In today’s economy, a job is no guarantee of dignity or security. One in five workers now earns less than the “living wage”, a sum above the minimum wage but below what campaigners consider to be enough to make ends meet. Poverty is no longer a cast-iron link to unemployment. One in six people living in deprivation has a job, a figure that has grown during the recession.
The Living Wage series in The Irish Times over recent days has highlighted the day-to-day struggles of people who are working hard but struggling to make ends meet. Much of this is down to the fact that, nationally, real income has fallen over the past five years. A range of new taxes and charges have devoured the salaries of many, while the rent and utility costs are eating into what little is left over.
Worryingly, the division between work and unemployment is becoming increasingly blurred for those on low incomes. Many form part of a growing “precaricat”, stuck on either zero-hour or short-term contracts where insecure work, exploitation and free-riding on internships is increasingly common.
All of this is costing taxpayers. This year the Department of Social Protection is due to spend close to €300 million on the Family Income Supplement, an in-work benefit for some 50,000 working families on low incomes. The cost of this payment has soared by about 30 per cent over the past three years alone.
Campaigners point to the living wage as part of the solution.The concept has gained traction recently in the US and the UK, both of which are grappling with problems around low-paid work. In Ireland a living wage of €11.45 per hour has been put forward by a technical group of campaigners, trade unions and think tanks. They estimate this is the minimum needed to maintain an acceptable standard of living, significantly above the current legal minimum wage of €8.65 per hour.
Employers will doubtless object. But there is mounting evidence that firms which can afford to pay these rates have benefited from increased job retention, lower recruitment costs and decreased absenteeism. The exchequer can also benefit through a higher tax take and paying out less in welfare support.
It is only part of the solution. Any tax changes in this month’s Budget need to be targeted at rewarding low-paid work. Labour market protection is also required to tackle the scourge of insecure work contracts. It is a reminder that a job is not an end in itself. Work should give people a sense of meaning and purpose - but it also needs to pay. Living wages are good for business, families and society. Tackling these issues may seem expensive to some. A failure to do so, however, would be the most costly option of all.