons, particularly with Great Britain and Northern Ireland.
It is not clear what the rationale might be privileging comparison, including for example, statistical comparison
with Great Britain and Northern Ireland, over contexts as Europe or the OECD. Both OECD and European
Research Bodies such as EUROFOUND have previously provided Ireland with important statistical evidence
around low paid or precarious work. In order to ensure that the Commission are encouraged to consider the
most relevant evidence from an evolving international context, point d might be shortened to
- (d) International comparisons – ( NWCI Proposed Amendment under Head 2 Section 12)
4 > With regard to point (e)
Given that both unemployment and employment are clearly identified as considerations under point (f) of
Section 12 NWCI would have questions as to the rationale behind the additional inclusion of
(e) The need for job creation
(Head two Section 12)
This point can be read as implying a potential trade-off between ‘job creation’ and ‘wage levels’. Not only is
this an unproven assumption which should not be embedded within this legislation, it also opens up the
danger of ‘creation of jobs’ being routinely deployed as a rationale for lower wages.
NWCI suggest that the Bill would more accurately and appropriately reflect the specific and publicly stated
social and economic goals of this legislation If point e were amended to read
- (e) The need for quality job creation - (Proposed Amendment under Head 2 Section 12)
5 > NWCI would also suggest two other additional matters which the Commission should be asked to “have
regard to’ in making its recommendation. In 2014, 16% of those below the poverty line were in employment
and reduction of poverty has been a long stated goal of many national strategies. One clear consideration for
and measure of the Low Pay Commission should therefore be reduction in the levels of in-work poverty.
- ( ) In work poverty levels (Proposed Addition under Head 2 Section 12 Part 2 – as stand alone point and
also under subsection (g))
Another crucial area of ‘regard” should be the wider social impact of wage levels and the associated cost or
benefit to the state. On one level we know that a large and growing number of families who do have
employment must nonetheless rely on Family Income Supplement from the Department of Social Protection
to keep themselves out of poverty, a considerable cost to the state. Low pay can also limit access to
mainstream credit, creating further social pressures. On the other hand, those on lower or average incomes
are more likely to spend their incomes on local goods and services and the geographically spread economic
stimulus this could provide should also be considered.
-
( ) The social and economic impact of wage levels and associated cost or benefit to the state. (Proposed Addition under Head 2, Section 12, Part 2 – as stand alone point and also under
subsection (g))
6 > These areas of regard should also be reflected under Head 12, Section 12, Part 4 re three yearly report
Moving to Section 13 , still within Head 2
7 > NCWI would highlight one crucial point under Section 13. While this Bill is amending “The National
Minimum Wage Act 2000” there is a specific focus on the “minimum hourly rate of pay”.
Yet there is growing international recognition of the need for a wider perspective in relation to low and
minimum pay. For example, ‘Living Wage’ research developed by the Vincentian Partnership does offer an
hourly figure of €11.45, they make it clear that this calculation is for a single adult working full time with no
childcare costs and also provide a series of weekly or monthly calculations for different household types.
Looking beyond an ‘hourly’ approach is particularly important given the increasing prevelance and reality of
insecure and non-fixed hour contracts, something already recognised by the Government as a concern.
Women are particularly vulnerable to such contracts. It would be positive if the Bill were to allow the
Commission and the Minister scope to, in the future, consider a wider definition of or approach to a Minimum
Wage and associated recommendations
-
NWCI Recommendation - Replace ‘national minimum hourly rate of pay’ with ‘national minimum
hourly rate of pay and other minimum wage measure as required ’ in Parts 1, 2 and 4 of Section 13
under Head 2