Opening speech to Living Wage Forum, Dublin Castle
Wednesday 30th September 2015
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Good morning, ladies and gentlemen, you are very welcome to the Living Wage Forum.
I should at the very outset clarify what this forum is not about. I have no Government initiative to announce, I am not working on legislation and I have no scheme to put in place. I have no dotted line that I’ll be asking you to sign.
Instead, this forum is genuinely an invitation to a discussion. It is about turning to you, the invited guests, to discover whether there is sufficient interest in the topics we discuss to persuade you to seize the initiative and then to develop these ideas into a viable working model for an Irish living wage campaign.
Most of you are here, I think, because you accept that payment of wages, in return for work, is more than just an expenditure input to be factored into the cost of production.
In the words of the Treaty of Versailles of 1919, labour is not merely a commodity or an article of commerce.
Paying and receiving wages is about securing decent livelihoods. It is about having the wherewithal to plan for a future, for a family, for a mortgage. Fundamentally, I believe, it is about human dignity and respect.
We already have a national minimum wage. I am very happy to have put the Low Pay Commission on a statutory footing and to have received its first recommendation. I look forward to securing Government approval to bring the new minimum wage rate into effect in the New Year.
But I would stress that the statutory rate is a minimum rate only, a guarantee of a universal wage floor. Of necessity, when we are setting that rate, we must have regard to its impact on businesses paying at or near the minimum rate, businesses that are very often at the margins of commercial viability.
There is no way we can say we are attacking low pay if in fact we are, in the process, eliminating jobs. The minimum wage must be sustainable for business as well as being fair for employees. It is a fall-back for employees, not a target for employers.
In this country, where we have ministerial employment regulation orders that set sectoral pay and conditions at rates above the minimum wage, we recognise that the minimum wage is a safety net, a statutory floor. No enterprise should have it factored into their business calculations that paying the minimum wage is what will keep them profitable.
There is no doubt but that in the current environment powerful forces are bearing down on wages at the bottom end of the labour market – and not just in Ireland. None of us wants to see an economic recovery that creates a growing pool of underpaid workers, with little or no security and with no prospect of further training or further advancement. We don’t want to see profits secured on foot of a race to the bottom in employment standards or the sacrifice of hard won economic and social gains – and indeed rights. There are no winners in a scenario like this.
Most businesses, therefore, can aspire to doing better by their employees than just meeting the basic statutory entitlements. Most businesses value their employees. They invest in them and they want to compensate them as best they can.
As the economic recovery takes hold and as unemployment continues to fall, we all of us have a stake in seeing the benefits of that recovery being shared, by way of better working conditions, improved pay, particularly for low-paid workers and enhanced and sustainable profits for businesses.
Because the reality is we are all winners when it comes to moving people out of poverty by providing decent jobs. After all, industry cannot prosper without consumers who are able and willing to pay for the goods and services that industry produces.
The living wage is different to the minimum wage, for at least two reasons. First, a living wage is generally agreed to mean that a person in full-time work, without additional welfare support, can afford housing, food, utilities, clothing, transport, health care, childcare and minimal recreation. It is therefore higher than the minimum wage, which may well have to be supplemented by welfare payments, depending on individual circumstances.
The living wage is the rate you pay a worker you want to hold onto.
Second, while the Government may stand as godparent to the living wage, those in charge of delivering it are employers, workers and civil society. The living wage isn’t a creature of statute but is instead an independently assessed and independently agreed measure of the income necessary to meet basic needs. And this is what makes the concept interesting.
Of course the Government is not a completely uninterested bystander. From the Government’s viewpoint, the living wage can boost tax revenues, can reduce the welfare spend and so can create space for additional investment in essential public services.
And the State and the public sector are themselves employers – mostly but not always living wage employers. We in Government could do a lot to facilitate its adoption. We could look at public sector outsourcing of catering, cleaning and security, for example, and we could examine the potential of public procurement contracts.
But progress towards a living wage must I believe be on a voluntary basis – with buy-in from employers and employees across the economy.
I will play my part in exploring how we can progress the concept of a living wage in Ireland. I don’t believe we need to replicate exactly the London, the Scottish or indeed any model, but we can look at the UK experience and at the benefits it provides for society, the economy and for businesses there.
The purpose of this forum is to learn from the campaign that started in 2001, when an alliance of community organisations in London launched their campaign to secure wages sufficient to provide workers and their families with a basic but acceptable standard of living. We have speakers from that campaign, who will share with us their experience.
The idea of a living wage for London was supported by both Ken Livingstone and Boris Johnson as Mayors and it has gained increasing traction across Britain, and across the political spectrum. As long ago as 2010, David Cameron called it an idea whose time has come. And it has had a major impact on this year’s UK Budget.
I think we can learn from the UK experience, including how debate about the living wage feeds into the broader debate about in-work poverty and the policy instruments available when we seek to raise living standards for those at work but still in poverty – tax and tax credits, income supplements, and so on. This is a debate we have to have.
I think we can learn about their relative success in recruiting high-profile financial and legal firms and public sector bodies, and we can discuss progress in attracting employers in sectors which have a larger proportion of lower paid workers.
We can learn both about the economic and competitive benefits for employers who have a better paid, better trained workforce they are more likely to retain, as well as the disruption to pay differentials, and so on.
And we can learn lessons about the sort of assurances that employers need before they buy in to this process. The first rule for any commercial enterprise is that you do not buy a pig in a poke – you do not commit to a process if you do not know its outcome.
I know that some firms we invited to be here are interested but are still cautious. I’ve heard from some of them myself.
They will not be first movers. If they are to participate in the process you design, then there will be no open-ended commitments, no blank cheques, no pigs in pokes. Your design will have to provide for brakes as well as accelerators.
So, we need substance and detail about, for example, the proposed methodology behind the calculation of each year’s living wage, about the impact on sub-contracting, outsourcing and the supply chain, about the cost of compliance in a business where affordability is a pressing concern and where adoption of the living wage would be a real and substantial commitment.
We also need to recognise that many small and medium-sized firms are likely to struggle with the costs of implementing the living wage if a significant proportion of their staff are low paid.
Today marks an important milestone on the road a national discourse on the living wage. I am very encouraged that so many progressive employers have already approached me and asked how to become involved in supporting or exploring the concept of a living wage here in Ireland. I believe there is great potential in this concept and there can be positive impacts for employers, employees and for Irish society.
The campaign is predicated on the notion that paying the living wage is not just the right thing for employers to do but also that it makes good business sense to do so. The task here today is to decide if we can stand over that claim, can start to shape what an attractive living wage campaign for Ireland might look like and can persuade others to join the campaign.
I will be present here for the day’s discussions and I look forward to hearing all the contributions.