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Ivana Bacik Something has to give as costs soar - Ireland needs a pay rise

The Labour leader says a national pay rise will be a win-win for everyone.

THE SPIKE IN the cost of living is hurting people in every community right across Ireland. Inflation has surged to a 22-year high and looks set to continue its spiral. The rising costs of fuel, housing, and basic services are now out of control.

The price of essential foods like bread, milk and butter has risen sharply. Hard-working adult children are being forced to live at home rather than move out, parents are already wondering how they will afford new uniforms in September, and the idea of a modest family holiday or city break is a pipedream for most people.

Everyone is feeling the pinch – most of all those who were already struggling to make ends meet, and who now need the government to intervene and be on their side.

Tipping point

Something has got to give. The reality is that the government’s response to the cost-of-living crisis simply does not go far enough. That is why we believe that Ireland needs a pay rise.

This week, the Labour Party has kickstarted that process, starting by trying to make a Living Wage a reality. Our Living Wage Bill, which we introduced in the Dáil on Wednesday, would ensure the hundreds of thousands of people on low pay in Ireland would get the pay rise they so urgently need.

A national pay rise means putting money back in the pockets of those who need it most. It means ensuring that monthly or weekly wages go further.

It means implementing an effective universal pay rise by increasing the minimum wage – but it also means targeting the enormous costs faced by so many households.

Labour is unapologetic about the need for negotiated pay rises for people across the entire labour market, in the private and public sectors. Profits continue to rise and staff must be compensated.

However, the key reason we need this national pay rise is because low pay remains rampant across Ireland. One in five workers is officially categorised as low-paid. We have one of the highest levels of low pay in the EU.

Culture of low pay

Low-pay levels have remained steady over the last two decades. This was true even before the pandemic – and it has worsened with rising inflation. Many households simply do not have sufficient income for the basics. Right now, they cannot afford a decent standard of living, they are not being provided with basic economic justice.

We know that increases in take home pay can offer protection against spiralling inflation and redress the economic imbalance across Irish society – especially for those experiencing the sharp end of rising prices.

The programme for government includes a commitment to progress the National Minimum wage to a living wage over the lifetime of the government. Yet urgent action is needed to deliver this. The estimated living wage in 2021 was €12.90 while the minimum wage at present is €10.50. That hourly wage gap will only grow.

The most recent increase of 30 cent to the minimum wage in January was simply inadequate to meet the sharply rising costs of living.

Since 2016 the national minimum wage, the minimum wage has risen by less than 15%. So, the economic reality is that the goal of a living wage has become even more distant.

Unlike the minimum wage, which is not based on the cost of living, a living wage is truly evidence based, grounded in social consensus.

Our Bill would transform the Low Pay Commission into the Living Wage Commission and mandate it to make recommendations to ensure the minimum wage is transformed into a living wage within three years.

Cost to business

The usual suspects may argue that businesses cannot afford pay increases. However, this analysis fails to recognise the positive impacts of pay increases on productivity. Instead of being a burden on business, it would be a win-win.

First, we know that pay increases to those on low wages boost the income of businesses; they are recycled back into the local economy, particularly in sectors reliant on discretionary spending, like takeaway coffees, lunch outings or trips to the local boutique.

Secondly, all the evidence suggests that higher wages improve productivity. We know how difficult it is for many businesses to recruit staff – for bars and restaurants, childcare and homecare. These are sectors which suffer greatly from high staff turnover – imposing a significant cost on businesses.

A national pay rise just makes sense. Higher levels of take-home pay for staff and employees would reduce employer costs and improve the bottom line of businesses over time. And most importantly, eliminating the low pay trap for workers and increasing the real incomes of households would help to build a fair and equal Ireland.

Ivana Bacik is the leader of the Labour Party and a Labour TD for Dublin Bay South. 

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    Mute Nomad
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    May 15th 2022, 7:45 AM

    Okay – increase at the bottom but how about a tax cut for the rest of us too? The Government must be creaming it with the extra VAT receipts.

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    Mute David Van-Standen
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    May 15th 2022, 8:09 AM

    Giving everyone Ireland a pay rise sounds like a great idea! Until you actually think about it, because doing so would only maintain the current situation between high and low paid workers and further price increases would them negate it entirely.

    Low and middle income levels are the ones feeling the pressure of the rising costs of living, not those on high pay + bonuses + expenses.

    Any meaningful measures would need to raise up the income of the low and middle income earners to improve their situation and also require measures to prevent price increases, to stop rampant profiteering off the back of every alleged crisis.

    For example:
    In 2008 crude oil was $132.47 per barrel and petrol in ireland was €1.21 per litre.

    Today crude oil is $108.50 per barrel and petrol is €1.88 per litre.

