Mary Murphy

Session 2 and 3 Cap the Gap Day 3 11th April 2015

Wages v Capital

Distribution of Income

Pay Ratios Cap the Gap

• Irish company law does not require companies to publish pay ratios and doing so is not established practice.

• US Securities and Exchange Commission proposed a rule in 2013 that “would require public companies to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees.”

• Allow shareholders and customers to determine whether or not the company is ethical in its business dealing and fair in its treatment of employees. http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539817895#.VM-JX9KsWSo

• Average €40,000 is 2.3 times MW.• High €75,000 is 4.3 times the MW.• ‘very high €200,000 is 11.4 times the MW.• Extremely high (€1 million) is 56.9 times the MW.• Gender Pay Gap.Migrant Pay Gap, Disability Pay Gap • Civil servant pay scales pay ratio of 10-to-1 - lowest pay point for cleaners (€18,996)

compared to the top salary payable to Secretary General of €185,350. (9.76).

How Income is distributed

Class and Gender impact of tax and welfare changes

Market distribution – predistribution

Market inequality

Post distribution

Jobless HH 23% (53% have children)

Pensions

Today

• Low Wages – living wage

• Welfare

• Basic Income

Key issues in income policy

Social Welfare • Adequacy • Individualisation• Universal v targeted means testing

Work and Welfare • Work incentives• In work benefits • Conditionality and sanctions

How much is enough?

• P2000 working group on income adequacy and indexation

• What methods can you use

• What do you want to benchmark against

• International comparisons

Veit Wilson

• Budget standard? Basket of goods?

• Inclusion?

• Relative income poverty?

• Minimum wages? Principle of less eligibility

• Average wages?

Is your income enough to allow a minimum essential standard of living?• The Minimum Income Standard shows the income people need in order

to afford the goods and services that members of the public have agreed are a minimum essential for everyone in Ireland to have. This is a minimum standard that people agree no one should live below.

• A calculator allows you to see the minimum for your household type. By answering a few simple questions the minimum income standard for your household will be calculated. You can then make certain adjustments for your situation.

• The calculator is based on a social consensus view of the minimum needs for everyone. It aims to be a universal tool and cannot show what you require for all your individual needs. http://www.misc.ie/

Lone parent, 1,500 housing 15 and 17 year old child, €59,000

Social welfare v what is needed

Poverty and deprivation – mixed impact of social welfare

Who decides?

• Minister

• Experts

• Social Partners

• policy process, users?

Where is the power

EU semester, EC AGS, AR, CSR IFSC EMC

Cabinet Media Parliament

Committees

Electorate lobby

Experts

International

• Hard to compare

• What are you trying to buy

• Public services

• Purchasing power parity

EAPN 2007

Individualisation – who gets it

• Male bread winner

• Family payment

• .7, .33 why

• Limitation rule for unemployed

• Passport to ….

• Administrative Individualisation

Universal v targeted means testing

• Medical card• Household package • Child benefit

• Cost of universal v disincentives of transitioning from welfare to work

• Universal principle of equality • Trade-offs• Crisis CB debate – child income support

Work and Welfare

• Work incentives

• ESRI -

• Replacement ratios, economic rationality, gendered moral rationalities

• Couples with children in rent supplement

• Exceptions do not prove rules,

• Unemployable

EAPN 2009

NAGTSW

NAGTSW - NOT PUBLISHED

In work benefits

• Income disregards

• Income supplements (PTJI, BTWA)

• Family Income Supplement

• Taxation exemptions

• Employer subsidies – Jobs Plus,

FIS

Income equality and precarity/casualisation

Precarious work

Low pay

Part-time workFlexible hoursLittle upskilling

Ease of hiring & firing Reduced social

security

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OECD: Strictness of employment protection legislation index, 2008

The EU’s social protection agenda:making work pay

Making work pay is one of the four pillars of the EU’s strategy for the modernisation of social protection

Þ rhetoric of ‘incentives to take up work’Þ country specific recommendations: reduce

benefits, tighten conditions, impose (stricter) duration limits…

Þ many benefits, and almost all social minima are lower than the official EU poverty thresholds

Þ reluctance of EU Council vis-à-vis framework directive on guaranteed minimum income systems

Subsidising low paid employment (USC)

• Slivers of time – mini jobs (Germany)

• Bundling – packaging

• Crowd working – biding for work on e-bay

• Microwork, “Work that can be completed in a small block of time on a paid or voluntary basis”- blocks of about three hours or less, where there is no on-going commitment to continue the arrangement implied by either the worker or the entity providing the work.

• ‘as-and-when’work (used in the UK), casual work (Department of Social Protection), occasional work, (very) atypical, part-time work and flexible work

Irish trends

Liberal Universal

And also underpinned by a Record of Mutual Commitments [rights and responsibilities]

Sanctions 2010 SW Act provides that a payment can be reduced if a person: Refuses an appropriate offer of training Declines an intervention

Does not attend meetings Drops out of the process.

July 2013 DSP penalty rate for 21 days increases to nine weeks.

Number of people penalised has increased significantly since the start of this year. Jan – Dec 2012-1,455. and Jan - Oct 2013 2,403 claimants ,,, expect more

IMF REVIEW Oct 2013

Youth guarantee sanction • € 188 (– 44) to € 144 , € 100( – 25) to €75 €144 (- 33) to € 111.

• Youth guarantee differentiated from GSW – problem is ‘flat screen TV’s’

• Higher level of engagement/commitment PES– Non-attendance at meetings with DSP – Failure to accept a legitimate offer of a training/work placement/job – Failure to attend an accepted place on a training/education course – Failure to apply for or accept an opportunity on the national internship

scheme (JobBridge) (Additional Requirement)– Failure to register their CV on recommended jobs websites (Additional

Requirement).

– Disproportionate - legal?