1

THEIMPACTOFTHE

MINIMUMWAGEONIRISH

FIRMS:RESULTSFROMA

FOLLOW-UPSURVEYIN

2002

BRIAN NOLAN, JAMES WILLIAMS AND SYLVIA BLACKWELL

THE ECONOMIC AND SOCIAL RESEARCH INSTITUTE

4 Burlington Road, Dublin 4

2

1. INTRODUCTIONAND

KEYFINDINGS

The National Minimum Wage was introduced in Ireland on 1 April2000. Prior to introduction, a study on its likely impact was completedwhich included a substantial survey of firms, carried out by the ESRI’sSurvey Unit in late 1998/early 1999 (Nolan et al 1999). After introductionthe Department of Enterprise, Trade and Employment commissioned afurther survey of firms, in order to assess the immediate impact of theminimum wage. This was carried out in late 2000/early 2001 by the ESRI’sSurvey Unit, and interviewed both a substantial proportion of the originalsample and a significant number of other firms (Nolan, O’Neill andWilliams 2002). In 2002, the Department of Enterprise, Trade andEmployment commissioned another survey aimed at monitoring the on-going impact of the minimum wage, which was carried out in September,October and November of 2002. This report presents the results from thatsurvey, and uses them to assess the on-going impact of the minimum wageon wage levels and other aspects of work organisation among Irish firms.

This introductory chapter provides the background and context inwhich the results of the new survey are to be set. It describes the minimumwage, and recalls the main results from the previous survey carried out inlate 2000/early 2001. It then summarises the key findings from our newsurvey, which the remainder of the report goes on to describe in somedetail.

The National Minimum Wage introduced in April 2000 marked asignificant departure from the more limited system of Joint LabourCommittees which for many years regulated pay rates in specificoccupations and sectors. It applies to hourly wages, over a referenceperiod, which may be a week, a fortnight or no longer than a month.

As in any such system of wage regulation, it is important to be clearas to precisely how the hourly rate of pay is calculated. Employers mayselect the reference period to be used for a given employee, and areobliged to inform each employee in writing of the period selected. Theaverage hourly rate of pay is then calculated by dividing the employee’sgross reckonable pay in the reference period by their working hours in thatperiod. Working hours must include any overtime. Reckonable payincludes basic pay, shift premia, piece and incentive rates, commissionsand bonuses which are productivity related, a specified value where boardand/or lodgings are provided by the employer, and the amount of any

1.1The Context for

the Study

1.2The National

Minimum Wage

3

service charge distributed to employees through the payroll. (Overtimepremium, Sunday and public holiday premium and unsocial hourspremium on the other hand are not included in reckonable pay.)

Whereas an “experienced adult worker” must be paid at least thespecified minimum, certain categories of employee may be paid less, andfor them sub-minimum amounts are specified below which hourly payrates must not fall. These are employees aged under 18, those aged over 18but in their first or second year from date of first employment, and thoseaged over 18 in structured training or study undertaken in normal workinghours.

The National Minimum Wage was introduced at a level of IR£4.40per hour for experienced adult employees. For those under 18, the rateinitially set was £3.08. For those over 18 but in their first year from date offirst employment the initial rate was £3.52, while for those aged over 18but in their second year from date of first employment a minimum of£3.96 was set. For employees aged over 18 in structured training or studyundertaken in normal working hours, figures of £3.30, £3.52 and £3.96applied depending on whether they were in their first, second or thirdperiod of training or study.

The specified minima in force have subsequently been increasedtwice. The minimum for experienced adult employees was raised to £4.70from 1 July 2001, equivalent to 6 euro after the changeover to the euro. Itwas then raised to (euro) 6.35 (equivalent to £5) from 1 October 2002,with corresponding increases in the sub-minimum rates in each case.

The original survey of firms carried out in late 1998/early 1999, beforethe minimum wage was introduced, obtained information from 1,062 Irishprivate sector firms. All the firms who completed that survey wereincluded in the target sample for the second one, carried out in late2000/early 2001, as well as a further random sample of 1,160 firmsselected on a random stratified basis. Both surveys were designedprincipally to collect details on the current employment structure of privatesector firms. The overall response rate in the second survey was 53%.

Most firms in most sectors in the follow-up survey said they had noemployees paid £4.50 or less per hour. (This figure was used instead of£4.40 because one of the issues for investigation in the survey was whetheremployers knew about the minimum wage and its level). Textiles andclothing manufacture, retailing, and hotels/bars/restaurants were theexception. While virtually all the respondents to the survey had heardabout the minimum wage, significant proportions did not know exactlywhen it had been introduced or the exact level at which it was set. Only asmall minority had availed of the reduced rates payable foryoung/inexperienced workers.

About 5% of employees were said to have received an increase inpay as a direct result of the minimum wage, and about 13% of firms saidthat they had to increase pay for employees above the minimum wage torestore differentials. However, most firms said that, in the light of trendsin the Irish labour market, they would have had to increase wage ratesanyway. Only 16% of firms said that the minimum wage directly increasedtheir labour costs, and for half of these the increase was less than 5

1.3The 2000/2001

Survey of Firms

4

percentage points. Only 5% of respondents said they would be employingmore people in the absence of the minimum wage.

The percentage of workers who earned IR£4.50 per hour or lessfell from 21 per cent in 1998/99 to just over 4 per cent in 2000/2001. Therisk of being low-paid varied according to full-time/part-time status,sector, gender and age, with young workers and women facing a higherprobability and low pay being prevalent in sectors such as textiles, retailing,hotels etc. and personal services. The main concentrations of sub-minimum wage workers were in occupational grades related to sales andpersonal services.

The present study is based on a further sample of private sector firms,once again both following up those included in the previous survey andadding a substantial number of new firms. The survey and the patterns itreveals are described in detail in the body of this report. It may be usefulhowever to summarise the key findings in respect of numbers at or belowthe minimum wage at the outset.

In the new survey only 15 per cent of firms say that they have asignificant proportion (15 per cent or more) of their employees at or belowthat wage level. This is almost identical to the corresponding figure in ourearlier survey. In the hotels/restaurants/bars sector, however, about halfthe responding firms now have 15 per cent or more of their employees ator below the full minimum wage, a noticeable increase since the previoussurvey.

In the new survey, about 2 per cent of employees are stated to bepaid below the full adult minimum wage, while a further 2.6 per cent areon that minimum. This represents in effect no change since the 2000/2001survey. As in that survey, part-time employees are much more likely to beat or below the minimum wage, as are young workers. That risk is muchhigher for employees in the hotels/restaurants/bars sector than elsewhere.

1.4Key Findingsfrom the New

Survey

5

2.METHODOLOGY

In this chapter we provide details on the operational aspects of the surveycarried out in September/October 2002 and the construction of thedataset underlying this study. We begin in Section 2.2 by discussing thecontent of the questionnaire. Section 2.3 is concerned with details ofsample design and response rates. Section 2.4 considers the way in whichthe data were re-weighted prior to analysis. Finally, Section 2.5 outlines theway in which the survey was administered. In the appendix to the Chapterwe present a brief note on re-weighting of the data.

The survey instrument was designed to principally collect details on thecurrent employment structure of private sector non-agricultural firms. Inparticular, we were concerned to record details on the number of personsengaged on both a full-time and part-time basis according to, inter alia,hourly basic pay rates, age and gender. These questions formed the core ofthe questionnaire. In addition, details were recorded in respect ofbackground classificatory variables including changes in the volume andvalue of business over the years immediately preceding the survey. Detailswere also recorded on the firms’ perceptions of the effects of minimumwage legislation on its operation and, in particular, the perceived effectsthe legislation had on wage levels.A. Background details and basic classificatory information (Q’s

1-9, 12, 13, 14). These included recent trends in the value and volumeof the respondent’s business.

B. Indirect questions on perceptions of current problems facing business(Q’s 10 and 11).

C. Employment structures of persons engaged on a full time basisaccording to broad occupational grade; hourly basic pay rates; genderand age composition (Q’s 15-2I).

D. Employment structure of persons engaged on a part time basisaccording to occupational grade; hourly basic pay rates; gender andage composition (Q’s 22-29).

E. Knowledge of the minimum wage (Q’s 30-37).F. Perceptions of the impact of the minimum wage on a range of

operational aspects of the company. (Q’s 38-44).The survey instrument recorded details in respect of the entire businessenterprise or firm in contrast to the establishment, outlet or branch. Theeffective (or completed) sample was subsequently re-weighted to representthe totality of business enterprises in Ireland. An extremely importantconsideration in conducting the survey in 2002 was the timing of thechange in the level of the minimum wage at the end of September in thatyear. Fieldwork for the survey was undertaken in the months of Septemberand October. The minimum wage for an experienced adult worker was set

2.1 Introduction

2.2The

Questionnaire

6

at €5.97 per hour until the end of September. From that date it increasedto €6.35 per hour. This change in the rate obviously posed problems interms of administering the survey. To address these issues we preparedtwo versions of the questionnaire – a September and an October version.In the former all questions relating to the breakdown of staff according topay scale were benchmarked against a level of €5.97 per hour. In theOctober round of the survey we benchmarked all questions on staffbreakdowns in relation to the revised minimum wage threshold of €6.35per hour. In Chapter 5 below we report the breakdown of staff around thethreshold in terms of the minimum wage plus or minus a given amount (forexample, the minimum wage plus €1 etc.). Thus, although the informationwas recorded in terms of euro amounts when we came to report the datathey were presented in terms of levels around the minimum wage – thislevel or threshold having changed in the course of fieldwork. To minimiseconfusion on the part of respondents in the course of fieldwork and toallow the new minimum wage rates to get “bedded into” the system wesuspended all interviewing in the first week in October.

The sample used in the survey was drawn from two main sources. Atotal of 1,040 firms successfully completed the questionnaire in the secondround of the survey in late 2000/early 2001. All 1,040 relevant firms wereincluded in the target sample for the third round of the survey. In additionto this “old” sample component we augmented our target sample with a“new” random sample of firms which had not been asked to participate inthe survey in the earlier two rounds of the project.

By continuing with the “old” sample which successfully completedthe survey in 2000/2001, we were able to ensure that we would havelongitudinal micro-data at the level of the individual enterprise over time.This would allow us to look at changes over time in terms of the size andcontent of the labour-force in individual business entities. The purpose ofthe two phase survey which we have undertaken as part of this study is toallow us to carry out a “before and after” analysis of the size and structureof private sector employment. It is usual that this sort of analysis is basedon what one would describe as two independent cross-sectional surveys.This means that one undertakes two separate independent surveys of firmsat two discrete points in time. One then compares the aggregate resultsfrom the first survey with those from the second. This allows one to assessthe overall net effect of the introduction of the legislation at a broad oraggregate level. Analysis based on repeated cross-sectional surveys does notallow one to make any statement about the change which has taken placeat the level of the individual firm. This means that by carrying out analysisbased on repeated cross-sections one can describe net effects across allfirms in general. One cannot, however, undertake any micro-level analysisbased on the experience of individual enterprises. The longitudinal analysispresented in Chapter 6 of the report is based on this type of longitudinalanalysis where we discuss changes which have taken place at the level ofthe individual respondent.

Although the longitudinal component provides a wealth ofimportant new micro-level information we decided to supplement thetarget sample used in the survey with a fresh or additional sample of

2.3Sample Designand Response

Rates

7

businesses. We had two main reasons for doing this. First, and mostimportantly, we anticipated a response rate of the order of 55 per centamong the firms which had participated in the first round of the survey.This would have left us with just over 570 completed questionnaires. Thissample size is really too small to allow one to undertake the requiredanalysis. A total of 1,000 completed questionnaires was the target set forthe sample. Second, to ensure that the re-weighted sample (Section 2.4below) is fully representative of the current population of all firms in thecross-section it is important to include an adequate mix of old and newbusinesses in the sample. By supplementing or augmenting the originalsample with a new sub-sample one can ensure that the final sample foranalysis at the second wave of the survey is fully representative of thestructure of all current enterprises in the population.

The supplementary sample of new businesses was selected on arandom stratified basis from lists of firms which are maintained for thispurpose in the ESRI. Prior to sample selection these firms were stratifiedaccording to sector; size (number of employees) and region. The sectorsused for pre-stratification were as follows: Building & Construction;Manufacture of Textiles & Apparel; Other Manufacturing and Production;Retail; Wholesale; Banking/ Property/Renting & Business Services;Hotels/Restaurants/Bars; Personal Services and Other Services. These arethe sectors which we also use for analysis in the body of the report, andthe types of sub-sectors and firms they contain are shown in Appendix 1.Within each sector firms were stratified according to number of employeesand region. A sample was then selected with a view to ensuring that eachsector/size stratum would be reasonably represented in terms of absolutenumber of cases in the final effective sample for analysis and reporting.

Table 2.1 below outlines the response levels for the survey. Theleft-hand segment of the table provides details on response outcomes inrespect of the “old” sample of firms which also participated in the surveyin 2000/2001. The right-hand segment relates to outcomes from the“new” or supplemented sample, i.e. the sample added in 2002.

8

Table 2.1: Response Rates for Second Round Minimum Wage Survey

“Old” Sample of2000/2001 “New” Sample of 2002 Total

Outcome No. Per Cent No. Per Cent No. Per Cent

Successfully Completed 693 71.0 737 62.7 1,430 66.5

Completed but Unusable 3 0.3 21 1.8 24 1.1

Refused 109 11.2 302 25.7 411 19.1

Never Available for Interview 140 14.3 71 6.0 211 9.8

Other 31 3.2 45 3.8 76 3.5

Out-of-Business 64 - 138 - 202 -

Total 1,040 100.0 1,314 100.0 2,354 100.0

We can focus in the first instance on response levels for the “old”sample of 2000/2001. One can see that a total of 64 of the firms inquestion were either out of business or otherwise invalid elements in thepopulation by the time of the third survey in 2002. When these wereexcluded this gave a valid sample of 976 firms. A total of 71 per cent ofthese successfully completed the questionnaire. One can also see that 11.2per cent of businesses explicitly refused to participate in the survey whilethe remaining 14.3 per cent were never available throughout the fieldworkperiod. This latter category can be interpreted as a “soft” refusal.

The middle segment of the table shows that the response rateamong the “new” sample was lower at just under 63 per cent. The higherresponse rate among the “old” sample-which had already participated inthe second phase of the survey is very much as one would expect andsimply reflects the fact that this group of firms had already shownthemselves to be predisposed towards participation in the survey.

These response levels for old and new samples translate to anoverall response level of 66.5 per cent for the full target sample. This is avery good response rate for a survey of this type being administered to arandom sample of firms.

Prior to analysis, the 1,430 questionnaires from responding firms werestatistically adjusted or re-weighted so as to ensure that the structure orcomposition of the effective sample was in line with the structure orcomposition of the population from which it was selected according to anumber of important classificatory variables such as size, sector etc. Thisre-weighting of the data is necessary for two reasons.

First, there may be systematic and differential levels of non-response as between one group of firms and another within the sample.For example, small firms in a given sector may have an above averagepropensity to participate in surveys of this nature. If this were the casethen they would be over-represented in the final sample for analysis andwould consequently be contributing “too much” to the aggregate results.Accordingly, one should statistically adjust or re-weight the data to ensurethat all sub-groups of the population are appropriately represented in thesample, in line with their representation in the overall population.

Second, the sample was selected on a disproportionate stratifiedbasis. This means that some size/sector strata were over-represented in the

2.4Re-weighting

the Data

9

original sample so as to ensure adequate coverage in the final effectivesample for analysis. For example, given the Department’s concern withsectors such as the Manufacturing of Textiles & Apparel or Retail it wasdecided to over-sample from them when selecting the target sample. Thisover-representation at sample selection stage was adjusted for in the re-weighting scheme.

In deriving the weights or adjustment factors two related butindependent weighting systems were prepared. The first is derived with thefirm as the entity or unit of analysis. The second is based on the employeeas the unit of analysis. In the latter weighting scheme each firm isinterpreted as a group of employees rather than as a single entity in its ownright. The way these two sets of weights were derived is described inAppendix 2. The employee-based weight is used in deriving estimates ofemployment or employee structures in subsequent sections of the report. Theenterprise-based weight is applied in deriving population estimates of thecharacteristics of firms.

Although weighted, the grossed estimates presented are, of course,subject to standard statistical sampling variances. These variances will beespecially pronounced in the analysis of sub-groups based on a smallnumber of respondents. As noted above, the survey was re-weighted toreflect the totality of business enterprises in Ireland, in contrast to theestablishment, outlet or branch. All information recorded on thequestionnaire relates to the complete enterprise in all of its branches oroutlets throughout the Republic of Ireland.

