Low pay levels in retail and hospitality are perpetuated by welfare transfers that subsidise struggling households, according to Tasc, a trade union-supported think tank. Comparisons with other EU states confirm Ireland has "a serious structural problem with inequality" and the report advocates a redistribution of resources between high- and low-paid workers and between labour and capital.
The approach taken by successive governments – a progressive taxation system and the distribution of benefits to low-income households – tends to discourage job seekers. The Tasc report suggests that higher pay levels would make work more attractive and allow for additional State investment in universal services, such as health, childcare and housing.
Low pay is seen as a key driver of inequality. Women are particularly vulnerable. The introduction of zero-hours contracts led to gross exploitation. That situation has improved somewhat. But because of weak labour protection, minimum wage levels remain the norm within the retail and hospitality sectors. Recently, progressive employers have begun to offer living-wage pay levels and this development is to be welcomed.
Almost one-quarter of the workforce is on low pay, the second highest percentage in the EU. Ireland has a high cost of living, more expensive than other countries. Were it not for welfare transfers that propel Ireland into a median EU income position, the incidence of poverty and crime would be much higher.
This report offers reasons to review those mechanisms that encourage pockets of long-term unemployment and social inequality. Attention is drawn to “precarious work practices affecting a growing number of invisible and under-valued workers”. It notes that an unusually low share of the national income goes to the working and lower middle class, and that income inequality between rich and poor has been growing steadily for four decades. These elements have fuelled public anger and political opportunism in other countries. The Government should take note.