How to achieve a Living Wage
Since its launch in 2014, the Living Wage has become a crucial part of the wage debate. Despite its popularity, though, there is little consensus over how we might achieve a Living Wage.
Merely increasing the minimum wage may not work. The Living Wage is an annual calculation of a minimum acceptable living standard.
It is based on a single person working 39 hours a week on a permanent basis.
While the Living Wage is expressed in hourly terms (€12.30 per hour) it is, in fact, an annual figure.
An employee may earn more than €12.30 per hour but, if they are on a precarious contract or unable to find full-time work, their annual income may fall far short of a minimum acceptable living standard.
The Living Wage is about more than just hourly pay; it is about contracts, regular hours and income, and an all- year living standard. We need to do more than just increase the minimum wage which is exclusively focused on hourly pay.
First, over 20% of Irish workers are low-paid. There is a strong relation- ship between collective bargaining and low pay. In EU countries with high levels of collective bar- gaining the number of low-paid is much lower. In Finland it is 5%; in Belgium it is 4%.
There are countries where low pay is not prevalent, yet they don’t have a minimum wage — like Denmark and Sweden. They reduce low pay through collective bargaining.
The legal right to collective bargaining gives workers the ability to bargain their way up to the Living Wage and remove precarious practices.
Second we need to reduce living costs. Between 2014 and 2019, the Living Wage increased by 85 cents. Yet, the cost of non-housing expenditure — food, transport, energy — actually fell. The rise in the Living Wage was wholly down to rent increases.
Reducing rents and other social costs (Dublin public transport fares are twice the average of other EU capitals) can help close the gap between the minimum and the living wage.
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The two strategies — collective bargaining and reducing living costs — pay and reduce household expenditure. In this context, the minimum wage will still play a role — though much reduced.
Empowering workers and reducing living costs is the most efficient and sustainable way of achieving the Living Wage.