All questionnaires were completed on a personally administered basiswhich involved an interviewer paying a visit to each respondent andcompleting the instrument on site. Given the nature of the survey and thepotential bias which could be introduced to the sample results by strategicresponses, personal administration of the survey was essential. In otherwords, it was important that information was recorded from therespondent in respect of occupational and pay structures as well as detailson likely responses to the introduction of pay floors before terms such asthe ‘minimum wage’ were explicitly used in the survey.. Consequently, itwas not possible to leave the survey form with respondents for self-completion. In a very small number of the larger companies a speciallyprepared 4-page section on occupational structures was left withrespondents for completion and subsequent collection by the interviewer.This special section was used only in circumstances where the enterprisewas so large that it would have been unreasonable and impractical toexpect the respondent to have collated details from personnel or otherfiles in the course of the interview.

Survey forms were returned to the ESRI by interviewers as theywere completed for editing, checking and data entry. At each of thesestages the questionnaire was carefully checked to ensure completeness and,in particular, internal consistency of the data provided to ensure that, forexample, the figures provided on total numbers engaged on a full-time andpart-time basis were consistent with subsequent detailed breakdowns.Where inconsistencies were apparent these were resolved by phone follow-up with the respondent.

2.5Survey

Implementation

10

3.KEYCHARACTERISTICS

ANDTRENDS

In this chapter, we set out some key characteristics of the firms in the2002 survey, in terms of sector, size and ownership, and in terms of theproportion of the workforce at or below the full adult minimum wage. Wealso look at trends in size of the firm’s workforce, staff turnover, volumeof business, profitability and operating environment, and how perceptionsof these had changed since the previous survey carried out in late2000/early 2001.

We look first in Table 3.1 at the characteristics of sample firms bysector of activity cross-classified by numbers employed, the proportion ofthe workforce paid at or below the full adult minimum wage, and Irishversus foreign ownership.

As in the previous surveys, we see that most of the firms in thebuilding and construction, retail, banking/finance/business, hotels/restaurants/bars and personal and other services sectors had less than 10employees. Textiles and clothing and other manufacturing are the onlysectors where a substantial number of firms had 35 or more employees.Virtually all firms in building and construction, retail andhotels/restaurants/bars are domestically-owned, with the proportionforeign-owned being highest in manufacturing

Turning to the proportion of the firm’s employees paid at or belowthe full adult minimum wage, we see that four out of five firms said theyhave no employees at that pay level. About 15 per cent of firms said thatthey have at least 15% of their employees at that pay level. This is almostidentical to the percentage of firms in that situation in the 2000/2001survey. Only 3 per cent of firms had some employees but less than 15 percent of their workforce at that wage level; this is such a small group thatwe will effectively ignore it, focusing on the distinction between those withno-one versus those with 15 per cent or more of their workforce at orbelow the full adult minimum wage.

Similarly, across most sectors three-quarters or more of all theresponding firms have no employees at or below the full adult minimumwage. The striking exception is the hotels/restaurants/bars sector, whereabout half of all firms had employees at or below the full minimum wage.This represents a sharp increase since the previous survey, where 37 percent of firms in the sector had employees at or below that minimum.

3.1 Introduction

3.2Key

Characteristicsby Sector

11

Table 3.1: Firms Classified According to Sector and (I) Size; (ii) Percentage of Workforce who are Paid the Full Minimum Wage or Less Per Hour; (iii) Ownership

(i) Size Category (ii) Percentage of Workforce At FullMinimum Wage or Less

(iii) Nationality

3 orLess

4-9Engaged

10-34Engaged

35-55Engaged

100+Engaged

Total None LT15% 15+% Total Irish Foreign Total

% % %Sector

Building andConstruction

32.7 50.9 8.7 5.1 2.6 100.0 86.4 6.0 7.7 100.0 97.8 2.2 100.0

Manufacture Textiles andApparel

7.8 26.9 38.3 19.2 7.8 100.0 79.2 6.5 14.3 100.0 95.1 4.9 100.0

Other Manufacture 9.0 15.9 39.5 24.4 11.2 100.0 82.3 9.9 7.8 100.0 81.4 18.6 100.0Retail 42.3 49.4 4.7 2.3 1.3 100.0 79.8 2.3 17.9 100.0 97.6 2.4 100.0Wholesale 36.9 43.5 10.9 5.7 3.0 100.0 89.3 4.7 6.0 100.0 92.2 7.8 100.0Banking /Finance/Business

41.8 47.6 5.0 2.8 2.9 100.0 94.7 1.2 4.1 100.0 89.0 11.0 100.0

Hotels/Restaurants/Bars 22.0 65.9 2.8 4.6 4.7 100.0 49.5 1.8 48.7 100.0 98.9 1.1 100.0Personal and Other

Services41.8 50.9 3.7 2.0 1.6 100.0 87.0 0.9 12.1 100.0 94.4 5.6 100.0

All Firms 35.4 49.5 7.4 4.6 3.1 100.0 81.6 3.0 15.4 100.0 94.3 5.7 100.0

12

Other sectors with significant – though much lower – proportions of firmswith employees at or below the full adult minimum wage level are retailand textiles and clothing manufacturing.

When firms were asked about changes in the size of their workforce inthe last two years, Table 3.2 shows that only 20 per cent said theirworkforce had increased, which compares with a figure of one-third in theprevious survey. About 22 per cent said their workforce had fallen,compared with 16 per cent in the previous survey. The proportion statingthe workforce had declined was above average in building andconstruction and in textiles and clothing, and in foreign-owned firms.

Table 3.2: Firms Classified According to Changes in Size of Workforce Over Two YearsPreceding the Survey

Size of Workforce

Larger Same Smaller Total%

Sector

Building and Construction 19.1 46.6 34.3 100.0Manufacture Textiles and Apparel 17.2 44.2 38.6Other Manufacture 30.9 38.5 30.5 100.0Retail 21.0 64.8 14.2 100.0Wholesale 20.1 60.6 19.3 100.0Banking /Finance/ Business 22.6 56.4 21.0 100.0Hotels/Restaurants/Bars 15.7 59.8 24.5 100.0Personal and Other Services 24.7 57.0 18.3 100.0

Size of firm3 or less 8.6 72.4 18.9 100.04-9 engaged 24.7 51.6 23.6 100.010-34 engaged 30.5 40.7 28.8 100.035-99 engaged 43.9 30.2 25.9 100.0100+ engaged 52.6 26.5 21.0 100.0

Percentage of workforce paid fullminimum wage or less per hour

None 21.7 56.8 21.5 100.0Less than 15 34.3 30.3 35.3 100.015 or more 16.1 59.5 24.4 100.0

NationalityIrish 20.8 58.2 21.0 100.0Foreign 28.1 27.0 44.9 100.0

All firms 21.2 56.4 22.4 100.0

The change in conditions since the previous survey is alsoreflected in firms’ assessments of staff turnover. Table 3.3 shows thatwhile most firms felt that there had been no change in turnover in the

3.3Trends in Size,Staff Turnoverand Volume of

Business

13

previous two years, the numbers saying it had increased were balanced by asimilar number saying it had fallen. This was in contrast to the 2000/2001survey, when rather more felt that turnover had increased than decreased.The proportion saying turnover had fallen in our most recent survey wasrelatively high in building and construction and in manufacturing.

Table 3.3: Firms Classified According to Level of Staff Turnover at Time of Survey Relativeto Position 12 Months Earlier

Level of Staff Turnover at the Time of Survey Relative to the Position 12Months EarlierDecreasedSubstantially

DecreasedSlightly

RemainedConstant

IncreasedSlightly

IncreasedSubstantially

Total

%Sector

Building and Construction 4.8 10.9 72.0 7.9 4.5 100.0Manufacture Textiles andApparel

4.9 15.9 64.9 11.0 3.2 100.0

Other Manufacture 8.1 17.2 57.9 13.8 3.1 100.0Retail 3.4 6.8 76.3 11.9 1.6 100.0Wholesale 2.5 5.5 79.3 11.5 1.2 100.0Banking /Finance/Business

3.1 12.8 65.7 14.3 4.1 100.0

Hotels/Restaurants/Bars 1.2 9.9 81.0 1.8 6.1 100.0Personal and OtherServices

1.5 8.4 71.5 13.6 4.9 100.0

Size of firm3 or less 1.9 5.4 82.7 6.3 3.8 100.04-9 engaged 2.6 10.3 71.8 11.9 3.4 100.010-34 engaged 5.9 16.8 54.6 17.2 5.4 100.035-99 engaged 10.1 17.8 47.3 20.3 4.5 100.0100+ engaged 13.7 33.8 38.9 10.9 2.6 100.0

Percentage of workforcepaid full minimum wageor less per hourNone 3.1 9.1 73.4 11.2 3.2 100.0Less than 15 6.4 32.2 38.2 2.4 1.8 100.015 or more 3.7 11.3 72.8 5.5 6.7 100.0

NationalityIrish 2.8 10.2 72.9 10.3 3.7 100.0Foreign 10.9 8.4 61.1 16.0 3.6 100.0

All firms 3.3 10.1 72.2 10.7 3.7 100.0

The same pattern is shown by Table 3.4, where we see that only about 40per cent of firms said their volume of business had increased, comparedwith almost two-thirds in the previous survey. Almost one in five said theirvolume of business had decreased, compared with one in ten in the earliersurvey. Looking across the sectors, firms in the textiles and clothing, othermanufacturing, wholesale and particularly hotels/restaurants/bars sectors

14

were more likely than others to say that their volume of business hadfallen. The percentage saying that volume of business had fallen was alsorelatively high for small firms, and for firms with a significant proportionof their employees at or below the full minimum wage.

Table 3.4: Firms by Trends in Volume of Business in the Two YearsPreceding the Survey

Volume of BusinessIncreased Constant Decreased Total

%Sector

Building and Construction 33.9 48.6 17.5 100.0Manufacture Textiles and Apparel 35.1 37.7 27.3 100.0Other Manufacture 49.9 26.4 23.7 100.0Retail 47.9 39.7 12.4 100.0Wholesale 45.8 29.1 25.1 100.0Banking /Finance/ Business 50.9 31.1 17.9 100.0Hotels/Restaurants/Bars 28.4 36.2 35.4 100.0Personal and Other Services 30.7 58.2 11.0 100.0

Size of firm3 or less 31.8 43.5 24.7 100.04-9 engaged 44.2 41.0 14.9 100.010-34 engaged 51.3 29.4 19.3 100.035-99 engaged 57.3 23.4 19.3 100.0100+ engaged 66.2 17.9 15.9 100.0

Percentage of workforce paidfull minimum wage or lessNone 42.7 38.8 18.5 100.0Less than 15 45.6 39.0 15.3 100.015 or more 34.8 43.3 21.9 100.0

NationalityIrish 40.5 40.6 18.9 100.0Foreign 59.8 21.6 18.5 100.0

All firms 41.6 39.5 18.9 100.0

When asked about their overall profits in the last year, we see fromTable 3.5 that 65 per cent of firms said they had made a profit, downslightly from about 69%. As in the previous survey, most of these said itwas a moderate rather than a substantial profit. Under 10 per cent of firmssaid they had made a loss, about the same number as in the previoussurvey. The sectors where the numbers reporting a loss were highest weretextiles and clothing and other manufacturing. The hotels/bars/restaurantssectors had a relatively low proportions reporting profits, but a highproportion saying they broke even rather than making a loss. Small firmswere also more likely than larger ones to report that they broke even, andfirms with a significant proportion of minimum wage employees were alsomore likely than others to give that response.

3.4 Profitabilityand Wage Costs

15

Table 3.5: Firms by Level of Profits in the Last Year

SubstantialLoss

ModerateLoss

BrokeEven

ModerateProfit

SubstantialProfit

Total

Sector

Building and Construction 1.8 2.4 23.0 70.5 2.2 100.0Manufacture Textiles andApparel

6.5 12.3 23.3 56.3 1.6 100.0

Other Manufacture 5.7 13.0 18.9 57.3 5.2 100.0Retail 1.3 8.4 28.5 60.6 1.2 100.0Wholesale 2.9 7.2 18.7 68.2 3.0 100.0Banking /Finance/ Business 2.1 5.6 20.0 65.9 6.4 100.0Hotels/Restaurants/Bars 5.8 1.6 41.1 50.4 1.1 100.0Personal and Other Services 1.3 7.2 30.4 59.9 1.1 100.0

Size of firm

3 or less 4.4 3.6 35.1 56.9 0.1 100.04-9 engaged 1.3 6.3 23.7 64.9 3.7 100.010-34 engaged 3.0 9.4 16.9 66.3 4.4 100.035-99 engaged 1.6 11.3 16.5 63.5 7.1 100.0100+ engaged 2.8 6.7 13.1 65.9 11.6 100.0

Percentage of workforce paidfull minimum wage or lessper hour

None 1.8 5.6 24.1 65.2 3.3 100.0Less than 15 2.2 10.4 21.8 61.4 4.3 100.015 or more 6.3 5.9 40.3 46.8 0.6 100.0

Nationality

Irish 2.6 5.4 27.4 62.5 2.2 100.0Foreign 1.8 13.9 11.1 58.0 15.2 100.0

All firms 2.5 5.8 26.5 62.2 2.9 100.0

As in the earlier surveys, firms were also asked what percentage their totalwage bill comprised of the company’s total operating costs. Table 3.6shows that across the sample as a whole the average figure was 38 percent, while the median – the level above and below which half of thesample falls – was 35 per cent. These figures are almost identical to thosereported in the 2000/2001 survey. As in that survey, the wage bill is aparticularly high proportion of total operating costs in building andconstruction, banking/finance/business, and personal and other services,but wages accounted for a below-average proportion of total operatingcosts in smaller firms.

16

Table 3.6: Mean and Median of Wages Bill as a Percentage ofOperating Costs

Mean MedianSector

Building and Construction 42.9 40.0Manufacture Textiles and Apparel 35.9 33.0Other Manufacture 35.8 30.0Retail 34.3 30.0Wholesale 35.0 33.3Banking /Finance/ Business 40.7 35.0Hotels/Restaurants/Bars 35.3 30.0Personal and other Services 37.4 40.0

Size of firm

3 or less 36.3 30.04-9 engaged 39.1 38.010-34 engaged 37.1 35.035-99 engaged 36.8 35.0100+ engaged 39.8 40.0

Percentage of workforce paid fullminimum wage or less per hour

None 37.8 35.0Less than 15 37.9 40.015 or more 38.6 35.0

Nationality

Irish 38.2 35.0Foreign 33.1 30.0

All firms 37.9 35.0

Finally, respondents were given a list of a range of difficulties that couldface a company, and asked to rank them in order of importance to theircompany at present. Table 3.7 shows for each of the seven suggestedproblems the proportion stating it was the most important problem theyfaced, and the proportion for whom it was among the top two or threemost important.

Basic labour costs was the area most often identified asproblematic, with about 30 per cent of respondents selecting it as the mostdifficult and almost three-quarters saying it was among the three mostserious difficulties. Recruiting staff, although still seen by about 20 per centof firms as the most difficult area, featured less prominently than in the2000/2001 survey. Employer’s PRSI and corporation taxes were alsoselected by significant numbers as among the three most difficult areas.Industrial relations were not seen as a serious difficulty compared withthese other aspects, even less than in the previous survey.

3.5Perceptions of

Areas ofDifficulty

17

Table 3.7: Ranking Assigned to Seven Possible Difficulties in Terms of their Importance as they Face a Company

Rank Poor IndustrialRelations

Recruiting Staff Employer’sPRSI

Basic LabourCosts/Wages

UnfairCompetition

CorporationTaxes

Affordable Equityand Working

CapitalCum. % Cum. % Cum. % Cum. % Cum. % Cum. % Cum. %

1 0.6 21.0 13.3 30.8 17.6 14.7 13.02 1.6 32.2 34.5 55.8 27.5 40.7 25.53 3.5 42.2 59.0 73.4 38.9 60.0 42.3

In this chapter we have described some key characteristics of the firms inour 2002 survey, and their perspectives on how their business and itsoperating environment have been developing.

We saw at the outset that four out of five firms said they had noemployees at or below the level specified at the time of interview as thefull adult minimum wage. About 15 per cent of firms said that they had atleast 15% of their employees at or below that wage level, almost identicalto the percentage of firms in that situation in our earlier 2000/2001 survey.Across most sectors three-quarters or more of firms had no employees atthat wage level, but the hotels/restaurants/bars sector was the exception.About half the responding firms in that sector had 15 per cent or more oftheir employees at or below the full adult minimum wage, a noticeableincrease since the previous survey. Retail and textiles and clothingmanufacture had lower but significant proportions of firms withemployees at that pay level.

Although a majority of firms said their workforce was unchangedcompared with two years earlier, firms were less likely than in the previoussurvey to say that it had increased, and more likely to say it had fallen. Theproportion saying the workforce had fallen was above average in buildingand construction and in textiles and clothing. Similarly while most firmsfelt that there had been no change in turnover in the previous two years,the numbers saying it had fallen was up since the previous survey,particularly in those sectors. Textiles and clothing and other manufacturingwere the sectors where the proportion of firms reporting a loss washighest.

