Become aware of the minimum wage

The Irish minimum wage world is largely an international population, with very little power. They keep the country’s hotels, restaurants and shops open and vibrant. But lobbyists in these sectors fight every day to keep their salaries low.

The next budget will likely see the minimum wage rise by around 50 cents an hour, up to one euro if the government feels generous. One euro per hour is the absolute bare minimum needed to ensure that the country’s poorest workers are no poorer than they were last year. The need for generosity in order not to become impoverished testifies to the power imbalance faced by the minimum wage worker.

There are plans to move to a “living wage”, calculated in a recent report at €12.17. This rate is set at 60% of what an average worker earns. The current target is for workers to reach the full living wage by 2026 only. It’s a long time to wait for a minimum basic quality of life.

And what exactly is meant by a living wage? Will it offer true quality of life, as its name suggests?

Will paid workers, for example, be able to claim their “week in the sun” that most of us enjoy at this time of year? Seems like a reasonable living wage expectation working hard all year. Well, the average cost for this week in the sun is around €2,500 – around six weeks of full-time paid work. Is it realistic?

What about the cost of going out for an evening once in a while and taking in a ride or two – a day’s work? Then there is the elephant in the hall of astronomical accommodation costs. It is difficult to see how the living wage really allows a quality of life as we understand it today. The name sounds great, but I wonder to what extent this is a stylish rebranding of continued low wages.

That said, it is clear that the minimum wage must rise rapidly towards the living wage.

And it should do it in sharp upward motions, rather than a drip. Big increases help workers see a clear change in their quality of life. Less than €12 in the next budget will mean abandoning the longstanding practice of real earnings for low-wage workers.

However, there is an even bigger problem, and that is that we are simply not thinking about the needs of minimum wage workers in the right way. The annual talk of small pay raises will never change the dial. That means always relying on the next paycheck. This means that the worker and his family must always settle for less. This is what we need to fix. We need to help people get out of the low wage trap for good.

Development

One of the main ways to raise someone’s wages to minimum wage is to give them the opportunity to upskill. The main program for this in the country is Springboard; government-funded courses offered by universities and colleges.

Yet on the Springboard website right now, there are a few hundred courses in all kinds of technology, data, and business, but nothing in hospitality or retail management. The very sectors where minimum wage workers are employed have no direct path to improvement. The only solution offered is to give up and start over.

The clearest path for minimum wage workers to higher pay is to progress where they are already working. Instead, we took on a horrible economic view of a higher power reallocating people to the areas we decided they needed to work in.

There will, for sure, be restaurant kitchen porters dreaming of becoming a data scientist. But there will be many more who want to progress by running their restaurant, by owning the restaurant. Ditto for traders, ditto for hoteliers.

So what would we do then if we really cared about the people caught in the minimum wage trap?

There are a few approaches that have proven effective in other countries. I will especially draw here from France, having lived and worked there for many years. Part of that work was to help those same workers rise and progress. The people who are permanently trapped at the bottom of the payroll in Ireland.

First, a story. In the bike rental shop on our annual French camping holiday, I was chatting with the person who worked there. He was 18, an avid biker, and wanted to continue working in bike shops. So he was about to enroll in a degree in bike shop management.

The degree would allow him to continue working in bike shops, and he would also take a part-time degree to enable him to manage and eventually own his own bike shop. He may have initially worked for minimum wage, but he also had a clear upward career path.

This program, called “alternance”, is the fastest growing student enrollment program among French business schools. You can be any age and learning adapts to your family situation. It is a rise in competence adapted to the person. Would we have so many people stuck on long-term low wages, if we gave Irish workers the same personalized pathways to success?

Supports

This, however, is only part of the puzzle. You can give people all the education they might need, but if there are no opportunities, how are they going to achieve their ambitions? To do this, we need supports that encourage small business ownership in the sectors where we are most likely to find minimum wage workers. This is another central point of the French approach to wage progression in the minimum wage sector – to protect and encourage their “micro-entrepreneurs”.

In Ireland, it is essentially impossible for a minimum wage worker in retail, restaurants and hotels to imagine owning the business in which they work. The planning encourages developers to target every retail unit of the unholy trinity of Costa, Centra and the fast food chain. Another problem is that banks simply won’t lend to small business candidates without assets, even if they clearly have the expertise.

How do we fix this?

A great start would be government grants and loans that are exclusively for small business owners who are currently working as employees in their industry. This would replace bank lending which is irrevocably asset driven.

Planning can also help – designing smaller units in new developments. Or design marketplaces where would-be restaurateurs could start with something smaller like a food truck to hoard resources. There’s also a lot that can be done around rent protection for retail businesses, so that success doesn’t mean an immediate increase in rents.

If our education plan is that the only way to escape low wages is to drop out and start over, then we will always have little upskilling. If we only design the retail and other service sectors for chains and wealthy investors, no one will be able to go from checkout to the top.

We need to chart a practical path to success for minimum wage workers. Then, perhaps the annual rush for a few pennies added to the minimum wage will become less of a crisis event.

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