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    Mute Richard Williamson
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    May 15th 2022, 9:11 AM

    @David Van-Standen: how is fuel so expensive at the pumps if the barrel of oil is relatively cheap?

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    Mute OConnelj
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    May 15th 2022, 10:42 AM

    @Richard Williamson: tax

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    Mute Ciaran
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    May 15th 2022, 10:42 AM

    @Richard Williamson: barrel of oil is the raw ingredient and the fuel at the pump is a by product of oil after refinement. Then there are transportation costs , importation Costs , labour costs, taxation and margins to get it to the pump station. Most difficult and lucrative part of a product is the last three miles : getting it to where consumers are.

    It’s like saying how come grain is relatively cheap compared to a sliced pan in the shop.

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    Mute John Elliott
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    May 15th 2022, 12:03 PM

    @Richard Williamson: he pretty much explains it in his comment. Pure greed pumping up prices on the back of people’s fears on World events. All the oil companies have had their biggest quarterly profits ever in 2022.

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    Mute first_timer
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    May 15th 2022, 8:57 AM

    How about abolishing USC and property tax Ivanka?

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    Mute first_timer
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    May 15th 2022, 8:58 AM

    @first_timer: *Ivana*

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    Mute The next small thing
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    May 15th 2022, 11:05 AM

    @first_timer: great idea, what taxes would you increase/introduce to cover the 5-6 billion a year shortfall or would you cut public services?
    As for labour, when you support the influx of unskilled workers from all over the globe why would businesses increase their cost base when they can replace workers with people who have the same or lower wage demands?

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    Mute Derek Power
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    May 15th 2022, 12:44 PM

    @The next small thing: how did we survive before it? I don’t disagree with your comment but it was brought in to plug a gap and all that seems to have happened is a bigger fund to be mismanaged. This same boiler plate comment pops up any time removal of USC is mentioned.

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    Mute The next small thing
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    May 15th 2022, 1:52 PM

    @Derek Power: We survived on stamp duty and other associated taxes related to the building boom of the noughties, that disappeared so needed to be replaced, the increases in expenditure in the noughties are still there whether it’s public sctor pay and pensions, social welfare rates, housing supports, childrens allowance etc. I don’t have any faith in the current government managing the public finances effectively and the opposition want to increase expenditure further so they’ll be coming for even more taxes.

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    Mute Neuville-Kepler62F
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    May 15th 2022, 8:19 PM
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    Mute Enda not endof
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    May 15th 2022, 7:44 AM

    How about not supporting the government and actually being opposition.

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    Mute et
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    May 15th 2022, 8:40 AM

    We really need people with know how to run this Country, it is such a tiny place and it is being ruined at present.

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    Mute David Corrigan
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    May 15th 2022, 7:54 AM

    €93.60 before tax increases per week still won’t help as food, energy, fuel costs are ramping up on a monthly basis. A lot of companies won’t be able to afford pay rises as their operating costs are being hit from all angles. When all variables in the equation are moving at the same time, it is very difficult to nail things down.
    The next 2 years are going to be very very bad for low paid folk in this country.

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    Mute Margaret Deacon
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    May 15th 2022, 12:15 PM

    @David Corrigan: yep if wages go up everything else will also to cover employers expenses

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    Mute Tomo
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    May 15th 2022, 12:30 PM

    @David Corrigan: If companies can’t afford to raise low income workers wages, then those companies can’t afford to operate and should not exist.

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    Mute David Corrigan
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    May 15th 2022, 12:47 PM

    @Tomo: True but if they are in a highly competitive sector, they can’t go all out and increase their prices to account for the increases in running costs. I know very profitable companies paying peanuts to their workers and they have no interest whatsoever in increasing wages. It’s called greed.

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    Mute Kate Peters
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    May 15th 2022, 5:17 PM

    @David Corrigan:we have hardly anything of our own in this Country,they have either been sold to global companies or they have closed down,FG FF are to blame,they would sell the shirts off the people’s back if it made them look good in the EU,I’d say David in 2 years time,they will be very little small to medium businesses opened..

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    Mute MikeOM
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    May 15th 2022, 8:49 AM

    Make the country even more expensive. Yeah, sure Labour, that’s the solution.

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    Mute Niall Power
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    May 15th 2022, 11:18 AM

    Labour pretending to care about the less well off again!
    This is from the party who took the medical card from disabled children when last in government!
    Is that Real Socialism Ivana?

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    Mute Liam Byrne
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    May 15th 2022, 11:08 AM

    Ivana is feeling the pinch, have you seen the price of Champagne and Smoked Salmon, and imagine if had to pay a Water Tax too.

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    Mute Ciaran
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    May 15th 2022, 11:35 AM

    @Liam Byrne: you should pay for your water..