On average across the sample as a whole, the total wage billcomprised 38 per cent of the operating costs of responding firms,unchanged since the 2000/2001 survey. Basic labour costs were mostfrequently identified as the most difficult aspects of their operations, withdifficulties in recruiting staff featuring less prominently than in ourprevious survey.

3.6 Conclusions

4.PERCEPTIONSOFTHE

IMPACTOFTHEMINIMUM

WAGE

In the course of the survey respondents were asked to record details ontheir knowledge and assessment of the minimum wage and its impact onemployment levels, practices etc. In the previous survey carried out in late2000/early 2001 knowledge levels were found to be almost universal (99per cent) although details on the level of the threshold and its date ofintroduction appeared to be less widely known by companies. In thatround of the survey only 6 per cent of firms recorded having used any ofthe sub-minimum rates. We also found that only 16 per cent of firms atthe end of 1999/early 2000 felt that the introduction of the legislation hadled to a direct increase in labour costs while only 5 per cent of firms feltthat it had led to a reduction in the number of persons employed.

In the course of this chapter we pursue these issues with a view toassessing the extent to which knowledge and perceptions of the minimumwage have changed over the intervening two years. We begin the chapterin Section 4.2 by considering knowledge levels of the minimum wagebefore moving on to the use of sub-minimum rates in Section 4.3. This isfollowed in Section 4.4 by a consideration of perceived impacts of thelegislation on employment and a selection of operational and related issuesin the workplace. Finally, Section 4.5 presents a brief summary of our mainobservations.

In the course of the survey respondents were asked the simple questionas to whether or not they had ever heard about the introduction of theminimum wage. Table 4.1 shows that a very high percentage of all firms -97 per cent - answered in the affirmative. One can see that there is almostuniversal knowledge across all sectors and other classifications of firms.

4.1 Introduction

4.2Knowledge of

Minimum WageLegislation

Table 4.1: Firms classified according to whether or not they have heard about the introductionof the minimum wage.

Sector Yes NoBld & Const 97.8 2.2 100.0Manf text& apparel 100.0 0.0 100.0Oth manf&prod 99.2 0.8 100.0Retail 96.3 3.7 100.0Wholesale 95.8 4.2 100.0Prop/rent/bus serv 95.4 4.6 100.0Hotels/rest/bar 100.0 0.0 100.0Pers&Other Servs 97.0 3.0 100.0

Size of Firm3 or less 96.1 3.9 100.04-9 engaged 97.4 2.6 100.0

10-34 engaged 98.2 1.8 100.035-99 engaged 98.0 2.0 100.0

100+ engaged 98.9 1.1 100.0

Percentage of workforce paid on or below full minimumwageNone on or below full minimum wage 96.7 3.3 100.0It 15% on or below full minimum wage 99.0 1.0 100.0

15+ on or below full minimum wage 98.4 1.6 100.0

NationalityIrish 97.1 2.9 100.0

Foreign 96.1 3.9 100.0

All Firms 97.1 2.9 100.0

In the previous round of the survey the figure recorded as havingheard of the legislation was 99 per cent. The apparent 2 percentage pointfall between the earlier and more recent rounds of the survey is notstatistically significant, so this represent a ‘no-change’ situation in terms ofrecognition levels.

In further focusing on the issue of the knowledge and perceptionsrespondents were asked to record when they felt the rate of the minimumwage was most recently changed and when it would be changed in thefuture. As discussed in Chapter 2, the rate was changed at the end ofSeptember 2002, in the course of fieldwork for the survey. As noted inSection 2.4 above, interviewing took place in the months of Septemberand October 2002. Two versions of the questionnaire were used. Forrespondents interviewed in the month of September the questionnairecontained the old threshold of €5.97 per hour. The questionnaireadministered to respondents in the month of October contained therevised threshold of €6.35 per hour. As noted in Section 2.4, nointerviewing took place in the first week of October 2002 to allow‘bedding-in’ of the new rates and, as far as feasible, avoid confusion on thepart of the respondent as to the then current level.

In presenting figures on knowledge levels of the most recentchange in the threshold and future changes we have split the sampledepending on when interviewing took place. Table 4.2 provides details onfirms classified according to when they believed the minimum wage rate(a) would next be changed and (b) was last changed. For those interviewedin September we report details to the question: ‘When will the rate bechanged in the future? For those interviewed in October we report detailsto the question: ‘When was the rate last changed. Presenting theinformation in this way means that the elapsed time between the actualreference point for the change and the point of interview is broadlyequalised for both subsets of respondents regardless of whether thequestion was asked retrospectively or prospectively.

From Table 4.2 one can see that just over 58 per cent of thoseinterviewed in September said explicitly that they did not know when theminimum wage rate would be changed in the future. Just over one-third –37 per cent – correctly recorded that it would be changed inSeptember/October 2002 while the remaining 5 per cent gave a date inNovember/December 2002 or into 2003. It is clear from the figures thatthere are some variations in knowledge levels according to sector. In theregion of 50 per cent of firms in the two Manufacturing sectors; the Retailsector and Personal & Other Services sector correctly recorded theSeptember/October turning point. Substantially lower perceptions (23-29per cent) in the Wholesale; Banking/Business Services and Hotel/Restaurant/Bar sectors were able to correctly record when the rate wouldnext change.

Table 4.2: Firms classified according to when they believe the minimum (a) would next be changed and (b)was last changed.

Respondents Interview in September Respondents Interview in OctoberSection A:Sector

Don’tknow

Sept/Oct2002

Nov/Dec2002

General2003 Total

Don’tknow

2001 orearlier

Jan-Aug2002

Sept/Oct2002 Total

Bld&Const 59.1 35.4 0.0 5.6 100.0 40.4 4.4 0.4 54.8 100.0Manftext&apparel

49.4 50.6 0.0 100.0 33.9 0.0 0.0 66.1 100.0

Oth manf&prod 43.5 49.7 2.5 4.4 100.0 13.6 4.4 5.6 76.4 100.0Retail 51.6 47.2 1.1 0.2 100.0 29.3 1.8 0.5 68.4 100.0Wholesale 67.0 29.4 0.0 3.6 100.0 27.9 8.1 15.0 48.9 100.0Prop/rent/busserv

69.6 26.9 0.0 3.6 100.0 27.4 5.5 11.0 56.2 100.0

Hotels/rest/bar 63.8 23.4 0.3 12.5 100.0 61.0 0.7 0.7 37.7 100.0Pers&OtherServs

45.4 48.7 3.7 2.2 100.0 40.6 2.5 8.2 48.7 100.0

Section B: Sizeof Firm3 or less 68.4 25.7 0.7 5.2 100.0 35.1 3.3 5.9 55.7 100.04-9 engaged 54.0 42.5 0.9 2.6 100.0 42.6 3.2 3.4 50.8 100.010-34 engaged 51.5 41.8 1.4 5.3 100.0 22.1 5.1 4.2 68.6 100.035-99 engaged 38.5 58.1 0.7 2.8 100.0 21.4 0.4 5.6 72.7 100.0100+ engaged 32.6 59.5 0.0 7.9 100.0 22.4 4.7 7.1 65.8 100.0

Section C: Percentage ofworkforce paid on or belowfull minimum wageNone on or belowfull minimum wage

58.5 35.8 0.9 4.7 100.0 38.9 3.8 4.2 53.2 100.0

It 15% on or belowfull minimum wage

38.8 54.0 2.8 4.4 100.0 28.6 1.8 6.6 63.0 100.0

15+ on or belowfull minimum wage

60.9 38.4 0.0 0.7 100.0 29.6 0.9 5.2 64.4 100.0

Section D:NationalityIrish 59.7 36.2 0.9 3.2 100.0 39.8 1.9 4.2 54.1 100.0Foreign 28.6 48.5 0.0 22.9 100.0 7.6 19.2 6.8 66.5 100.0

All Firms 58.4 36.8 0.8 4.0 100.0 37.2 3.3 4.4 55.1 100.0

From Section B of the Table one can see that knowledge ofwhen the next change would take place was very clearly and positivelyrelated to size of company. The larger the firm the higher the percentageof respondents who could correctly state when the change in the ratewould take place. One can see that two-thirds of smallest companies didnot know when the rate would change. The comparable figure for thecategory of largest company was one-third.

One can see from Section C of the table that there appears to beno clearly defined systematic relationship between percentage of the

workforce currently paid on or below the threshold at the time of thesurvey and knowledge levels regarding the forthcoming introduction ofchanges in the rate. Section D of Table 4.2 indicates that there are higherknowledge levels among foreign than indigenous companies (48 per centcompared with 36 per cent respectively). The reader should, however, notethat nationality is strongly linked to size of firm and, accordingly, this islargely a reflection of the trend identified according to size of firms inSection C of the table.

The right-hand segment of Table 4.2 relates to companiesinterviewed in October 2002 and presents information on responses to thequestion on when the rate had changed most recently. A total of 55 percent of the sample interviewed in October were able to correctly recordwhen the rate had most recently been changed with just over one-third (37per cent) recording that they did not know. The reader is reminded that inrespect of this group of respondents the rate has been changed within the3 – 3½ weeks preceding their interview. Accordingly, it is not surprisingthat knowledge levels among this subset of firms are higher than amongtheir counterparts who were interviewed in the month of September.

From Section A of the table one can see that 61 per cent of thissubset of firms in the Hotel/Restaurant/Bar sector recorded that they didnot know when the rate had been changed. This is substantially above thepercentage recorded in other sectors. Sections B and D of the tableconfirm the relationship between knowledge levels and size/nationalityidentified above in our discussion of respondents interviewed inSeptember.

Respondents were then asked to record the actual level of theminimum wage for an experienced worker. The results are outlined inTable 4.3. As was the case in the previous table, these are broken downseparately in respect of the sub-samples interviewed in September and inOctober. From the bottom line in the table one can see that 39 per centof those interviewed in September correctly indicated that the minimumwage threshold was €5.97 per hour. One should note, however, that afurther 6 per cent spontaneously recorded that it was €6.35 per hour.Given the proximity of the change in rates to their interview date onecould reasonably interpret these respondents as being able to correctly citethe current rate. From the left hand side of the table (i.e. thoseinterviewed in October) one can see that 47 per cent correctly recorded€6.35 as the then current rate. Overall, therefore, one could say that one-third of respondents recorded that they did not know the rate of theminimum wage when interviewed with a further 45 per cent recording thecorrect rate and the remaining 20 per cent recording an incorrect figure.

Table 4.3: Firms classified according to their perceived level of the minimum wage.

Respondents Interviewed in September Respondents interviewed in October

Section A: SectorDon’tknow

€4.00 –5.49

€5.50 –5.96 €5.97

€5.98 –6.34

€6.35 €6.35 ormore Total

Don’tknow

€4.00 –5.99

€6.00 –6.34 €6.35

€6.36 –6.50

€6.51 ormore Total

Bld&Const 42.7 4.9 7.7 29.6 7.4 0.4 7.4 100.0 34.8 7.6 8.4 46.8 1.2 1.2 100.0Manf text&apparel 14.9 10.6 10.6 35.1 10.6 2.7 15.4 100.0 19.8 0.0 0.0 71.9 4.1 4.1 100.0Oth manf&prod 29.0 0.7 6.4 46.4 6.1 6.6 4.9 100.0 15.2 6.2 5.4 61.4 5.4 6.3 100.0Retail 36.9 1.1 7.9 36.0 7.6 5.7 4.8 100.0 25.1 0.0 4.8 53.5 5.1 11.4 100.0Wholesale 48.1 2.3 0.8 26.6 7.9 8.3 5.9 100.0 27.0 4.0 7.4 45.5 0.6 15.5 100.0Prop/rent/bus serv 23.6 6.1 4.4 42.2 6.3 10.7 6.7 100.0 40.6 4.9 15.0 33.5 4.9 1.0 100.0Hotels/rest/bar 25.7 12.7 0.8 57.6 1.6 0.8 0.8 100.0 50.3 0.2 0.2 48.9 0.4 0.0 100.0Pers&Other Servs 37.8 3.4 4.2 31.0 6.0 10.0 7.6 100.0 37.8 4.1 3.6 48.1 2.0 4.4 100.0

Section B: Size of Firm3 or less 33.6 8.2 3.9 33.9 6.5 4.9 9.0 100.0 42.0 4.4 9.5 33.4 5.6 5.1 100.04-9 engaged 33.4 2.2 6.9 40.4 6.8 7.7 2.7 100.0 37.3 3.3 6.3 48.3 1.3 3.5 100.010-34 engaged 34.4 3.1 5.5 43.4 3.6 5.5 4.6 100.0 18.7 2.5 5.3 61.5 5.5 6.6 100.035-99 engaged 28.0 2.8 3.2 50.8 4.1 5.5 5.7 100.0 19.7 2.5 1.8 65.8 4.4 5.8 100.0100+ engaged 26.9 2.3 3.4 48.0 5.8 4.8 8.8 100.0 14.1 2.4 0.0 77.4 1.0 5.2 100.0Section C: Percentage ofworkforce paid on or below fullminimum wageNone on or below fullminimum wage

34.0 3.9 4.9 36.2 7.2 7.1 6.8 100.0 39.6 4.1 7.9 40.4 3.5 4.4 100.0

It 15% on or below fullminimum wage

32.8 2.6 51.4 5.1 4.8 3.2 100.0 24.9 0.0 4.0 61.6 9.5 100.0

15+ on or below fullminimum wage

29.1 8.6 8.4 48.6 2.2 2.4 0.7 100.0 14.1 0.5 0.2 82.0 0.6 2.6 100.0

Section D: NationalityIrish 33.5 4.8 4.8 38.3 6.5 6.3 5.7 100.0 36.3 3.7 6.2 46.1 3.1 4.5 100.0Foreign 23.2 1.8 17.4 49.5 1.6 3.8 2.8 100.0 26.9 0.7 12.7 57.0 0.7 2.1 100.0

All Firms 33.1 4.7 5.3 38.8 6.3 6.2 5.6 100.0 35.6 3.5 6.7 46.9 3.0 4.4 100.0

One can see from the detail of the table that the pattern of variation bysector, size, nationality is broadly similar to that outlined in relation to theprevious table in relation to when the rate was/will be changed. Forexample, a higher percentage of larger/foreign firms are able to correctlystate the rate than among small/indigenous ones.

In this Section we consider respondents knowledge and use of the sub-minimum rates. A total of 6 eligible sub-minimum rates were included inthe questionnaire as follows: Under 18 years of age In first year of employment and aged 18 yrs or over In second year of employment and aged 18 yrs or over Trainee aged 18 yrs or over in 1st one-third period of training Trainee aged 18 yrs or over in 2nd one-third period of training Trainee aged 18 yrs or over in 3rd one-third period of training.

Table 4.4 shows that 6 per cent of all firms recorded that theircompany was currently availing of the sub-minimum rates at the end of2002; 86 per cent said they were not and the remaining 8 per cent said theyhad never heard of the sub-minimum thresholds. One can see from thedetail of the table that the rates are used most frequently in the Building &Construction sector (11 per cent); Hotels/Restaurants/Bars (9 per cent)and Other Manufacturing and Production (8 per cent). Perhaps the highincidence of sub-minimum rates in some of these sectors may be due toapprenticeship arrangements. This could be of particular relevance in theBuilding & Construction sector.

Section B of the table shows that the use of sub-minimumarrangements increases with size of firm. One can see, for example, thatonly 1 per cent of companies with 3 or less employees record using thesub-minimum arrangements. This rises progressively with numbersengaged until it stands at 18 per cent among the largest companies inwhich 100 or more persons are engaged. In many respects this is as onewould expect. The greater the number of persons engaged the greater isthe potential for at least some of them falling into one of the eligible sub-minimum categories which fall within scope of the legislation.

Section C of the table shows that only a trivial percentage (2 per cent)of those who had no workers recorded as being paid below the minimumwage said they had ever used the sub-minimum rates. A total of 65 percent of firms which had up to 15 per cent of their workforce below the fullminimum wage recorded that they had used sub0minimum rates.Surprisingly, only one-third of the firms which had 15 per cent or more oftheir workforce below the minimum wage said that they had availed ofsub-minimum rates.

Finally Section D indicates that use of sub-minimum rates is somewhathigher among Irish than foreign companies (6 per cent and 3 per centrespectively). From the bottom line in the table one can see that, inaggregate the incidence among firms of use of sub-minimum rates isunchanged as compared to the previous survey at the end of 2000/early2001. The only minor change in the pattern of responses regarding firms’

4.3 Knowledgeand Use of Sub-minimum Rates

use of sub-minimum rates is the reduction of the percentage which saythey have never heard of the sub-minimum levels. These fell from 18 percent in 2000/2001 to 8 per cent in 2002.

