Reducing the costs of employing people


Over the past few weeks I have set out a number of new ideas and directions aimed at hastening our return to growth and prosperity. I have tried as far as possible to find new and constructive ideas that offer real solutions.
One proposal I haven’t considered here so far – but one which often get mentioned – is that of reducing the minimum wage. Without doubt we need to reduce the costs of employing people. It appears to me, however, that a flat rate reduction in the minimum wage rate would be a crude way to achieve this, not to mention the potential unfairness to those already in jobs that pay the minimum wage.
One of arguments made against any minimum wage is that it gives businesses an additional incentive to mechanize certain jobs. The US grocery retailer, Wal-Mart, is often quoted as an example of this trend. It added automated check-outs to most of its stores, thus doing away with a number of check-out operators.
This incentive exists even the rate is decreased by a euro or more. A better course would to reducing the potential costs of the minimum wage would be to apply a graduated or multiple-wage structure, allowing a lower entry interim level minimum wage during training period. This could be coupled with a longer period where employees retain existing social welfare entitlements.
Costs like employers PRSI (10.75%), training etc means that small and medium businesses are finding the costs of hiring new people an obstacle. Some calculate the yearly cost to the small employer to be a multiple of 1.4 of the new workers wages – and this does not take account the additional costs if the new employee does not work out.
The additional funding for the employer PRSI exemption scheme announced in the last budget has been helpful, but we should consider extending the exemption beyond the current one year and broaden the qualifying criteria for both employers and employees.
The growth we achieved in the past decade and a half was not achieved by cheap labour, but rather by better management and greater productivity. There is no reason why our return to that growth and prosperity should be based on another formulation.
Moving from those on the minimum wage to those on a more sizeable one, last weekend I picked up the Irish Times to find myself (once more) in the sights of that newspaper’s Oireachtas colour writer. The cause: a webcast interview I gave to the Limerick Post in which I referred to the “Dublin 4 types” in the Irish Times.
Ms Lord, on behalf of the Irish Times, took exception to my remarks saying that most of its writers were born outside Dublin. She even reminded me that Stephen Collins was (Lord help him) a lifelong supporter of Limerick hurling.
She misses the point. The “Dublin 4” mentality has nothing to do the specific location. How could it? Both Ringsend and Irishtown are in Dublin 4, but the people there are among the most straight-forward and direct you could meet
What I was talking about was the state of mind of some in the commentariat who see any idea developed by anyone outside their circle as without merit and those who dare to question their analysis as pariahs.
It is snobbery: an elitism of the inadequate. Just like the arts critics who will reply, as Stephen Fry has suggested, when asked by St Peter them what they did with their lives: I sat back, looked at the work of others and said: I don’t like it, it’s not good enough.
Ms Lord’s Saturday round up is as humorous as the people who talk to her – so it seems that fewer and fewer witty people have been speaking to her of late.
She might have been funnier if she had stuck with the Independent. That way she could have commented wryly on something like….. oh say… the paradox of the Irish Times lecturing others on ethics while itself doing away with evidence that Supreme Court Justice Mr Nial Fennelly said had the “…intent to deprive the courts of jurisdiction (and) was, as the High Court had held, designed to subvert the rule of law.”
That, alas, is a colour piece we won’t see in the Irish Times anytime soon.

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