`I'm 24. My weekly pay after tax is £163. There is no way I can afford to get married or own my own home. I could get a mortgage of a maximum of £25,000 but that wouldn't even buy me a site. I earn £4.70 an hour, which is above the minimum wage, but I can't live on it, I even have to be careful what I spend on food. A loaf of bread costs £1 now. I'm considering getting a second job in the black economy, maybe in a bar. I just can't understand how any government in this Celtic Tiger economy could be like this."
Gerry is a clerical worker in Cork. He works, not in a fly-by-night retail or catering business, but in the Civil Service. His story illustrates the fact that the introduction of a minimum wage will not represent a significant improvement to many low-paid workers, even with the provision in the new legislation for increasing the rate to £5 an hour by 2002.
"The rate is disappointing," says John Douglas, deputy general secretary of Mandate. "It is only two-thirds of the median industrial wage of 1987." Michael Coffey, joint general secretary of FUGE (the Federated Union of Government Employees), notes that FUGE was pushing for a minimum wage of £6.50. "With inflation at four-and-a-half per cent, very little will improve for people on £4.40 an hour. Some multinational food chains are already paying £5 an hour, so £4.40 is an insult." Recent negotiations have resulted in an agreement to pay contract cleaners £5 an hour from April 1st.
Nevertheless, the new legislation does represent progress. Ireland is the last country in the EU to introduce a minimum wage, says Rosheen Callender, national equality secretary of SIPTU: "An estimated 200,000 people, about 13-and-a-half per cent of the workforce, will benefit from the introduction of a minimum of £4.40 an hour. Many people have been earning considerably less than this."
One of the lowest rates of pay has to be a food-processing plant in the west, where part-time workers are getting less than £2 an hour. "The new rate will affect more people in rural areas," believes John Douglas. "Rates of pay for workers in small shopping centres, pubs and supermarkets around the country are still as low as £2.50 or £3 an hour." Other employees earning less than the minimum rate include some textile workers, cinema ushers, and those working in small retail businesses and non-unionised catering companies.
Deirdre, a married woman with two children who works in the retail business in the south-west for 20 hours a week, earns £4.37 an hour and feels "the employers just don't care. I feel I should be on at least £5 an hour. I'm 40-years-old and I've been working for the same company for three years. My husband has most of my tax-free allowance so I come out with about £60 a week. We went to the union but they couldn't do anything. It's hardly worth your while to go to work." Until last year, Gerry worked in a factory where the wages weren't much better than his current position in the Civil Service, but by working overtime three nights a week for a year and a half, he was able to put by a couple of thousand pounds in the credit union. Thanks to a credit union loan he was able to buy a car for £2,000 and pay his car insurance of £2,000.
"I love having the car; it gives me great freedom. I can go fishing after work or go and visit my family. But I have to pay the Credit Union back £66 every week, which leaves me with very little. My rent is £35 a week, and then there is the gas and the ESB. I eat cornflakes for breakfast, a box of those lasts for ages. I make cheese sandwiches to take into work, and I buy vegetables in the market to cook for my dinner.
"Every so often I go out for a beer and a game of pool. But going out for a night of drinking and clubbing is too expensive. I've only done that twice since Christmas. I don't buy a lot of clothes. I bought a pair of boots for £25 before Christmas, two pairs of jeans on sale for £20 each last September, and a few shirts on sale for £5 each last February. That's all I've spent on clothes for a long time. I have to be careful. If I want to do one thing, I can't do another."
He feels rather bitter that he left his factory job because he believed the Civil Service was a better option. He got four honours in his Leaving Certificate, and did a two-year certificate in business studies, "but I'm earning less than a labourer. . . We're told the average industrial wage is supposed to be £15,000. In my job, it will take 15 years to go up to that level. I'll be nearly 40. I can't understand why the Government has acknowledged the fact that no-one should be earning less than £200 a week, and yet, as a civil servant, I'm earning less than that."
He believes the tax system is unfair: "The Government is prepared to tax the minimum amount of money it has declared we are entitled to earn. Low earners should be taken out of the tax system altogether. I pay £21 a week in tax. The new tax legislation is worth less than £4 extra a week for me, whereas someone earning two-and-a-half times my gross pay will get eight times more than me."
Even with supplements such as the FIS (Family Income Supplement), which is related to the number of children in the family, low-income earners are at risk of getting into debt. The Money Advice and Budgeting Service (MABS) was set up in 1992 "to empower people to regain control over multiple debt situations," says its co-ordinator, Liam Edwards.
"Otherwise their dignity and credibility goes lower by the day." Seventy per cent of the 20,000 people who have used MABS are on social welfare, but Edwards notes a recent increase of the number of low and middle income earners consulting the service.
"I see a lot of people who are in low-paying jobs, working long, anti-social hours just to earn enough to live on," says Michael Culloty, a money adviser with Finglas MABS. "There is one man I know who was unemployed for 16 years, and is now working 60 hours a week as a courier. He has two children and a wife on disability. Although doing this kind of menial job leaves him only marginally better off, it gives him a much more positive outlook. He earns £3.33 an hour before tax, so the introduction of the minimum wage will be a big improvement for him."
It is feared that for some, the extra money will disappear into a loophole. Although it has been decided that tips, service pay and premiums (apart from the shift premium) will not be included in calculating the minimum wage, other considerations may be used by employers to pay less. "There are many escape clauses which exclude people like trainees, under-18s and first-time job entrants," says John Douglas.
"I see people getting lost in the £4.40-an-hour debate, whether it's the right amount," adds Ciaran Lynch, chairperson of the Labour Party's Ballyphehane Branch in Cork South Central. "The method of calculation is more important than the sum. I can see casual workers being forced to work unsociable hours to earn overtime just to fulfil employers' needs to fit the minimum wage criteria. A person who is on £4.40 an hour could find they have their hours reduced so that the employer can take on a casual worker for less."
Aebhric McGibney, an economist with IBEC, says there is no question of employers forcing people to work overtime or manipulate their hours to arrive at a certain sum. He sees implementation of the new legislation as a potential nightmare for employers: "There is still not enough detail as to how it will apply, and yet there will be criminal penalties for non-compliance."
Rosheen Callender is concerned that, with the approval of the Programme for Prosperity and Fairness, which involves an increase in wages of five-and-a-half per cent, employers may try to get away with giving one increase rather than two: "Employees, especially if they are not in unions, must insist on receiving both the new minimum wage and their PPF increase."