Table 4.4: Incidence of the Use of Sub-minimum Rates Classified by Sector, Sizeof Firm, Percentage of the Workforce Paid at Sub-minimum Level andNationality

Yes No Never Heard of Sub-Minimum Rates

Section A SectorBld&Const 11.0 80.5 8.5 100.0Manf text&apparel 5.8 78.2 15.9 100.0Oth manf&prod 8.3 87.6 4.0 100.0Retail 5.4 84.7 9.9 100.0Wholesale 1.4 86.1 12.4 100.0Prop/rent/bus serv 3.1 92.3 4.6 100.0Hotels/rest/bar 9.3 84.2 6.5 100.0Pers&Other Servs 1.8 82.7 15.5 100.0

Section B Size of firm3 or less 1.4 87.1 11.5 100.04-9engaged 6.2 86.8 7.1 100.010-34engaged 13.6 80.4 6.0 100.035-99engaged 16.5 77.1 6.4 100.0100+engaged 18.1 77.6 4.3 100.0

Section C Percentage of workforcepaid below minimum wage

None below full minimum wage 2.1 89.7 8.1 100.0Less than 15% below full minimum wage 65.0 34.0 1.0 100.015+% below full minimum wage 34.8 50.3 7.3 100.0

Section D NationalityIrish 6.1 85.3 8.5 100.0Foreign 2.9 91.5 5.7 100.0All Firms 6.0 85.7 8.4 100.0

All Firms end 2000/early 2001 6.2 76.1 17.7 100.0

The 6 per cent of companies which recorded having availed of sub-minimum rates were asked to indicate which of the various eligible rateswere being used. Table 4.5 shows that by far the most frequently used rateis that applying to young workers under 18 years of age – cited by 67 percent of relevant respondents. The rate in respect of trainees over 18 yearsand in their first third of training, and persons over 18 years but in theirfirst year of employment were also recorded on a relatively frequent basisby relevant employers (22 per cent and 18 per cent respectively).

Table 4.5: Percentage of Firms which Recorded Using the Sub-minimum Rates ClassifiedAccording to Which Rate Was Used1

Yes No TotalUnder 18 years of age 67.4 32.6 100.01st year of employment over 18 years 18.3 81.7 100.02nd year of employment over 18 years 14.1 85.9 100.0Trainee over 18: 1st 1/3 training 21.8 78.2 100.0Trainee over 18: 2nd 1/3 training 6.4 93.6 100.0Trainee over 18: 3rd1/3 training 5.5 94.5 100.01 Note that this table is based only on the 6 per cent of companies which recorded that they were availing of the

sub-minimum rates at the time of interview.

Table 4.6 outlines the percentage of firms which have used differentcombinations of sub-minimum rates. The most important point to note isthat firms generally use only 1 of the 6 eligible levels. One can see that 77.7per cent of those who use the sub-minimum levels use only one. The mostfrequently used is in respect of young workers under 18 years (53 per cent).Only small percentages of relevant firms actually apply combinations ofrates. For example, 4.3 per cent apply the young worker rate along with therate for those aged 18 years or over but are in their first year ofemployment. A further 6.5 per cent of relevant respondents applied theyoung worker rate and also the rate for those aged 18 years or over butwho were in their second year of employment.

Table 4.6: Firms which availed of sub minimum rates classified according to thecombination of rates used.

Use rate in question? %

Under 18

yrs of age

First Yr

18 yrs +

Second Yr 18

yrs +

Trainee 18+

1st third

Trainee 18+

2ndt third

Trainee 18+

3rd third

Per cent of

relevant firms

Yes No No No No No 53.0

No No No Yes No No 14.6

No Yes No No No No 6.7

Yes No Yes No No No 6.5

Yes Yes No No No No 4.3

No No Yes No No No 3.4

No No No Yes Yes Yes 1.7

No Yes Yes No No No 1.4

Other Combinations 8.4

Total 100.0

In the final section in this chapter we consider respondents’ replies to aseries of questions aimed at eliciting their opinions and views on the impactof the introduction of minimum wage legislation as it impacted on anumber of aspects of workplace practices and experience.

Table 4.7 presents details on responses to the direct question as towhether or not respondents felt that the introduction of minimum wagelegislation had directly increased their labour costs or had no impact onsuch costs. One can see from the table that just under 1-in-5 firms (18 percent) felt that the minimum wage had increased labour costs. Section A inthe table indicates that the view is held most frequently by companies in theHotel/Restaurant/Bar sector (40 per cent) and also the Manufacturing ofTextiles and Apparel (34 per cent). It was expressed least frequently in theBanking & Business Services sector (12 per cent) and in Wholesale (10 percent).

4.4PerceivedImpact of

IntroducingMinimum Wage

Legislation

Table 4.7: Firms Classified According to Whether or Not They Feel theMinimum Wage has Increase Labour Costs

Increased labour costs No effect TotalSection A: SectorBld&Const 6.8 93.2 100.0Manf text&apparel 34.4 65.6 100.0Oth manf&prod 17.4 82.6 100.0Retail 24.1 75.9 100.0Wholesale 10.3 89.7 100.0Banking & Business Services 12.0 88.0 100.0Hotels/rest/bar 40.0 60.0 100.0Pers&Other Servs 14.3 85.7 100.0

Section B: Size of firm3 or less 10.4 89.6 100.04-9engaged 22.9 77.1 100.010-34engaged 21.9 78.1 100.035-99engaged 25.4 74.6 100.0100+engaged 21.6 78.4 100.0

Section C: Percentage of workforcepaid on or below full minimum wageNone on or below full minimum wage 12.2 87.8 100.0lt 15% on or below full minimum wage 23.5 76.5 100.015+% on or below full minimum wage 50.1 49.9 100.0

Section D: NationalityIrish 19.3 80.7 100.0Foreign 5.0 95.0 100.0

All Firms 2002 18.5 81.5 100.0

All Firms 2000/2001 16.1 83.9 100.0

As one might expect, there appears to be a strong and positiverelationship between percentage of workers employed at or below theminimum wage and the view that its introduction has increased labourcosts. One can see that one-half of all companies who employ 15 per centor more of their staff on or below the full adult minimum threshold feelthat the legislation has increased labour costs to a higher level than theywould otherwise be.

Finally, one can see from Section D of the table that the view thatthe minimum wage has increased labour costs is held by substantially largerproportions of Irish than foreign companies.(19 per cent and 5 per centrespectively).

The bottom line in the table presents aggregate figures on employers’perceptions from the 1999/2001 survey of the impact of the legislation onlabour costs. One can see that there is a remarkable consistency betweenthe figures at the end of 2002 and those from the previous survey in

1999/2000. There is really no change in attitude in this regard over theperiod in question. This consistency is perhaps all the more surprising giventhe very changed macroeconomic circumstances prevailing at the end of2002 as compared to three years earlier. In 1999 supply side constraints andlabour shortages were a major problem facing employers. Given slightlymore uncertain business circumstances today coupled with fewerconstraints in the labour market one might have expected a higherpercentage of respondents in the more recent survey to blame theminimum wage for increasing labour costs than was the case in 1999. Thisis clearly not the case. There would appear to be no evidence to suggestthat employers are using it to a greater degree as a scapegoat for risinglabour costs today as compared with 3 years ago.

To further explore firms’ views on the impact of the minimum wagethey were asked whether or not they felt that, in the absence of theminimum wage, they would be employing more, the same or fewer personsthan were actually employing at the time of the survey. The results areshown in Table 4.8. This shows that, in aggregate, 93 per cent of firms feelthat the introduction of the minimum wage has had no effect onemployment levels with the remaining 7 per cent feeling that they wouldnow have more persons engaged if it had not been introduced. One can seefrom the table that almost one quarter of business in theHotel/Restaurant/Bar sector feel that this is the case. One quarter of firmswhich have a high percentage of persons employed at or below the currentminimum wage threshold also feel that they would be employing morepeople had the legislation not be introduced. Section D of the table showsthat this view is much more commonly held among Irish than foreigncompanies.

Table 4.8: Firms Classified According to Whether or Not They Felt that, in theAbsence of the Minimum Wage, They Would Now have More; theSame or Fewer Persons Engaged than they Current have.

MorePeople

SameNumber

FewerPeople

Total

Section A: SectorBld&Const 3.9 96.1 0.0 100.0Manf text&apparel 15.3 84.7 0.0 100.0Oth manf&prod 4.1 95.8 0.0 100.0Retail 8.3 91.7 0.0 100.0Wholesale 4.5 95.5 0.0 100.0Prop/rent/bus serv 2.1 97.9 0.0 100.0Hotels/rest/bar 23.5 76.5 0.0 100.0Pers&Other Servs 1.3 98.7 0.0 100.0

Section B: Size of firm3 or less 2.6 97.4 0.0 100.04-9engaged 10.8 89.3 0.0 100.0

10-34engaged 6.6 93.4 0.0 100.035-99engaged 7.1 93.0 0.0 100.0

100+engaged 2.3 97.7 0.0 100.0

Section C: Percentage of workforcepaid on or below full minimum wageNone on or below full minimum wage 4.0 96.0 0.0 100.0lt 15% on or below full minimum wage 3.3 96.7 0.0 100.015+% on or below full minimum wage 24.0 76.0 0.0 100.0

Section D: NationalityIrish 7.5 92.5 0.0 100.0

Foreign 1.2 98.8 0.0 100.0

All Firms 2002 7.2 92.6 0.0 100.0

All Firms end of 2000/early 2001 5.3 94.7 0.0 100.0

The bottom line in Table 4.8 provides a comparison of the situation atthe end of 2000 with that which prevailed 3 years later. As in previoustables the figures suggest that there has been no change over the last 3 yearsin the situation in terms of employers’ perceptions of the effect of theminimum wage on employment levels. The only sector in which therewould seem to be any appreciable change in perceptions is in theHotel/Restaurant/Bar sector (not shown in the table). In 1999/2000 9 percent of firms in that sector recorded that they felt that, in the absence ofthe minimum wage, they would have been employing more persons thanthey were at the time of interview. By the end of 2002 a total of 23 per centof firms in that sector felt that minimum wage levels were adversely

impacting on employment levels. This change represents a substantial andreal change in perceptions among employers in the sector over the periodin question.

In addition to questions related to the impact of the minimum wage onemployment levels respondents were also asked whether or not they feltthat its introduction had affected various aspects of their operations. Theresults are shown in Tables 4.10 and 4.11. We can see from Table 4.10 thatbetween 90-96 per cent of companies felt that the minimum wage had noeffect on most of operational aspects considered. The aggregate figures inrespect of those who felt that the legislation had no effect on the relevantaspect of business are summarised below:

% sayingNo Effect

Changed pay and benefits 90%Changed work organisation 93%Reduced number of working hours 92%Resulted in more inexperienced staffbeing employed 93%Reduced expenditure on training 95%Tightened control on labour 92%Increased Training & Development 96%Increase Use of Technology 95%Impacted on quality of services 93%Increased prices 83%Reduced profits 82%

It is clear from the figures above, and also from the detail of Table 4.10,that higher percentages of firms felt that the minimum wage had an impacton two operational aspects of business viz. Prices and profit levels. A totalof 17-18 per cent of firms recorded that the legislation had an impact inthese cases. This is a full 10 percentage points higher than the comparablepercentages for each of the other aspects of business activity outlined in theTable. One can also see that much higher percentages of firms in theManufacture of Textiles & Apparel and also in the Hotel/Restaurant/Barsector feel that the minimum wage has had a significant effect in both theareas of increasing product prices and also profit levels. Almost 43 per centof firms involved in the Manufacturing of Textiles & Apparel feel that ithas adversely impacted on profit levels.

The final column in Table 4.10 presents comparable figures from the2000/2001 Survey. The most striking feature of these is the remarkableconsistency between the figures recovered in the earlier survey and thoserecorded at the end of 2002.

Finally, firms were asked about the impact of the minimum wage onaspects of their business, such as morale, productivity, retraining,subcontracting, turnover and industrial relations. The results are shown inTable 4.11. One can see that in most instances almost 95 per cent of firmssaid that it had no effect in any of these areas. Not surprisingly, among the

Table 4.10: Firms Classified According to their Perceptions of the Impact of the Minimum Wage on a Series of Operational and Related Aspects of their BusinessBld&Const

Manftext&apparel

Othmanf&prod

Retail Wholesale Banking/Fin/Bus. Services

Hotels/rest/bar

Pers&OtherServs

Total 2000 Survey

Changed pay and benefitsSignificant effect 1.9 11.0 4.4 2.6 4.0 0.0 11.9 2.4 3.4 3.7Slight effect 4.5 15.7 10.6 8.3 4.8 3.2 8.8 7.5 6.5 11.7No effect 93.6 73.2 85.1 89.0 91.2 96.8 79.4 90.0 90.1 84.6

Changed work orgSignificant effect 0.0 3.3 2.3 0.5 5.0 0.1 6.5 2.0 1.7 1.0Slight effect 5.8 14.1 5.2 5.5 1.9 4.5 8.7 4.4 5.5 7.7No effect 94.2 82.6 92.5 94.0 93.1 95.4 84.9 93.6 92.8 91.3

Reduction of working hoursSignificant effect 0.0 3.3 0.4 2.7 5.0 0.0 11.6 3.9 3.0 0.5Slight effect 3.9 9.2 4.5 6.1 1.0 2.1 13.1 1.6 5.0 8.4No effect 96.1 87.5 95.1 91.2 94.1 97.9 75.3 94.6 91.9 91.1

More inexperienced staffSignificant effect 0.0 3.3 1.0 3.7 2.2 11.4 1.2 2.8 0.6Slight effect 4.3 10.9 5.4 3.9 0.7 0.5 8.8 1.4 3.6 9.1No effect 95.7 85.9 93.6 92.3 97.1 99.5 79.8 97.5 93.5 90.3

Increased pricesSignificant effect 5.6 14.2 2.5 6.2 2.2 0.1 23.4 6.0 6.8 1.8Slight effect 4.9 20.5 13.7 10.8 2.9 4.5 21.5 9.3 9.6 14.9No effect 89.5 65.3 83.8 83.1 95.0 95.4 55.1 84.7 83.6 83.2

Reduced profitsSignificant effect 5.6 17.8 4.9 5.6 3.8 0.1 19.2 5.9 6.2 2.1Slight effect 4.7 24.8 13.6 14.5 6.5 6.7 16.3 11.1 10.5 16.3No effect 89.7 57.4 81.5 79.9 89.7 93.2 64.5 83.0 83.3 81.6

Reduced expend on trainingSignificant effect 0.0 4.9 0.6 2.4 2.2 12.1 0.1 2.5 0.6Slight effect 2.1 10.9 5.3 3.3 1.9 0.4 1.7 4.2 2.4 5.4No effect 97.9 84.2 94.2 94.4 96.0 99.6 86.2 95.7 95.2 94.0

Tightened control on labourSignificant effect 0.2 7.9 2.6 4.9 3.6 0.1 7.3 4.9 3.2 2.2Slight effect 6.2 18.5 8.9 4.5 2.4 0.5 13.9 2.8 5.3 8.6No effect 93.6 73.6 88.5 90.6 94.0 99.4 78.7 92.3 91.5 89.2

Increased Training & developmentSignificant effect 3.3 0.1 1.2 2.2 0.0 7.0 0.0 1.4 1.2Slight effect 4.1 14.1 4.4 4.1 1.5 0.4 1.9 5.1 3.0 7.8No effect 95.9 82.6 95.5 94.8 96.4 99.6 91.1 94.9 95.6 91.0

Increase in technologySignificant effect 1.9 7.9 3.0 1.2 2.4 0.5 1.0 1.1 1.0Slight effect 5.8 14.2 6.1 3.4 2.2 0.4 12.1 1.8 4.4 6.8No effect 92.3 77.9 91.0 95.4 95.5 99.6 87.4 97.3 94.5 92.2

Quality of serviceSignificant effect 1.9 3.3 1.0 1.4 1.7 0.5 1.9 1.1 1.0Slight effect 3.9 15.5 4.4 4.1 4.3 0.4 18.2 7.1 5.7 7.7No effect 94.2 81.2 94.6 94.5 94.0 99.6 81.3 91.0 93.2 91.3

Table 4.11: Firms Classified According to their Perceptions on the Effect of the Minimum Wage on a Number of Areas ofBusiness, Classified by Sector

Bld &Const

Manftext&

apparel

Othmanf&

prod

Retail Whole-sale

Bank/Fin/Business

Serv.

