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Poverty, old age and low wages

Raising pension age, reduction of low wages attacked

The Social welfare and pensions Bill, 2011 attracted critical comment for its implications on poverty  (Seanad Eireann, Debates, 23rd June 2011, 744, 797).  Katherine Zappone (ind, Taoiseach nominee) pointed out that the raising of the pension age would disproportionately affect poorer and by definition less healthy people who were obliged to leave the workforce early due to poor health and until they received the pension at 68 would be well below the poverty line.  Was this fair?  What would be the effect of the increased pension age on the poverty of old people?  There was a need to poverty-proof the implications of increasing the pension age before it became law.  Trevor Ó Clochartaigh (SF, agricultural) described the level of poverty among older people as unacceptably high, with 24% older people in poverty.  The state pension was the single most effective way of reducing poverty among older people and had done so over 2004-7.  He quoted the report by Mary Daly Measured or misused? Poverty and deprivation among older people in a changing Ireland, which showed the heavy reliance by older people on the pension in keeping out of poverty.  But if older people were forced onto jobseeker payments while awaiting the much later pension, they would be down between €31 and €42 a week and without the household benefits package of fuel allowance, TV licence, telephone, electric, bottled gas or natural gas.  Older people were already disproportionately hit by fuel poverty with 1,500 to 2,000 extra deaths in winter.  Anyone voting for the Bill would condemn swathes of older people to poverty.  In effect, it was cutting the pension 16% and extending the working life by three years.  This contrasted with the approach in France and Slovenia.  John Crown (ind, NUI) pointed out that when the pension had been introduced in Germany by Bismarck in 1879 the average age of death was 45 and now it was close to 90.

In the Dail debate, Aengus Ó Snodaigh (SF, Dublin SC)  criticized keeping people at work until 65, 66, 67 and 68 on the basis that it would prevent jobs going to younger people in need of employment (Dail Eireann, Debates, 7th June 2011, 419).  Raising the pension age might be relevant at times of strong economic and employment growth, but was a fallacy in times of recession. Predicting the ratio of workers to pensioners was not an exact science and was affected by many elements.  €1bn could be saved if tax reliefs on private pensions were standardized and another €100m saved if the cap on earnings from pension contributions were lowered to €75,000, all that without making an older person work a single day longer.  Age Action Ireland had expressed concern that the raising of the pension age to 68 by 2028 would create a poverty trap for older workers.  Many had contracts requiring them to retire at 65, so they would be forced out of employment at that age and have to sign on the dole until they qualified for the pension.  Other countries had set down longer lead-in times to ensure that people did not end up in poverty traps of this kind.  Wealthier older people had the option of private pensions and savings until their state pension, but those on low incomes would be hit hardest.  There was no provision for people in physically demanding jobs to retrain.

Asked later about fuel poverty and older people by Aengus Ó Snodaigh, the Minister for Social Protection Joan Burton told him that over 19,000 low-income homes were retrofitted with thermal efficiency measures in 2009 and a further 24,291 in 2010 (Dail Eireann, Debates, 15th June 2011, 243-4).  The Department of Communications, Energy and Natural Resources was tasked with presenting an energy affordability strategy and this would be published shortly.  Aengus Ó Snodaigh returned to the issue of people obliged to retire at 65 but had to wait for their pension until 68, but who would not have any fuel allowance eligibility in the meantime.  The minister told him that the forthcoming strategy would address supports for low-income families.

Aengus Ó Snodaigh expressed regret that there had not been the opportunity to  invite representatives of pensioners to come before the committee to make a presentation (Dail Eireann, Debates, 15th June 2011, 272).  Joe Higgins (SP, Dublin W) said that some people wished to continue working, an idea which should be embraced, but it should be a voluntary decision and people should have the option of when to take a pension.  This work-till-you-drop approach meant that thousands would die before reaching the retirement age and was a brutalization of society, by any standards and perverse.  He did not buy the minister’s argument about the increasing numbers of older people, because they were small compared to the rising numbers of births.  The reality was that pensioners were being sacrificed to the needs of the European financial markets, the EU, the IMF and the European Central Bank, the vampire banks.  Tens of billions of euros were committed to the gambling debts of European speculators in contrast to the amounts necessary to sustain pensions.  He wanted to end the current diseased system and take unemployed people out of enforced idleness.  He asked what was the human dimension to all this?  Think of keeping a man on construction sites until the age of 68 – it was tough and wearying enough for young people – but to do this to 68 in winter was shameful.  Women in his constituency were tearing themselves from their beds at 4am to 5am to go work in factories or offices to clean them.  Now they have to do this to 68.

Joan Collins (PBP, Dublin SC) said that the real problem was that raising the age to 68 was mandatory. She knew people who stayed on in old jobs or came back voluntarily, like in An Post.  We would be having a completely different debate if this were not mandatory.

Returning to fuel poverty, asked by Joe Costello (ind, Dublin C) why Ireland was not using the European Regional Development Fund for insulation for social housing, the Minister for Finance, Michael Noonan, told him that although the structural funds had been amended in 2009 to make such spending possible, current energy efficiency schemes were not compatible with the complex EU structural funds eligibility and audit criteria (Dail Eireann, Debates, 16th June 2011, 718-719).  In addition, Ireland was already set to draw down all its structural fund allocation, so it would not have been possible to get additional funding for this purpose.

The issue of poverty and low income families was raised again when the Dail debated issues of low pay and changes in the operation of the Joint Labour Committees (JLCs).  Seamus Healy (ULA, Tipperary S) pointed out that many of the 275,000 children living in poverty in the country belonged to the families covered by the JLCs.  He disputed the argument that Irish labour costs must come down, because they were already below the European average and the 250,000 people covered by the JLCs were the lowest paid people in the country (Dail Eireann, Debates, 21st June 2011, 70, 72).  Reductions in pay would drive down demand and cause more unemployment and shop closures.  Joan Collins (PBP, Dublin SC) pointed out that the system of JLCs had been introduced by Winston Churchill in 1909 – even though not a friend of the labour movement, he recognized the need for regulation to protect vulnerable workers.  Now the poorest and most vulnerable would be open season to unscrupulous employers.  The changes in the JLCs were being promoted by the hospitality industry, which had the lowest wages of any sector in the country and a recent survey found that 53% earned below the minimum wage, 51% did not get a pay slip, 84% did not get a contract, 44% did not get breaks and 85% got no overtime pay or Sunday premium.  One third of all complaints to the Migrant Rights Centre of Ireland came from the hospitality sector.  Workers in the JLCs were mainly young people, women and migrant workers and these proposals would increase their poverty.  Ireland already had the highest level of poverty in 17 developed countries, only the US being worse (Dail Eireann, Debates, 21st June 2011, 66-87; 22nd June 2011, 346-370).

Catherine Murphy (ind, Kildare N) spoke on the increasing levels of inequality in Ireland (Dail Eireann, Debates, 22nd June 2011, 365).  The driving down of wages not only had negative economic effects but caused ever greater inequality that contributed to economic crises and instability.  She commended the TASC recommendations for a low pay commission modelled on that developed in Britain, a proposal which made both economic and good social sense.

> Public Service Obligation levy on voluntary organizations: Dail Eireann, Debates, 21st June 2011, 182