The Government has failed to deliver on its promises to help low-paid workers, writes Manus O'Riordan
The stubborn refusal to increase the labour inspectorate during Tánaiste Mary Harney's watch at the Department of Enterprise and Employment has very publicly come home to roost in the current exposure of the denial to immigrant workers of their basic entitlements under law. Rectifying that failure of Government must now be a top priority.
But there are further failures of delivery which must be rapidly addressed if other previously identified inequities, even if not illegal, are also to be rectified. For it is indeed a scandal that from May 1st onwards 37,000 workers, who will be earning no more than the statutory minimum wage for a 39-hour week, will effectively be told by Government:
"So you thought you were out of the tax net? More fool you! Did you really believe that, when the Minister for Finance's Budget statement in December proclaimed that limited tax credit increases 'will ensure that all those on the minimum wage are fully outside the tax net', it would have any meaning when the minimum wage itself would require adjustment in May? Admittedly, we kept that adjustment as low as possible, and in relative terms below that of the previous adjustment. Nonetheless, each of you must now cough up €167 in tax to us this year."
Workers who try to survive on what is legally the lowest of wage rates have been dealt a double blow by the failure to deliver on repeated Government promises that they would share equitably in the fruits of economic growth and be completely removed from the tax net. Indeed, when first set in April 2000 at a rate equivalent to 54.27 per cent of the average industrial earnings prevailing at that time, the Tánaiste's boast was that "the introduction of the national minimum wage will ensure that those sectors of the labour force, especially women and young persons, currently on low pay, will get a better share of the fruits of economic growth of recent years."
Over the past five years, far from getting a better share, subsequent adjustments in the minimum wage have in fact left them with a lesser share. As we in Siptu have been pointing out for the best part of last year, even to have hung on to the same share - getting back to the 54.27 per cent ratio - would have required a new minimum wage rate of €8 an hour to be set for May 2005. The adjustment of the minimum wage from €7 to €7.65 in May constitutes a Scrooge-like failure to maintain that same share, to say nothing of the Tánaiste's "better share".
Worse still - such low-paid workers will now be legally mugged by the State during the remainder of the year for €167 of that minimalist increase. It was in the Government's own budget 2001 paper that the Tánaiste had promised that the minimum wage would be completely cleared out of the tax net in budget 2002. "That's real tax reform," she proclaimed four years ago. Would that it had been so real. But only 90 per cent of the minimum wage was in fact exempted from tax as a result of budget 2002, and no further improvements on that relative position were made under budgets 2003 or 2004.
This is why Siptu insisted that its top priority for Budget 2005 was the demand for tax credits to be increased in order to clear a wage rate of €8 an hour out of the tax net for this year.
Instead we got a cynical playing with words in December's Budget statement, to the effect that all those on the minimum wage would be outside the tax net in January 2005, without any mention of the more substantive fact that, once the prevailing rate of €7 was adjusted by anything more than 3 cent an hour, all such workers would be whacked for tax yet again from May onwards.
"To those that hath not, the less shall be given," is indeed a sad commentary on the Government failure to deliver on its previous promises to the lowest of low-paid workers.
Manus O'Riordan is head of research for Siptu