Hotels/rest/bar

Pers&Other Servs

2000Survey

Staff MoraleDecrease 0.0 3.2 2.1 2.4 0.3 0.1 11.8 2.1 2.6 0.8No effect 90.9 84.5 89.5 86.4 94.4 93.2 65.9 94.4 87.3 87.4Increase 9.1 12.3 8.4 11.3 5.4 6.6 22.3 3.5 10.1 11.8ProductivityDecrease 0.0 1.6 0.8 2.1 0.3 0.0 0.1 0.0 0.6 0.5No effect 95.4 92.8 94.3 91.4 94.8 95.6 92.0 98.0 94.2 92.8Increase 4.6 5.6 4.8 6.5 4.9 4.4 7.9 2.0 5.2 6.7Staff RetrainingDecrease 0.0 0.0 0.0 2.0 1.6 0.0 0.1 0.1 0.6 0.6No effect 97.1 94.1 96.0 93.3 92.2 95.6 91.1 99.6 95.0 95.3Increase 2.9 5.9 4.0 4.7 6.1 4.4 8.8 0.3 4.4 4.1SubcontractingDecrease 0.0 1.0 0.4 2.1 0.3 0.0 0.3 0.0 0.6 0.4No effect 93.1 89.4 95.9 94.8 93.0 92.0 92.9 98.9 94.0 97.3Increase 6.9 9.6 3.7 3.1 6.8 8.0 6.9 1.1 5.4 2.4Staff TurnoverDecrease 0.2 3.3 1.0 2.7 0.5 2.0 12.3 0.1 3.0 3.4No effect 95.0 88.8 95.9 93.4 94.4 93.6 68.1 99.5 91.0 92.0Increase 4.8 7.9 3.1 3.9 5.2 4.4 19.6 0.4 6.0 4.7Industrial RelationsDecrease 0.0 3.3 0.4 1.6 0.5 0.0 0.1 0.0 0.4 0.9No effect 97.3 93.4 94.9 95.9 96.2 95.8 92.8 97.9 95.9 96.3Increase 2.7 3.3 4.7 2.5 3.3 4.2 7.1 2.1 3.7 2.7

minority who said that there had been some effect the greatest perceivedimpact appears to have been in terms of improvements in staff morale.Just over 10 per cent of companies recorded that this had been the case.The final column in the table presents comparable figures at an aggregatelevel from the 2000 survey. As was noted in our discussion of the previoustable, these figures indicate a remarkable consistency over the two mostrecent round of the survey. The figures suggest only negligible changes interms of firms’ attitudes in these areas.

In this chapter we have presented the responses of firms to questionsabout their knowledge of the minimum wage and also their perceptions ofits effect on labour costs, on employment levels and a range of other

operational aspects of business activity.We found that there was almost universal knowledge across all

sectors of the wage having been introduced. Notwithstanding somedifficulties in interpreting the data as a result of a change in the level of thethreshold in the course of fieldwork, one can reasonably say that one-thirdof firms record that they do not know the rate while just slightly less thanone-third (45 per cent) are able to cite the correct figure. The reader mustassess the significance or otherwise of this finding. It would appear to bemuch more significant that there is universal knowledge of the existence ofthe wage floor than that everyone completing the survey should be able torecall the minutiae of its application. It may be of greater relevance that theManaging Director of a company knows of the wage’s existence and isable, as required, to secure details on its level etc. from the personnel orfinance department.

We saw that 6 per cent of companies recorded that they used thesub-minimum rates at the end of 2002; a further 86 per cent said they werenot and the remaining 8 per cent said they had never heard of them. Thehighest recorded use of sub-minimum rates was in the Building &Construction sector (11 per cent); Hotels/Restaurants/Bars (9 per cent)and Other Manufacturing & Production (8 per cent). The higher incidenceof their use in these sectors may reflect apprenticeship and related trainee-based arrangements. This could be of particular relevance in the case ofBuilding & Construction. In general, we found that the most frequentlyused sub-minimum rate was for young workers under 18 years of age. Itwas noteworthy that there was no change in the recorded incidence ofsub-minimum rates between the end of 1999 and the end of 2002.

In terms of the perceived impact of minimum wage legislation onvarious aspects of business activity we saw that 18 per cent of companiesfelt that its introduction had resulted in an increase in labour costs. Thepercentage of firms holding this view was substantially higher in theHotel/Restaurant/Bar sector (40 per cent); Manufacturing of Textiles &Apparel (34 per cent) and Retail sector (24 per cent). It was notable thatthe percentage of firms who felt that the statutory wage floor hadincreased labour costs had remained unchanged since the previous survey.Just over 16 per cent of firms at the end of 1999/early 2000 recorded thatthey felt it had increased labour costs compared with the 18 per cent at theend of 2002. Similarly, there had been effectively no movement in the

4.5Summary

percentage who felt that, in the absence of the legislation, they would becurrently employing more staff.

Finally, we saw that over 90 per cent of firms felt that theminimum wage had no effect on business operations across a wide rangeof different dimensions such as changing pay and benefits; changing workorganisation, reducing the number of working hours etc. Just under 20 percent of companies recorded that they felt it had impacted on their outputprices and also on their profit levels. In general, the percentages holdingthese views were highest in the Manufacture of Textiles & Apparel andalso the Hotel/Restaurant/Bar sectors. The overall story told by thefigures in this aspect of the report, however, is that minimum wagethresholds are not felt to have impacted substantially on the business oroperational aspects of companies in Ireland.

5.PAYPROFILES

In the previous two chapters we considered changes in key characteristicsof the business enterprise. Issues examined included number of personsengaged; proportion of the workforce at or below minimum wage levels;changes in the size of the workforce over recent years; trends in profitlevels and output; knowledge of attitudes to and perceptions of the impactof the minimum wage in Ireland and so on. In this chapter we change thefocus somewhat from these characteristics of the firm to a consideration ofthe characteristics of the workforce. In particular, we focus on pay structuresand changes therein over the three rounds of the survey. We examine indetail variations in pay structures according to industrial sector; gender; agecohort and employment status (specifically fulltime vs. part-time).Throughout the chapter we focus on the percentage of workers on theminimum threshold and those below it. Although the emphasis is on thesituation as it pertained in the last quarter of 2002 we provide comparableinformation from the 1999 and 2001 surveys as relevant.

In Section 5.2 we discuss the breakdown of the workforce in termsof hourly pay rates and variations therein according to key classificatoryvariables. In Section 5.3 we provide details on the occupationalcharacteristics of those below the threshold. Finally, Section 5.4 providesa brief summary of the main findings presented in the chapter.

5.2.1 FULL-TIME/PART-TIME WORKERS

In the course of the questionnaire the employer was asked toprovide a detailed breakdown of persons engaged in the enterpriseaccording to a 7-fold classification of hourly basic rates as discussed inChapter 2 above. The number of persons within each of these basic payrates was further broken down in terms of gender; full-time/part-timestatus and age cohort. Table 5.1 presents the results.

From the table one can see that just under 2 per cent of workerswere recorded as being paid below the full adult minimum wage thresholdin the last quarter of 2002, while a further 2.6 per cent were recorded asbeing on the full adult minimum itself. Just over three-quarters of workerswere paid €1.60 or more above the minimum rate. These figures implythat just under 24,000 persons were being paid below the full adultminimum threshold at the end of 2002.

5.1 Introduction

5.2 Distributionof Workers

According toHourly Pay

Rates

Table 5.1: Persons engaged classified according to basic pay scale and whether or not full-timeor part-time, last quarter 2002.

Below FullMinimum

Wage

At FullMinimum

Wage

Min Wage+80 cent

Min Wage+160 cent

Min Wage+160 cent or

over

Total Total N

Full time 1.0 1.5 5.4 10.0 82.0 100.0 1,052,261Part time 6.6 8.0 20.2 21.9 43.3 100.0 200,198All Persons 1.9 2.6 7.8 11.9 75.8 100.0 1,252,459

It is clear from the table that substantially higher proportions ofpart-time than full-time employees were at or below the threshold. Onecan see that 6.6 per cent of part-time staff compared with 1 per cent offull-time workers were below the full adult minimum wage level while 8per cent of part-time workers and 1.5 per cent of full-time workers werebeing paid exactly at the threshold.

Table 5.2 provides comparable details on the breakdown ofworkers for the last quarters in 1999 and 2001. In the first two rounds ofthe survey employers were asked to record the number of persons beingpaid at or below IR£4.50 per hour. The reader is reminded that the actuallevel of the full adult minimum wage when the 2000/2001 survey wascarried out was IR£4.40 per hour. Accordingly, as noted in Chapter 2, themove to recording the numbers at and below the very specific levels of€5.97/€6.35 per hour in the course of the 2002 survey means that thefigures are not directly comparable with levels recorded in previous years ofthe survey. They nonetheless provide extremely important benchmarksagainst which to measure trends and change over the period in question.

If one takes the threshold of IR£4.50 per hour as an approximatecomparator for the full adult minimum wage threshold in both 1999 and2000/2001 one can see that the proportion of workers at or below thethreshold fell from 21 per cent in 1999 to 4.3 per cent in 2000/2001,compared with 4.5 per cent in 2002. As regards full time staff one can seethat percentages at or below the full adult threshold fell from 13.7 per centin 1999 to 2.2 per cent in 2000/2001, compared with 2.5 per cent in 2002.The comparable figures for part-time workers were 64.4 per cent, 16.9 percent and 14.6 per cent. The clear story told by these figures is one of avery substantial fall in the proportions of persons recorded as being at orbelow the full adult threshold in 1999 as compared with the situation twoyears later, followed by a period of effectively no change between 2001and 2002. The authors would point out that the figures of 4.3 per centamong all workers in 2000/2001 and 4.5 per cent in 2002 indicates a verystable situation over that period: the slight increase is well within what onewould expect in terms of sampling variation from one round of the surveyto the next.1 In summary, therefore, it is clear that rates tumbled between1999 and 2000/2001 and have remained constant thereafter.

1 This level of fluctuation would be well within standard samplingvariations for the measure in question.

Table 5.2: Summary comparison of persons engaged classified according to broad pay scaleand full-time/part-time status, 1999, 2001, 2002.

IR£4.50 perHour or Less IR£4.51 - £5.50 IR£5.51 + 2002

1999 2000/2001

1999 2000/2001

1999 2000/2001

Belowfull MW

AtfullMW

Abovefull MW,below(MW +80 cent)

MW +80 centor more Total

Full Time 13.7 2.2 15.8 10.6 70.5 87.2 1.0 1.5 5.4 92.0 100Part Time 64.4 16.9 17.8 36.1 17.8 47.0 6.6 8.0 20.2 64.2 100

Total 21.1 4.3 16.1 14.2 62.8 81.5 1.9 2.6 7.8 87.7 100

5.2.2 Industrial sector and employment statusTable 5.3 provides a detailed breakdown of the workforce

according to pay grade, industrial sector and full-time/part-time status. Ifone initially focuses on Section C of the table (All Persons) one can seethat the Hotels/Restaurants/Bar and Retail sectors stand out as havingsubstantially higher than average levels of sub-minimum wage workersthan other sectors. A total of 6 per cent and 3.6 per cent respectively ofthose engaged in these sectors are recorded as being paid below theminimum rate at the end of 2002. Lowest levels of sub-minimum workersare found in the Manufacture of Textiles & Apparel (0.5 per cent) and alsoBanking & Business Services sectors (0.7 per cent).

The contrast between Hotels/Restaurants/Bars and Retail sectorson the one hand and all other industrial sectors on the other becomes evenmore stark if one considers the total percentages at or below the full adultthreshold. One can see that a total of 19.7 per cent of those in theHotel/Restaurant/Bar sector and 7 per cent of those engaged in retail arebeing paid at or below the full adult rate. These compare with 4.5 per centof all persons in aggregate.

Table 5.3: Persons engaged classified according to basic pay scale, industrial sector andwhether or not full-time or part-time, last quarter 2002.

Below FullMinimum Wage

At FullMinimum Wage

Full Min Wage+80

Min Wage +160 Min Wage +160 or over Total

Section A: Full Time

Bld&Const 1.5 0.4 1.6 3.4 93.1 100.0

Manf text&apparel 0.5 2.5 13.2 18.5 65.4 100.0

Oth manf&prod 0.8 0.9 5.9 13.3 79.1 100.0

Retail 1.2 2.1 11.3 12.7 72.7 100.0

Wholesale 0.7 1.1 3.1 9.1 86.0 100.0

Banking & Bus. Serv. 0.7 0.1 1.8 8.9 88.5 100.0

Hotels/rest/bar 3.2 10.9 12.2 21.9 51.9 100.0

Pers&Other Servs 0.6 1.1 5.7 6.0 86.6 100.0

Total full time 1.0 1.5 5.4 10.0 82.0 100.0

Section B: Part Time

Bld&Const 4.7 0.0 11.2 0.1 83.9 100.0

Manf text&apparel 1.1 8.4 24.9 36.9 28.7 100.0

Oth manf&prod 3.9 3.4 14.5 21.6 56.7 100.0

Retail 8.0 5.8 18.9 29.4 37.9 100.0

Wholesale 4.6 12.3 29.5 26.4 27.1 100.0

Banking & Bus. Serv. 0.4 0.1 15.3 28.0 56.2 100.0

Hotels/rest/bar 10.7 18.4 24.6 28.4 17.9 100.0

Pers&Other Servs 6.5 9.4 23.8 2.6 57.8 100.0

Total part time 6.6 8.0 20.2 21.9 43.3 100.0

Section C: All Persons

Bld&Const 1.7 0.4 2.1 3.2 92.6 100.0

Manf text&apparel 0.5 3.2 14.7 20.8 60.8 100.0

Oth manf&prod 0.9 1.1 6.3 13.8 77.9 100.0

Retail 3.6 3.4 14.0 18.6 60.5 100.0

Wholesale 1.2 2.4 6.1 11.1 79.3 100.0

Banking & Bus. Serv. 0.7 0.1 3.6 11.4 84.2 100.0

Hotels/rest/bar 6.0 13.7 16.8 24.3 39.2 100.0

Pers&Other Servs 1.5 2.4 8.6 5.5 82.0 100.0

Total All Persons 1.9 2.6 7.8 11.9 75.8 100.0

Sections A and B of Table 5.3 outline the breakdowns for full-timeand part-time staff. One can see that in the case of all sectors thepercentage of full-time persons employed at or below the threshold islower than that of part-time workers. Among full-time workers theHotel/Restaurant/Bar and Retail sectors stand out as having the highestproportions of workers at or below the full adult minimum wage.Although both sectors also have high rates among part-time staff(especially the Hotel/Restaurant/Bar sector) other sectors such asWholesale and Personal & Other Services also display high levels (17 percent and 16 per cent respectively) among those engaged on a part-timebasis. The reader should note, however, that in relation to these latter twosectors a very large proportion of the workers in question are recorded asbeing at the full adult threshold rather than below it. If one focuses onlyon those below the line the Hotel/Restaurant/Bar and Retail sectors clearlystand out as having the highest levels for part-time staff (10.7 per cent and8 per cent respectively).

Table 5.4 outlines comparable details on the breakdown of full-time and part-time workers at or below the full adult minimum threshold

for 1999 and 2000/2001. Section C of the table provides a breakdown forall persons engaged. The story told by these figures is that, in aggregate,the percentage of persons at or below the minimum wage fell verysubstantially between 1999 and 2000/2001. In general, there has been verylittle change between the end of 2000/early 2001 and the end of 2002.This is true in respect of all areas of industrial or business activity with theexception of the Hotel/Restaurant/Bar and Personal Services sectors. Inregard to the former a total of 49 per cent of workers were paid at orbelow the full adult threshold in 1999. By the end of 2000/early 2001 thishad fallen to 14 per cent. By the end of 2002, however, the recordedfigure for the sector had risen to 20 per cent. This indicates a real upwardtrend, above what one could discount as a result of fluctuations resultingsolely from statistical or sampling issues. One should note, however, thatthe majority of the 20 per cent of workers in question are actually recordedas being on rather than below the full adult minimum. One can clearly seefrom Table 5.4 that the 20 per cent in question is broken down as 6 percent below that level and 14 per cent on the full adult minimum wage.

The figures in the table also indicate that the percentages at orbelow the minimum threshold in Personal Services have increasedsomewhat over the period 2000/2001 to 2002, from 1.8 to 3.9 per cent,having fallen substantially from just under 15 per cent at the end of 1999.The authors would note that the apparent increase in this sector generallyrepresents a ‘no change’ situation and that the 2 percentage point increaseis consistent with standard sampling fluctuations. Other changes over theperiod 2000/2001 to 2002 such as the 0.4 percentage point increase in theaggregate figures for Manufacturing/Textile & Apparel or the 0.2 pointincrease in aggregate for the Wholesale sector equally represent a positionof no change over the period in question.

Section A of Table 5.4 outlines details on the breakdown of full-time workers within each sector according to basic pay scale. This showsthat only in the Hotel/Restaurant/Bar sector did the percentage of thoseat or on the threshold increase over the period 2000/2001 to 2002. A totalof 8.5 per cent of those engaged on a full-time basis in the sector were ator below the full adult minimum in 2000/2001. This increased to just over14 per cent by the end of 2002. The authors would once again point outthat the marginal rise from 1.3 to 1.7 per cent in respect of full-timepersons engaged in the Personal Services sector is not significant and veryclearly represents a position of stability in that sector.