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    Mute Liam Byrne
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    May 15th 2022, 2:23 PM

    @Ciaran:
    I do.

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    Mute Kate Peters
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    May 15th 2022, 5:18 PM

    @Liam Byrne:

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    Mute Jim O'Sullivan
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    May 15th 2022, 8:07 AM

    What a narrow ambition from a “Labour” party. What we need is distributive justice—ring any bells Ivana?

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    Mute FiannaFáilness FineGaelness
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    May 15th 2022, 2:16 PM

    @Jim O’Sullivan: They’re “Labour” in name only. We all know that putting up minimum wage without introducing any other measures will only increase the cost of living more.

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    Mute gerardfleming
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    May 15th 2022, 11:08 AM

    People on invalidity pension and disability have only recieved 5 euro increase in last 3 years and tds have had 3 pay rises in that time. Welcome to Ireland

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    Mute Ciaran
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    May 15th 2022, 10:48 AM

    You can’t just increase wages across the board and not think the end price of the product or service won’t increase too. That’s very naive.

    A worker on 10.50 an hour then being paid 13.50 an hour increase the cost of labour by 29%. A business will never absorb such an increase.

    Increased labour costs = increased cost to the end consumer. It’s very basic.

    .

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    Mute Stuart Birney
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    May 15th 2022, 8:35 PM

    @Ciaran: No Ciaran, you’re completely missing the point! What’s very basic is the fact that people out there are having to work for €10.50 an hour! Are you on €10.50 an hour? I bet not but I also bet that if you were you would be very much welcoming a raise and not spouting such nonsense.

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    Mute Virgil
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    May 15th 2022, 8:26 AM

    What happened to Alan? Why is he no longer leader ?

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    Mute David Corrigan
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    May 15th 2022, 11:25 AM

    @Virgil: Who?

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    Mute James Reardon
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    May 15th 2022, 1:06 PM

    Populist ideas to help Labour take the Greens spot in the next coalition is all this is. Very transparent. Theyll shaft us just like Ivanna and the few Labour tds did to their own leader.

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    Mute Dave
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    May 15th 2022, 11:18 AM

    Typical Irish politics, short sighted stuff with only one intention, buying votes…

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    Mute James Walsh
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    May 15th 2022, 10:53 AM

    “Every little hurts” that’s labours way and ye ensured that from you’re time in government, fool me once ye did never again trust you. #Neveragain

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    Mute Jonathan Conway
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    May 15th 2022, 12:07 PM

    Great idea – Increasing wages for everyone would ensure that we enter a wage price spiral which would leave high inflation even more entrenched and hard to solve. If this happens Central bankers would have no choice but to jack up interest rates to 8 – 10% in a climate with crazy corporate and personal debt that would cause a global depression for years and make the 1980s look like a teddy bears picnic.
    Great to see Labour great ideas.

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    Mute The Guru
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    May 15th 2022, 11:11 AM

    Yes let’s try putting out a fire by throwing petrol on it.

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    Mute Don Hogan
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    May 15th 2022, 7:41 PM

    Seems Labour needs a lesson in economics. Raising wages during an inflation is counterproductive and only fuels higher prices – more money leads to greater demand which leads to more inflation.

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    Mute l
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    May 15th 2022, 12:30 PM

    30% total tax rate from 35 up to 100k. Get on with it.

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    Mute Nirvana Barbarossa
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    May 15th 2022, 11:45 PM

    Ivana Basic Income – she has no new ideas, she thinks, “if I say I’ll give everyone more money then they will vote for me”

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    Mute Virgil
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    May 16th 2022, 11:44 AM

    Labour will be lucky to get any seats in the next GE. If they’d stuck with Alan Kelly they’d be in a position to make gains. But of course, Kelly wasn’t ‘politically correct’ enough for the smoked salmon types. I’m actually looking forward to the collapse

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    Mute Ivor McTin
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    May 15th 2022, 7:52 PM

    Ivana, I think you’ll find it’s recent immigrants feeling the pinch more so than others. Would labour support a tax cut for immigrants on the lower incomes similar to thr SARP program for high income foreign nationals?

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    Mute Joseph Duggan
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    May 15th 2022, 11:42 AM

    Gdp up in 2021 how

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    Mute Don
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    May 19th 2022, 9:12 PM

    One of the most blatant price increases was the ESB’s 25% increase from May 2022. This they justified in order to retain talent in the company. The company is highly profitable and completely under government control. The net result is inflation across the board for everyone which now must feeds into wage demands. I really don’t understand why the government could not step in to rein this in. Maybe the government were gleefully thinking about their own pay going up.

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    Mute François Pignon
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    May 18th 2022, 11:18 PM

    Too many mouths, too few resources! Death and taxes, my dears.

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