Sir, – The income gap between those at the bottom of the pay scale and those at the top continues to grow, and it is apparent to all that current systems of wealth redistribution and work incentivisation are failing badly.
Increasing the minimum wage across the board in a small, open economy seems counterproductive. The argument is that if you increase the wages of those at the bottom, you will increase their spending power. Logic dictates that any improvement will be temporary and in the long term damaging to employment prospects. If employers improve the rates of the lowest-paid workers by X, then presumably they must also increase the salaries of workers up the scale by a similar amount to preserve relativity. With the wage bill thus increased, employers must seek to regain competitiveness by either raising prices or cutting costs, and perhaps staff levels. Meanwhile vendors of high-demand items, like rental properties, will be able to charge more. The resultant inflation will quickly cancel out the wages increase, but the effect of making Irish goods and services more expensive internationally will linger, at best restricting growth or at worst resulting in business failures and increased unemployment.
An economy is a complex eco-system in which apparently simple actions have subtle and non-obvious consequences. Surely there must be a cleverer way to help the working poor? – Yours, etc,
JOHN THOMPSON,
Phibsboro, Dublin 7.