Table 5.4: Comparison of persons engaged at or below minimumwage threshold classified according to industrial sectorand full-time/part-time status, 1999, 2001, 2002.

IR£4.50 perHour or Less 20021999 2000/

2001Below FullMinimum

Wage

At FullMinimum

WageSection A: Full-TimeBld&Const 9.0 2.3 1.5 0.4Manf text&apparel 32.2 2.9 0.5 2.5Oth manf&prod 8.9 1.9 0.8 0.9Retail 24.0 3.5 1.2 2.1Wholesale 14.2 0.8 0.7 1.1Prop/rent/bus serv 5.9 0.8 0.7 0.1Hotels/rest/bar 31.3 8.5 3.2 10.9Pers&Other Servs 11.9 1.3 0.6 1.1Total 13.7 2.2 1.0 1.5

Section B: Part-TimeBld&Const 12.2 2.2 4.7 0.0Manf text&apparel 42.6 6.2 1.1 8.4Oth manf&prod 22.1 6.0 3.9 3.4Retail 80.8 22.4 8.0 5.8Wholesale 67.2 28.7 4.6 12.3Prop/rent/bus serv 57.8 11.9 0.4 0.1Hotels/rest/bar 79.0 23.0 10.7 18.4Pers&Other Servs 38.0 5.3 6.5 9.4Total 64.4 16.9 6.6 8.0

Section C: All PersonsBld&Const 9.1 2.3 1.7 0.4Manf text&apparel 33.2 3.3 0.5 3.2Oth manf&prod 9.7 2.1 0.9 1.1Retail 38.8 9.9 3.6 3.4Wholesale 22.5 3.4 1.2 2.4Prop/rent/bus serv 10.7 1.6 0.7 0.1Hotels/rest/bar 49.3 13.8 6.0 13.7Pers&Other Servs 14.9 1.8 1.5 2.4Total 21.1 4.3 1.9 2.6

Section B of Table 5.4 relates to part-time workers. One can seethat, in aggregate terms, a total of 14.6 per cent of part-time workers wererecorded as being at or below the full adult minimum threshold at the endof 2002. This is very substantially lower than the rate at the end of 1999but generally represents a position of no change on the levels recorded inrespect of late 2000/early 2001. It is clear that some sectors, notablyPersonnel & Other services and Hotel/Restaurant/Bars display anincrease in the percentage of part-time workers at or below the thresholdin 2002 as compared to the situation in 2000/2001.

In the previous table in this chapter we have concentrated on thepercentage of workers at or below the minimum threshold. This can be

effectively interpreted as an analysis of the “risk” of an employee in eachsector falling below the minimum wage threshold. In Table 5.5 we furtherexplore the issue of sectoral variations in the levels of low pay. We changethe emphasis, however, from “risk” to “incidence”. By sectoral“incidence” we are referring to the concentration of persons within eacharea of activity who are at or below the minimum pay level threshold.

Column (i) in the table outlines the total number of personsengaged in each sector while column (ii) outlines their percentagebreakdown. The next 3 columns in the table provides comparable detail onbreakdown of all persons below the full adult minimum threshold (Col(iii)); at that threshold (Col (iv)); and all those at or below that line (Col (v)).The ratio of the figures in columns (ii) to Column (v) is then presented inColumn (vi). This ratio gives a crude measure of the degree of over- orunder-representation of minimum wage workers in each sector relative tothe situation which would pertain were minimum and sub-minimumworkers distributed on a pro-rate basis across all sectors.

We can begin by considering Section C of the table i.e. all personsengaged. One can see, for example, that the Building & Constructionsector accounts for approximately 13 per cent of those engaged in theprivate non-agricultural workforce. This same sector also accounts for 6per cent of those at or below minimum pay rates. Accordingly, one couldsay that Building & Construction has just less than one half the level ofminimum wage workers which they would have if they were distributedacross all sectors on a pro rata basis with all persons engaged. The ratio ofColumns (v) to Column (ii) is presented in Column (vi).

The figures in Column (vi) of the table indicate that the Retail andHotel/Restaurant/Bar sectors have a ratio of greater than 1. In the Retailsector there would appear to be approximately 1.6 times the number oflow paid workers as might be expected. In the Hotel/Restaurant/Barsector one finds approximately 4.4 times the number of workers at orbelow the full adult minimum wage as would be expected if this groupwere proportionately distributed across all sectors. One can see fromSections A and B of the table that this story is told consistently for bothfull-time and part-time staff.

Table 5.5: Distribution of persons at or below the full adult minimum wage in 2002 classifiedaccording to industrial sector.

All Persons% of AllPersons

% of personsbelow fullminimum

wage

% of personsat full

minimumwage

% of persons at orbelow full

minimum wage

RatioCol (v)/Col (ii)

Section A: Full-Time (i) (ii) (iii) (iv) (v) (vi)Bld&Const 155,680 14.8 21.2 4.1 11.0 0.74Manf text&apparel 9,577 0.9 0.4 1.5 1.0 1.11Oth manf&prod 265,111 25.2 19.0 15.2 16.8 0.67Retail 113,612 10.8 12.5 14.9 13.9 1.29Wholesale 52,748 5.0 3.4 3.6 3.5 0.70Prop/rent/bus serv 179,901 17.1 11.8 1.1 5.4 0.32Hotels/rest/bar 67,568 6.4 19.8 45.6 35.2 5.50Pers&Other Servs 208,064 19.8 11.8 13.9 13.1 0.66Total Full time 1,052,261 100.0 100.0 100.0 100.0 -Section B: Part TimeBld&Const 8,620 4.3 3.1 0.0 1.4 0.33Manf text&apparel 1,367 0.7 0.1 0.7 0.4 0.57Oth manf&prod 15,245 7.6 4.4 3.3 3.8 0.50Retail 61,503 30.7 37.4 22.2 29.1 0.95Wholesale 6,736 3.4 2.4 5.2 3.9 1.15Prop/rent/bus serv 27,799 13.9 0.9 0.2 0.5 0.04Hotels/rest/bar 40,032 20.0 32.5 45.8 39.8 1.99Pers&Other Servs 38,896 19.4 19.1 22.7 21.1 1.09Total Part time 200,198 100.0 100.0 100.0 100.0 -Section C: All PersonsBld&Const 164,300 13.1 11.3 2.1 6.0 0.46Manf text&apparel 10,944 0.9 0.2 1.1 0.7 0.78Oth manf&prod 280,356 22.4 11.0 9.3 10.0 0.45Retail 175,115 14.0 26.2 18.5 21.8 1.56Wholesale 59,484 4.7 2.8 4.4 3.7 0.79Prop/rent/bus serv 207,700 16.6 5.8 0.7 2.9 0.17Hotels/rest/bar 107,600 8.6 26.8 45.7 37.6 4.37Pers&Other Servs 246,960 19.7 15.8 18.3 17.2 0.87Total All Persons 1,252,459 100.0 100.0 100.0 100.0 -

Table 5.6 presents comparable ratio figures in respect of 1999,2000/2001 and 2002. This allows one to assess the degree of change in thelevels of over- and under-concentration of minimum wage workersbetween 1999 and 2002. Using this crude measure of concentration onecan see from the table that the concentration of those on or below theminimum wage generally fell between 1999 and 2000/2001. Some sectors,notably Banking/Business services continued to show a reduction inconcentration levels into 2002. Other sectors, such as Personal & OtherServices, showed a slight (but not substantial) increase between the twomore recent surveys. One can see from the figures that the retail sector,although still displaying an over-concentration in 2002 also appears to haveexperienced a reduction in the level of over-concentration in the period2001-2002. It is clear from the figures that the Hotel/Restaurant/Barsector continued to have the highest level of over-concentration ofminimum wage workers in 2002 and also to have experienced an increasein the level between 2001 and 2002.

Table 5.6: Trends over time in the levels of over- and under-concentration of persons paid ator below the full minimum wage level 1999, 2001, 2002.

A. Full-Time workers B. Part-Time workers C. All persons engagedSector 1999 2001 2002 1999 2001 2002 1999 2001 2002Bld&Const 0.65 1.02 0.74 0.17 0.13 0.33 0.43 0.52 0.46Manf text&apparel 2.36 1.33 1.11 0.69 0.40 0.57 1.57 0.75 0.78Oth manf&prod 0.65 0.84 0.67 0.34 0.36 0.50 0.46 0.48 0.45Retail 1.75 1.59 1.29 1.25 1.32 0.95 1.84 2.30 1.56Wholesale 1.04 0.37 0.70 1.05 1.68 1.15 1.08 0.79 0.79Banking & Bus.Serv

0.43 0.34 0.32 0.90 0.70 0.04 0.51 0.37 0.17

Hotels/rest/bar 2.30 3.81 5.50 1.23 1.36 1.99 2.34 3.19 4.37Pers&Other Servs 0.87 0.59 0.66 0.59 0.31 1.09 0.70 0.41 0.87

5.2.3 Industrial sector and genderTable 5.7 provides details on the breakdown of employees at the

end of 2002 classified according to broad pay-scale, sector and gender.One can see that the risk of being below the full adult minimum wage is 1.5per cent for males and 2.6 per cent for females. If one considers workersat or below the line the rates are, respectively, 2.9 per cent and 7.0 percent. One can see from the table that the gender differential is marginallyhigher for females engaged on a full-time basis as compared with thoseengaged on a part-time basis. The risk of being at or below the thresholdamong full-time females is just over twice that of their male counterparts.Among part-time workers the risk for females is 1.2 times that of males.This would seem to imply that part-time status takes precedence over thegender as a primary determinant of the risk of low pay. In other words, ifone is engaged on a part-time basis one will have a much higher risk ofbeing at or below the full adult minimum wage regardless of gender.Indeed, a part-time female worker has a risk of being at or below theminimum standard which is 4 times that of full-time counterpart. The riskfor a part-time male worker is higher - 6.8 times that of his full-timecounterpart. In terms of gender differences by sector one can see fromSection C of Table 5.7 that, in aggregate, a higher percentage of femalesthan males in almost all sectors at the end of 2002 were at or below theline. Only in the Banking/Business Services sector were the percentagesfor both genders equal. One can see from Table 5.7 that the largestgender gap in terms of absolute percentage point difference is in theHotel/Restaurant/Bar sector. In that sector just under 24 per cent offemales compared with 14 per cent of males are paid at or below the fulladult minimum wage2. If one considers gender differences as measured by

2The authors would point out that these gender differentials in pay structures

may, at least in part, reflect differences in occupational composition of male andfemale workers. Information was not recorded in the survey on occupationalcomposition by gender.

the ratio of females to males at or below the threshold the traditionalmanufacturing sector (Manufacturing of Textiles & Apparel) comes out ashaving the highest male/female differential. One can see that a total of 1.7per cent of males compared with 4.9 per cent of females in that sector arerecorded as being paid at or below the full adult minimum rate. Thismeans that females have a risk of being paid at or below the thresholdwhich is 2.3 times their male counterparts.

From Section A of the table one can see that the genderdifferentials in terms of minimum wage rates are largely in favour of males– smaller percentages of males than females recorded as being at or belowthe threshold in all sectors except for Banking & Business Services, wherethe rates are exactly the same. Section B on part-time workers shows thatthe gender differences are less clearly defined with the gap between thepercentage of males and females below the line being substantially reducedas compared with the situation among full-time workers.

Table 5.7: Breakdown of workforce by pay grade, sector and gender.

Males Females

Section A: Full TimeBelowFull

MinimumWage

At FullMinimum

Wage

FullMinimumWage +80

MinimumWage+160

MinimumWage +160 or

overTotal Total N

Below FullMinimum

Wage

At FullMinimum

Wage

FullMinimumWage +80

MinimumWage+160

MinimumWage +160

or overTotal Total N

Bld&Const 1.4 0.2 1.6 3.4 93.4 100.0 137,296 2.3 2.2 1.6 3.6 90.2 100.0 155,680Manf text&apparel 0.5 1.2 6.4 14.7 77.3 100.0 4,088 0.4 3.4 18.3 21.4 56.5 100.0 9,577Oth manf&prod 0.8 0.8 5.2 9.5 83.6 100.0 188,596 0.6 1.2 7.4 22.8 67.9 100.0 265,111Retail 1.3 1.4 10.1 11.2 76.0 100.0 64,379 1.1 3.1 12.9 14.7 68.3 100.0 113,612Wholesale 0.7 0.5 2.3 7.1 89.4 100.0 36,270 0.6 2.5 4.8 13.6 78.5 100.0 52,748Prop/rent/bus serv 0.7 0.1 1.2 9.3 88.7 100.0 104,882 0.7 0.1 2.6 8.3 88.3 100.0 179,901Hotels/rest/bar 2.1 10.1 9.0 15.2 63.5 100.0 32,700 4.2 11.6 15.2 28.1 41.0 100.0 67,568Pers&Other Servs 0.2 0.5 5.6 2.7 91.0 100.0 137,927 1.4 2.2 5.9 12.6 77.9 100.0 208,064Total 0.9 1.0 4.5 7.3 86.4 100.0 706,137 1.3 2.6 7.4 15.5 73.2 100.0 1,052,261Section B: Part timeBld&Const 8.0 0.0 11.5 0.0 80.5 100.0 4,895 0.3 0.0 10.9 0.3 88.5 100.0 8,620Manf text&apparel 0.0 10.9 17.1 24.5 47.4 100.0 131 1.2 8.1 25.7 38.3 26.7 100.0 1,367Oth manf&prod 7.0 1.7 16.6 19.9 54.9 100.0 4,962 2.3 4.3 13.4 22.4 57.5 100.0 15,245

Retail 9.2 3.8 17.0 30.1 39.9 100.0 22,896 7.4 6.9 20.0 29.0 36.7 100.0 61,503Wholesale 6.4 7.8 42.0 29.8 14.0 100.0 3,491 2.7 17.2 16.1 22.7 41.3 100.0 6,736Prop/rent/bus serv 0.7 0.2 10.8 32.3 56.0 100.0 10,311 0.3 0.0 18.0 25.4 56.3 100.0 27,799Hotels/rest/bar 6.3 12.6 24.7 28.3 28.1 100.0 10,851 12.4 20.5 24.6 28.4 14.1 100.0 40,032Pers&Other Servs 9.1 9.4 27.0 2.0 52.5 100.0 16,556 4.6 9.3 21.4 3.1 61.7 100.0 38,896Total 7.2 5.7 20.3 21.2 45.7 100.0 74,093 6.2 9.4 20.2 22.3 41.8 100.0 200,198Section C: All PersonsBld&Const 1.6 0.2 2.0 3.3 93.0 100.0 142,191 2.0 1.8 3.1 3.1 89.9 100.0 164,300Manf text&apparel 0.5 1.5 6.7 15.0 76.3 100.0 4,219 0.6 4.3 19.7 24.5 51.0 100.0 10,944Oth manf&prod 1.0 0.8 5.5 9.8 82.9 100.0 193,558 0.8 1.6 8.1 22.8 66.7 100.0 280,356Retail 3.3 2.0 11.9 16.2 66.6 100.0 87,274 3.9 4.8 16.0 21.0 54.4 100.0 175,115Wholesale 1.2 1.1 5.7 9.1 82.8 100.0 39,761 1.0 4.9 6.7 15.1 72.4 100.0 59,484Prop/rent/bus serv 0.7 0.1 2.1 11.3 85.7 100.0 115,193 0.6 0.1 5.5 11.6 82.2 100.0 207,700Hotels/rest/bar 3.2 10.8 12.9 18.5 54.7 100.0 43,550 7.9 15.7 19.5 28.2 28.7 100.0 107,600Pers&Other Servs 1.2 1.5 7.9 2.6 86.8 100.0 154,483 2.2 3.9 9.6 10.3 74.0 100.0 246,960Total 1.5 1.4 6.0 8.6 82.5 100.0 780,231 2.6 4.4 10.8 17.3 64.8 100.0 1,252,459

Table 5.8 summarises comparative details on the percentage ofmales and females at or below the full adult minimum wage at each of thethree rounds of the survey. As in earlier sections of this chapter thefigures would seem to indicate that following a very substantial reductionin the percentage of both males and females recorded at or below thethreshold between 1999 and 2001 the position has remained largelyunchanged over the period end-2001 to end-2002.

Table 5.8: Percentage of males and females recorded as being paidat or below the full adult minimum wage threshold.

