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The political folly of the “Living Wage” plan

Once again, the Irish Government has borrowed a plan from the opposition. Once again, it will do them no good, whatsoever.

The announcement of a “living wage” by 2026, made by Leo Varadkar yesterday, is interesting on two levels. First, it constitutes the abandonment of the concept of a “minimum wage”, which is interesting on the level of language. When the minimum wage was introduced, years ago, it was hailed as a great progressive leap forward – a minimum standard of living beneath which none who worked would be permitted to fall. It had broad political acceptance, and the arguments against it, while logical, did not measure up to the basic sense most people had that it’s fair to make employers pay their workers a decent wage.

As the decades have progressed, though, the minimum wage fell out of favour with the left. The language is now, for some reason, considered stigmatising: Who wants to work for a minimum? People should have a “living wage”, instead. And so, in a matter of two decades, the minimum wage has moved from being a triumph of left-wing policy to being something only a right winger would think is enough. It’s a useful insight into how the frog gets boiled, more generally.

The ”living wage” is, of course, just a minimum wage with a different name, or at least it will be, once it becomes law. The minimum will increase from €10.50 per hour to €12.17, or an annual salary of €22,782 per year.

The opposition, predictably, will say it is not enough and that it should be higher. They will say that it is not a true living wage at all, because the unions wanted €12.90, and that was before inflation started to take hold last year. As I write this, nobody has yet issued a formal reaction. By the time you read it, it’s a safe bet that Paul Murphy, at least, will have called it insulting and Sinn Fein will have said that it is a betrayal of the lower paid. That it is neither matters little: The Government have once again made a trap for themselves: Once you concede the principle that the wage should rise, the opposition will always outbid you, and you will always look niggardly by comparison.

In all of this, employers have very little of a voice. A minimum wage increase, remember, is not paid by the Government. It is paid by little shops, and little pubs, and all sorts of smaller employers whose owners, often, are not exactly millionaires themselves. The Government will give them no subsidy to help with the higher wage bill. If it must be met, it will be met in one of two ways: Either you, the consumer, will pay more for your pint and your loaf of bread, or the shops will get by with fewer employees doing more work each for their wages. And, at the end of the day, a person earning 12 euros an hour is unlikely to be grateful to the Government for their station in life.

None of this is to say that an increase in the minimum wage may not have some merit: But in adopting the language of the opposition, the Government has conceded the point. It is introducing a “living wage” that is not the real “living wage” that the Unions and the Opposition wanted.

Imagine if they had, instead, just stuck with their own policy, and announced the exact same increase in the minimum wage, to €12.17 per hour. Then they could at least claim it was their own idea. As it is, it’s transparently an opposition idea, implemented, about 70% of the way, by the Government.

The Government’s political calculation here, if you talk to some of the very smart people who advise it, is that the average voter doesn’t care about the minimum wage, because it doesn’t affect them: They want to see it increased to a living wage not because it benefits them financially, but because it makes them feel better about the country and gives them an argument when their radical friends bring up their support for Fine Gael or Fianna Fáil: Well, they introduced a living wage, didn’t they?

But that sums up their entire approach to governing: The opposition says “we want X”, and the Government says “we’d love to, but we can’t afford it yet”. The opposition says “yes we can”, and people decide who to believe. At no point does this Government ever simply make the case that an opposition demand is actually a bad idea.

That’s how we ended up with the disaster of rent controls. And the collapse in the landlord market. And the banning of peat, and so many other unpopular policies. The opposition demands them, the Government implements them, and then the opposition simply says “well we’d not have done that” or “we’d have done it differently”.

When you have no ideas of your own, and no confidence in the ideas you do have, you end up in this position. The “living wage” is just the latest example.

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