Section A: Full-Time 1999 2000/2001 2002(per cent)

Male 10.3 1.6 1.9Female 19.8 3.6 3.9

Section B: Part-TimeMale 59.2 14.1 12.9Female 67.7 19.1 15.6

Section C: All PersonsMale 15.0 2.7 2.9Female 30.5 7.3 7.0

5.2.4 Industrial sector and age cohortIn Table 5.9 we outline the percentage of persons engaged in each

basic pay grade by broad age cohort. In interpreting the figures it iscritically important that the reader is reminded that only approximately 2per cent of relevant private sector workers are aged 18 years or less; justunder one-quarter are aged 19-25 years and the remaining three quartersare aged 26 years or more. Accordingly, in interpreting the percentagebreakdown for each of the 3 broad age cohorts the reader must takeaccount of the absolute number of persons in that cohort.

With this in mind, one can see from Section C of the table thatthere are major differences within the three age cohorts in terms of thepercentage of workers recorded as being at or below the full adultminimum threshold. One can see, for example, that almost 50 per cent ofthose aged 18 years or less are assigned to the two lowest wage categories.This compares with 8.9 per cent of those aged 19-25 years and 1.9 per centof those aged 26 years or more. As noted above, the base to which thesepercentages apply must also be taken into account. It is clear from thetable that the figures imply that about 17,850 persons aged 26 or more areat or below full adult minimum wage levels (approximately 6,550 of theseare below the threshold with the remaining 11,300 being on the full adultthreshold). The 49.2 per cent of those aged 18 years or less representsapproximately 12,500 persons – 10,500 of whom are recorded as beingbelow the threshold the remainder being recorded as on the line. In thelight of current minimum wage legislation and the particular application ofsub-minimum rates to younger workers the trends according to agecategory as indicated by the survey results are not surprising.

Table 5.9: Persons engaged in 2002 classified by broad age cohort; basic pay category and industrial sector.

18 years or younger 19-25 years 26 years or moreBelowFull

Minimum Wage

At FullMinim

umWage

FullMinim

umWage+80

Minimum

Wage+160

Minimum

Wage+160 or

over

Total TotalN

BelowFull

Minimum

Wage

At FullMinim

umWage

FullMinim

umWage+80

Minimum

Wage+160

Minimum

Wage+160 or

over

Total Total N BelowFull

Minimum

Wage

At FullMinim

umWage

FullMinim

umWage+80

Minimum

Wage+160

Minimum Wage+160 or

over

Total Total N

Section A: Full timeBld&Const 68.3 5.8 0.7 2.2 23.1 100.0 1,684 2.6 0.5 7.5 8.1 81.4 100.0 29,337 0.3 0.3 0.3 2.3 96.8 100.0 124,658Manf text&apparel 11.5 7.6 59.0 16.7 5.1 100.0 125 1.1 6.0 31.2 21.0 40.6 100.0 1,744 0.1 1.6 8.4 18.0 71.9 100.0 7,708Oth manf&prod 60.1 11.7 16.2 5.1 6.9 100.0 891 1.8 3.1 11.9 23.5 59.8 100.0 48,973 0.3 0.4 4.5 11.1 83.8 100.0 215,247Retail 14.5 1.3 32.8 5.5 45.8 100.0 1,225 1.7 6.0 22.6 22.9 46.7 100.0 26,293 0.8 0.9 7.5 9.7 81.0 100.0 86,094Wholesale 22.4 2.0 4.1 2.0 69.4 100.0 351 3.4 3.1 8.6 16.6 68.3 100.0 8,653 0.0 0.7 1.9 7.7 89.6 100.0 43,744Prop/rent/busserv

61.7 0.0 0.9 0.0 37.4 100.0 930 0.5 0.4 4.2 13.3 81.6 100.0 39,268 0.4 0.0 1.1 7.7 90.8 100.0 139,703

Hotels/rest/bar 39.7 5.2 29.3 15.3 10.5 100.0 942 0.8 16.7 15.0 24.4 43.0 100.0 24,150 3.7 7.7 10.2 20.5 57.9 100.0 42,476Pers&Other Servs 38.7 10.4 4.7 2.3 43.9 100.0 208 2.3 2.3 10.6 9.9 74.8 100.0 35,104 0.2 0.8 4.7 5.3 89.0 100.0 172,752Total 47.0 4.8 14.8 5.1 28.3 100.0 6,358 1.7 4.1 11.4 17.0 65.9 100.0 213,521 0.5 0.9 3.8 8.2 86.6 100.0 832,382Section B: Part timeBld&Const 48.5 0.0 51.5 0.0 0.0 100.0 810 0.0 0.0 66.4 0.0 33.6 100.0 830 0.2 0.0 0.0 0.2 99.7 100.0 6,981Manf text&appar 0.0 0.0 74.0 26.0 0.0 100.0 174 1.3 9.4 18.0 57.9 13.4 100.0 357 1.1 9.7 17.6 30.3 41.2 100.0 836Oth manf&prod 36.9 37.6 3.4 0.0 22.1 100.0 321 11.6 5.7 18.9 14.8 48.9 100.0 3,305 0.7 1.8 13.5 24.1 59.8 100.0 11,619Retail 37.7 5.1 15.1 20.3 21.9 100.0 9,458 4.2 7.4 23.4 34.1 30.8 100.0 26,120 1.1 4.4 15.7 28.0 50.8 100.0 25,924Wholesale 17.5 36.1 39.4 5.9 1.1 100.0 1,329 3.0 13.4 37.7 36.1 9.8 100.0 1,921 0.6 2.7 21.3 28.8 46.6 100.0 3,487Prop/rent/bus ser 2.2 1.1 93.1 2.4 1.1 100.0 710 0.9 0.3 33.7 28.0 37.1 100.0 7,233 0.2 0.0 5.8 28.9 65.1 100.0 19,857Hotels/rest/bar 44.1 12.3 33.6 7.7 2.3 100.0 3,646 5.7 28.4 25.5 27.6 12.9 100.0 21,956 10.0 4.7 21.1 34.9 29.4 100.0 14,430Pers&Other Ser 66.4 1.0 30.6 0.8 1.2 100.0 2,474 1.7 13.1 59.9 0.7 24.6 100.0 12,184 2.8 8.3 4.9 3.8 80.2 100.0 24,237Total 40.0 8.3 27.2 12.5 12.0 100.0 18,921 4.1 13.9 31.7 25.0 25.3 100.0 73,906 2.4 3.9 11.1 21.4 61.2 100.0 107,371Section C: All PersonsBld&Const 61.9 3.9 17.2 1.5 15.6 100.0 2,494 2.5 0.5 9.1 7.8 80.0 100.0 30,167 0.3 0.3 0.2 2.2 96.9 100.0 131,639Manf text&appar 4.8 3.2 67.7 22.1 2.2 100.0 299 1.1 6.6 29.0 27.3 36.0 100.0 2,101 0.2 2.4 9.3 19.2 68.9 100.0 8,544Oth manf&prod 54.0 18.5 12.8 3.8 11.0 100.0 1,212 2.4 3.3 12.3 22.9 59.1 100.0 52,278 0.3 0.5 4.9 11.7 82.6 100.0 226,866Retail 35.0 4.6 17.1 18.6 24.6 100.0 10,683 3.0 6.7 23.0 28.5 38.8 100.0 52,413 0.9 1.7 9.4 13.9 74.0 100.0 112,019Wholesale 18.5 29.0 32.0 5.1 15.4 100.0 1,680 3.3 4.9 13.9 20.1 57.7 100.0 10,573 0.0 0.9 3.4 9.3 86.4 100.0 47,231Prop/rent/bus ser 36.0 0.5 40.8 1.0 21.7 100.0 1,640 0.6 0.4 8.8 15.5 74.6 100.0 46,501 0.3 0.0 1.7 10.3 87.6 100.0 159,559Hotels/rest/bar 43.2 10.9 32.7 9.2 3.9 100.0 4,588 3.1 22.3 20.0 25.9 28.7 100.0 46,105 5.3 6.9 12.9 24.2 50.6 100.0 56,906Pers&Other Servs 64.3 1.8 28.6 0.9 4.5 100.0 2,682 2.2 5.1 23.3 7.6 61.9 100.0 47,289 0.5 1.7 4.7 5.1 87.9 100.0 196,989Total 41.8 7.4 24.1 10.6 16.1 100.0 25,279 2.3 6.6 16.6 19.0 55.5 100.0 287,427 0.7 1.2 4.7 9.7 83.7 100.0 939,753

52

Table 5.10 outlines comparative information on the percentagesof each age category recorded as being on or below the full adult minimumwage over the three rounds of the survey.

Table 5.10: Percentage of each age cohort at or below the full adultminimum wage 1999, 2000/2001, 2002.

Section A: Full-Time 1999 2000/2001 2002(per cent at or below full MW)

18 years or less 62.6 39.9 51.819-25 years 24.2 4.0 5.826 years + 7.7 0.8 1.4

Section B: Part-Time18 years or less 97.9 57.4 48.319-25 years 74.2 20.7 18.026 years + 42.1 6.3 6.3

Section C: All Persons18 years or less 80.6 49.5 49.219-25 years 34.5 7.0 8.926 years + 11.0 1.4 1.9

The figures illustrate the dramatic fall in the percentages of youngpeople at or below the threshold between 1999-2000/2001 and the relativestability in each category over the period 2000/2001-2002. The exceptionto this latter trend is the recorded rise in the incidence among young full-time employees. Although the base numbers are relatively small(approximately 6,500 in total) the increase between 2000/2001 and 2002 of12 percentage points among the youngest age cohort at or below the fulladult threshold indicates a real upward trend among this group of workers.

Table 5.11 presents details on the distribution of those recorded as beingat or below the full adult minimum threshold in each of the three roundsof the survey. For each year the estimated breakdowns of both all personsengaged and also those paid at or below the threshold are given. Bycomparing both sets of figures for each year one can identify grades inwhich low paid workers are over- or under-represented. Columns (C), (F)and (I) provide figures on the percentage of persons at or below the fullminimum wage divided by the corresponding percentage of all personsengaged in each of the occupational categories. The closer this figure is tozero for any given grade the more under-represented are minimum or sub-minimum wage workers in the grade in question. A figure of more than 1in Columns (C), (F) or (I) indicates that there is an over concentration ofminimum or sub-minimum workers in the grade in question. The datashow that low paid workers are relatively concentrated in Sales; PersonalServices and labourer grades. There have been some slight changes in therelative degree of concentration of these 3 grades over the period inquestion. The over concentration in sales appears to have declinedsomewhat with a commensurate increase being apparent in the PersonalServices and Labourer categories. Personal Service grade are of importancein the Hotel/Restaurant/Bar and Personal & Other Services sectors –particularly the former.

5.3Occupational

Grade and Levelof Pay Among

Low PaidWorkers

Table 5.11: Distribution by occupational grade of persons whoare recorded as being at or below the minimum wage threshold 1999,2000 and 2001

1999 2001 2002(A) (B) (C) (D) (E) (F) (G) (H) (I)

OccupationalGrade

At orbelow

fullMW

All En-gaged

Col. A/Col. B

At orbelow

fullMW

AllEngaged

Col. D/Col. E

At orbelow

fullMW

AllEngaged

Col. D/Col. E

Managers/Proprietors 3.4 15.7 0.2 3.7 13.5 0.3 6.9 17.8 0.4Eng/Sci/Computer/Other Professional 0.2 6.2 0.0 0.2 7.0 0.0 0.0 6.1 0.0Eng/Sci/Comp/Associ Professional 0.2 3.8 0.0 0.7 4.8 0.1 2.0 3.8 0.5Clerical/Secretarial 4.9 13.7 0.4 2.4 12.0 0.2 3.1 13.5 0.2Skilled Main/SkilledProduction 7.0 10.1 0.7 12.1 11.4 1.1 10.0 11.1 0.9Production Operatives 16.9 17.1 1.0 10.3 15.1 0.7 17.0 13.2 1.3Transport/Communications 2.3 5.9 0.4 2.1 6.1 0.3 0.2 5.1 0.0Sales 31.4 13.3 2.4 28.3 13.1 2.2 20.4 14.7 1.4

Personal Services 24.4 8.1 3.0 27.5 8.5 3.2 21.7 6.2 3.5Labourers 9.4 6.1 1.5 12.7 8.6 1.5 18.7 8.4 2.2TOTAL 100.0 100.0 - 100.0 100.0 - 100.0 100.0 -

In this chapter we have considered trends in the risk, incidence andcharacteristics of minimum wage workers in Ireland at the end of 2002 wesaw that there were very substantial reductions in the percentage ofworkers at or below the full adult minimum rate between 1999 through2000/2001 to the end of 2002. In the first survey in 1999 a total of 21 percent of employees were at or below the minimum standard. This hadfallen to 4.3 per cent by late 2000/early 2001 and was 4.5 per cent by theend of 2002. We pointed out that these figures represented a no changesituation in the incidence of minimum wage workers over the period late2000/early 2001 to 2002.

In general, we found that minimum wage workers were relativelyheavily concentrated in the Hotel/Restaurant/Bar sector with somewhatless substantial concentrations in the Retail sector.

The general story told by the figures presented in the chapter is avery substantial fall in the incidence and extent of minimum and sub-minimum workers between 1999 into late 2000/early 2001. Subsequent tothis there appears to have been remarkable constancy and consistency inrelevant trends over the period early 2001 to late 2002.

5.4Summary

6.CHANGESINTHE

COMMONSAMPLEOF

FIRMS2001/2002

As discussed in Chapter 2 we included two components in the targetsample of firms in the survey. These consisted of a “new” component offirms targeted for the first time in this survey in the 2002 round of thesurvey, together with the 1040 firms which had responded to the survey inlate 2000/early 2001. By including these two components in the sample itwas possible to examine some aspects of changes in the size and structureof individual firms over the period 2000/2001 – 2002 at the micro level ofthe firm. This allows us, in particular, to consider the degree to which theintensity of minimum wage workers changed among firms over the periodin question.

A total of 693 firms which participated in the 2000/2001 samplealso completed the questionnaire in 2002 and these have been included inthe analysis of the total sample of 1430 firms used throughout this report.The information provided by these 693 firms can also be used to provide aso-called “longitudinal” analysis of the data where the focus is on changeat the individual or micro-level of the firm. Up to this point in the reportwe have provided details on net change in the overall population betweenthe two years of the survey. This net change may mask, to some degree,compensating changes in different directions as experienced by individualfirms in the sample. For example, some firms may experience an increasein the proportion of minimum wage workers whom they employ, othersmay experience a decrease. The analysis presented to this point in thereport uses the two sample surveys as so-called independent cross-sections. The figures on change are net in the sense that, as describedabove, they represent the net experience of the often divergent fortunes ofindividual firms.

Whilst this type of analysis is extremely revealing and provides veryimportant insights to the overall change which has taken place in theworkforce, it is particularly helpful to complement it with the so-calledlongitudinal analysis at the level of the individual firm. This is what weprovide in this chapter, based on the subset of 693 respondents who werecommon to both rounds of the survey.

6.1 Introduction

Two specific aspects of the experience of firms are considered.First, we discuss the characteristics of those firms which have gone out ofbusiness between the second and third rounds of the survey i.e. between2000/2001 and 2002. Secondly, we consider changes and trends instructure of the workforce at the level of the individual firm over the period inquestion. In this regard we focus, in particular, on changes in theproportion of the workforce in individual firms which is at or below thefull adult minimum wage threshold. This allows one to assess, forexample, the percentage of firms which showed increases in theproportion of workers at or below the minimum level; the proportion withpersistently high levels at or below the threshold and so on.

As noted in Chapter 2 of the report, a pre-requiste for the analysis of allsample survey data is a statistical adjustment or re-weighting of the data.This is necessary to ensure that the sample is representative of the totalityof the population and eliminate any problems arising from differentialresponse levels according to underlying characteristics or other surveyissues.

In analysing the 693 firms which were common to both rounds ofthe survey it is necessary, therefore, to reach a meaningfully interpretableadjustment or re-weighting of the data. For the current chapter we havedeveloped two sets of weights for the subset of cases which were commonto both rounds of the survey. The first of these is based on the enterprise,the second on the employee. These are exactly analogous to the firm-basedand employee-based weights discussed in Chapter 2 in respect of the mainbody of the sample.

To implement the two sets of weights for the longitudinal sub-sample we have grossed the results to the population which existed in2000/2001 at the first round of the survey. Accordingly, one shouldinterpret the results based on the adjusted subset of questionnaires as ifone had been able in 2000/2001 to record prospective details on thesituation of the firm in 2002. This, therefore, gives us a measure of changeover the two-year period at the level of the individual company. Bydefinition this type of analysis excludes “births” of new firms over thestudy period. It focuses on the stock of firms which existed in 2000/2001 andwhich continued to exist into 2002. Of these firms it then asks the questionwhere are they now in terms of employment structure etc.

The reader’s attention is specifically drawn to the fact that thesample for analysis in this chapter is substantially reduced from the total of1,430 firms used throughout the rest of the report to the common set of693 firms which responded in both rounds of the survey. Because of thisreduction in sample size, variances and related confidence intervals aroundstatistical estimates are correspondingly wider than in early chapters.

6.2Interpretation

and Re-weighting the

Data forLongitudinal

Analysis

As noted in Chapter 2 above in our discussion of the continuingsubsample of firms who were included in both the 2001 and also the 2002surveys a total of 64 firms went out of business over the period inquestion. This represents an unweighted total of 5.2 per cent of firms or aweighted total of 6.1 per cent. These firms were identified in the course offieldwork as having gone out of business by the time the 2002 survey wasin the field. We consider some of the characteristics of those firms inquestion in this section.Table 6.1 presents details on the information recorded in the 2001 inrespect of trends in business volumes and also profit levels over the 12months preceding the survey. The information is then classified in termsof whether or not the survey was subsequently found to be out-of-business by the more recent survey in 2002.

From Section A of the table one can see that the firms which hadgone out-of-business by 2002 had a much higher probability of havingrecorded in the 2000/2001 survey that their business volumes haddecreased in the 12 months preceding that survey than did theircounterparts who were still in business at the end of the period inquestion. A total of 26 per cent of the companies which had beenidentified as having gone out-of-business by the time the 2002 survey hadrecorded in the earlier survey that their business volumes had fallen. Thiscompares with a figure of only 7 per cent among those companies whichwere still in business at the time of the 2002 survey.

Similarly, one can see from Section B of the table that almost 21per cent of companies which were identified as having gone out-of-business by the 2002 survey had recorded making a loss in the 2 yearspreceding the 2000/2001 survey. The comparable figure among companieswhich remained in business by the end of 2002 was 9 per cent.

6.3 FactorsAffecting Firms

Going Out ofBusiness,2001-2002

Table 6.1: Firms Which Participated in the 2000/2001 Survey Classified According to TheirBusiness Status in 2002 and Trends in (a) the Value of Their Business; (b) Their Over All ProfitLevel in the 12 Months Preceding the 2002 Survey

In Businessin 2002

Out of Businessby 2002

All Firms

A. Business Volumes Per Cent Per Cent Per CentIncreased 69.0 37.3 67.1Stayed the same 23.7 36.4 24.4Decreased 7.3 26.3 8.4Total 100.0 100.0 100.0B. Profit LevelsSubstantial Loss 1.0 6.7 1.4Moderate Loss 8.1 14.1 8.5Broke Even 18.7 25.9 19.1Moderate Profit 66.4 51.6 65.5Substantial Profit 5.8 1.8 5.6Total 100.0 100.0 100.0

Table 6.2 presents details on risk of going out of business over the periodin question according to industrial sector. From this one can see that thesectors with the highest risk of business failure included the traditionalmanufacturing sectors of Textiles & Apparel – almost 15 per cent ofcompanies went out of business in that sector over the period in question.This was followed by the Banking/Business Services sector whichexperienced a 12 per cent failure rate between the two rounds of thesurvey. One can also see from the table that the Personal & OtherServices sector had a relatively high business failure rate – 9.7 per cent.

The final column in Table 6.2 outlines comparable figures for thepercentage of companies which went out of business over the period1999-2001 – i.e. between the first and second rounds of the survey. Fromthese figures one can see that, with the exception of the Building &Construction sector, the relative pattern of business failures by sector overthe period 2001-2002 was remarkably similar to that experienced over theearlier period of 1999-2001.

Table 6.2: Firms which Participated in the 2000/2001 SurveyClassified by Business Status in 2002 and Sector in 2000/2001

Sector in 2000/2001

InBusinessin 2002

Out ofBusinessby 2002

All FirmsOut of

business1999-2001

Per Cent Per Cent Per Cent Per CentBuilding & Construction 99.7 0.3 100.0 11.0Manufacture of Textiles & Apparel 85.2 14.8 100.0 13.4Other Manufacturing 96.0 4.0 100.0 5.0Retail 94.0 6.0 100.0 7.0Wholesale 95.0 5.0 100.0 4.5Banking/Finance/Business Services 88.0 12.0 100.0 13.3Hotels/Restaurants/Bars 98.9 1.1 100.0 7.0Personal & Other Services 90.3 9.7 100.0 6.2Total 93.9 6.1 100.0 8.2

Tables 6.3a and 6.3b address the relationship between going out ofbusiness according to (a) size of company in 2000/2001 and (b) percentageof persons engaged in 2000/2001 who were paid less than IR£4.50 perhour3. From Table 6.3a one can see that there was a much higher businessfailure rate among smaller companies over the period. One can see fromthe table, for example, that almost 60 per cent of business closures weremade up of companies with 3 or less persons engaged. In total, this groupof smallest companies represented only 34 per cent of all businesses in2001. As one might expect, this was also the trend identified in the 2001survey in respect of business closure over the period 1999-2001.

3 This was taken as the minimum wage standard in the 2001 round of thesurvey.

Table 6.3a: Firms which Participated in the 2002 SurveyClassified According to Number of Employees in 2000/2001 andBusiness Status in 2002

Number of PersonsEngaged in2000/2001

In Businessin 2002

Out of Businessby 2002

Total Out of business1999-2001

Per Cent Per Cent Per Cent Per Cent3 or less engaged 32.5 59.4 34.1 35.74-9 engaged 46.2 23.9 44.9 49.710-34 engaged 10.2 10.1 10.2 7.035-99 engaged 6.5 4.6 6.4 4.7100+ engaged 4.5 2.0 4.4 2.9Total 100.0 100.0 100.0 100.0

Table 6.3b provides details on the breakdown of firms accordingto (a) whether or not they went out of business over the period 2001-2002and (b) the percentage of their workforce paid at or below the minimumwage level at the time of the 2000/2001 survey. The table would seem tosuggest that a higher than average percentage of companies whichemployed substantial proportions of minimum or sub-minimum workerswent out of business over the period in question. One can see from thetable, for example, that companies employing 15 per cent or more of theirworkforce at or below the minimum wage level made up a total of 13 percent of all companies at the end of 2000/early 2001. This group ofcompanies, however, constituted 20 per cent of companies which hadgone out of business over the period. Accordingly, it would appear fromthe data that over the period 2001-2002 companies which had a higherintensity of minimum or sub-minimum workers in 2000/2001 had a higherthan average probability of going out of business one year later.

Table 6.3b: Firms Which Participated in the 2002 SurveyClassified According to (a) Percentage of Employees in 2000/2001Who Were Below an Hourly Basic Pay of IR£4.50 or Less and (b)Business Status in 2002

Percentage BelowIR£4.50 Per Hourin 2000/20014

In Businessin 2002

Out ofBusiness by

2002

Total Out ofBusiness1999-2001

Per Cent Per Cent Per Cent Per Cent

None lt £4.50 82.1 76.6 81.8 53.3lt 15% lt£4.50 5.7 2.8 5.5 4.015+% lt£4.50 12.2 20.5 12.7 42.7Total 100.0 100.0 100.0 100.0

The longitudinal component of the sample allows us to classify firmsaccording to changes between 2000/2001 and 2002 in their intensity ofemployment of workers at or below the full adult minimum wage. Inrespect of the 2000/2001 survey we classify firms according to whether ornot they employed (i) no-one at or below IR£4.50; (ii) less than 15 per centof their workforce at or below IR£4.50; or (iii) 15 per cent or more of theirworkforce at or below IR£4.50 per hour. In respect of the situation in2002 we were able to classify firms according to the percentage of theirworkforce at or below the rate of €5.97 or €6.35 – depending on when thequestionnaire was administered i.e. September or October. The results arepresented in Table 6.4.

The figures in the table are percentages based on all firms5 and sothey sum across all cells to 100 per cent. The figures show, for example,that 72.2 per cent of firms had no minimum wage workers in either2000/2001 or 2002. A further 4.0 per cent had less than 15 per cent in2000/2001 but had no such workers in 2002, while 5.5 per cent of firmshad 15 per cent or more of their workforce at or below the full minimumwage standard in 2000/2001 but had no such workers in 2002. Inexamining the percentages in the table in this way one can assess theextent to which companies changed the intensity of their employment ofsub-minimum workers over the period in question. The figures show, forexample, that a total of 10.4 per cent of firms reduced the level of theirsub-minimum workforce over the period in question (i.e. the sum of 4.0per cent; 5.5 per cent and 0.9 per cent). A further 10.4 per cent of firms

4 Note: these figures relate to the percentage of employees below the IR£4.50hourly rate of 2001.5 In contrast to column or row percentages.

6.4Changes in the

Intensity ofMinimum Wage

Workers

(the sum of 1.7 per cent; 8.3 per cent; and 0.4 per cent) increased theintensity with which they used sub-minimum workers over the period.

Table 6.4: Reweighted Longitudinal Sub-Sample of Firms ClassifiedAccording to the Intensity of Minimum Wage Workers in TheirWorkforce in 2001 and 2002

Intensity of Minimum Wage Workers, 2002Intensity ofMinimum WageWorkers, 2001

None Lessthan 15%

15% orMore

Total

(Per Cent of Total)None 72.2 1.7 8.3 82.3Less than 15 per cent 4.0 1.1 0.4 5.515 per cent or more 5.5 0.9 5.7 12.2TOTAL 81.7 3.8 14.5 100.0

It is clearly of interest to consider which types of firms retainedtheir high concentration of minimum wage workers over the period 2001-2002. In other words, in which sectors are the 5.7 per cent of firms whichhad 15 per cent or more of their workforce at or below the full adultminimum in both rounds of the survey located. This sub-group can beconsidered to have persistently high levels of minimum wage workers overthe period in question. Column A of Table 6.5 provides a breakdown bysector of firms with persistently high levels of minimum wage workers.The figures show that 35 per cent of those with a persistently high level ofminimum wage workers are in the retail sector, compared with 25 per centof all firms (Column C of the table). Similarly, a total of 32 per cent offirms with persistently high levels of minimum wage workers are in theHotel/Restaurant/Bar sector. This sector accounts for only 13 per cent ofall businesses in the country. This means that firms with persistently highlevel of minimum wage workers are over-represented in the sector to theorder of 246 per cent as compared with the overall distribution ofbusinesses.

One can similarly ask where are the 10.4 per cent of firms whichexperienced an increase in the intensity of minimum wage employees intheir workforce. Column B of Table 6.5 shows that 26 per cent of thisgroup of firms are in the retail sector while 35 per cent are in theHotel/Restaurant/Bar sector.

Table 6.5: Sectoral Distribution of Firms Which (a)Longitudinally had 15 Per Cent or More Persons Engaged PaidIR£4.50 or Less Per Hour (11.5 Per Cent of All Firms from Table 6.4Above); and (b) Displayed an Increase in the Percentage of PersonsEngaged Who Were Paid IR£4.50 or Less Per Hour (3.5 Per Cent ofTable 6.4 Above)

Sector

(A)Persistent

High Levels

(B)Increase in % at or

below FullMinimum Wage

(C)All Firms

Per Cent Per Cent Per CentBuilding & Construction 0.0 14.5 14.3Manufacture of Textiles &

Apparel0.4 0.5 0.3

Other Manufacturing &Production

1.8 5.0 4.2

Retail 35.1 26.4 25.4Wholesale 1.9 9.0 9.3Banking/Finance/Business

Services8.5 5.9 17.9

Hotels/Restaurants/Bars 31.9 34.8 12.9Personal & Other Services 20.4 3.8 15.7Total 100.0 100.0 100.0

In this chapter we have focused on the sub-sample of respondents whichwere common to both rounds of the survey (i.e. to 2002 and late2000/early 2001). In particular, we discussed the characteristics of firmswhich were identified as having gone out of business over the study periodand also considered the sectoral distribution of firms which maintainedpersistently high levels of employment at or below the full adult minimumwage over the period in question.

We found that, as one might expect, firms which were identifiedas having gone out of business over the period 2000/2001-2002 weregenerally characterised as having experienced on-going declines in businessvolumes and profit levels in the 12 months preceding the earlier survey in2000/2001.

Finally, we saw that there was substantial evidence to suggest anover-concentration of firms which had experienced both increasing levelsand also persistently high levels of minimum wage workers in theHotel/Restaurant/Bar sector with slightly less significant concentrations inthe Retail sector.

6.5Summary

7.CONCLUSIONS

The National Minimum Wage was introduced in Ireland in April 2000.An “experienced adult worker” must be paid at least the specifiedminimum hourly rate, while sub-minimum amounts are specified foremployees aged under 18, those aged over 18 but in their first or secondyear from date of first employment, and those aged over 18 in structuredtraining or study undertaken in normal working hours. The minimum forexperienced adult employees was introduced at £4.40, raised to £4.70 from1 July 2001, equivalent to 6 euro, and then raised to euro 6.35 from 1October 2002, with corresponding increases in the sub-minimum rates.

A survey of firms was carried out in late 2000/early 2001 (Nolan,O’Neill and Williams 2002), commissioned by the Department ofEnterprise, Trade and Employment, to assess the impact of theintroduction of the minimum wage compared with a baseline survey from1998/99. Another survey, aimed at monitoring the on-going impact of theminimum wage, was then commissioned by the Department and carriedout by the ESRI’s Survey Unit, in September, October and November of2002. This report has presented the results from that most recent survey.

The survey of firms carried out in late 2000/early 2001 showed thepercentage of workers earning IR£4.50 per hour or less falling sharply,from 21 per cent in 1998/99 to just over 4 per cent. A relatively highpercentage of young workers, part-timers and women were at or belowthat pay level, as were workers in sectors such as textiles, retailing, hotelsetc. and personal services. The main concentrations of minimum-wageworkers were in occupational grades related to sales and personal services.Only a small minority of employers said they had availed of the reducedrates payable for young/inexperienced workers.

The present study is based on a sample of private sector firms, whichlike the 2000/2001 survey both followed up those included in the previoussurvey and adding a substantial number of new firms.

In the new survey only 15 per cent of firms said that they had asignificant proportion (15 per cent or more) of their employees at or belowthe level of the full adult minimum wage. This was almost identical to thecorresponding figure in the 2000/2001 survey. In thehotels/restaurants/bars sector, however, about half the responding firmsin the new survey had 15 per cent or more of their employees at or belowthe full adult minimum wage, a noticeable increase since the previoussurvey.

7.1The Context for

the Study

7.2The 2000/2001

Survey of Firms

7.3The New Survey

7.4Key

Characteristicsand Trends

There was some change since the previous survey in firms’descriptions and perceptions of their trading environment. Although amajority of firms said their workforce was unchanged compared with twoyears earlier, firms were less likely than in the previous survey to say that ithad increased, and more likely to say it had fallen, particularly in buildingand construction and in textiles and clothing, and in the latter sector theproportion reporting trading at a loss was also relatively high. While theaverage wage bill as a proportion of total operating costs was unchangedsince the 2000/2001 survey, basic labour costs were more often identifiedas a problem, with difficulties in recruiting staff featuring less prominentlythan in the previous survey.

The new survey shows that there is almost universal knowledge of theexistence of minimum wage legislation among employers. A total of 6 percent of firms recorded that they had used the sub-minimum rates at theend of 2002. The highest incidence of their use was in the Construction;Hotel/Restaurant/Bar; and Other Manufacturing Production sectors. Themost frequently used sub-minimum rate was for young workers under 18years of age. In general, respondents would appear to be of the view thatthe minimum wage threshold did not impact substantially on the businessor operational aspects of companies in Ireland.

The new survey found about 2 per cent of employees were being paidbelow the full adult minimum wage, while a further 2.6 per cent were paidat that adult minimum. This was very much the same as in the 2000/2001survey. Once again, part-time employees and young workers wereparticularly likely to be at or below the adult minimum wage. Theproportion at those wage levels was much higher for employees in thehotels/restaurants/bars sector than elsewhere, at 20 per cent, with thefigure for part-time workers in that sector being even higher at close to30%. About one in three of those part-time workers were below the fulladult minimum wage. Retailing was the sector with the next-highestproportion at or below the adult minimum wage, but at 7 per cent was stillvery much lower than the hotels/restaurants/bars sector.

The new survey allows one to assess the extent to which the incidenceof workers at or below the full minimum wage has changed at the level ofthe individual firm. We found that relatively small percentages of firmshad persistently high levels of minimum wage employees (in the sense of ator below the adult minimum) over the period 2000/2001-2002 and veryfew actually increased the percentage of their workforce paid at this level.The firms with persistently high levels appeared to be concentrated in theHotel/Restaurant/Bar sector, with some less concentrations in the Retailsector.

7.5Perceptions ofthe Minimum

Wage

7.6Pay Profiles

7.7Changes in the

CommonSample of Firms

APPENDIX1:CATEGORISINGFIRMS BY

SECTOR

The sectoral categorisation of firms used in this report, both for pre-stratification purposes in sampling and in the analysis presented in therest of the report, distinguishes the following eight sectors:

Building & Construction;Manufacture of Textiles & Apparel;Other Manufacturing and Production;Retail;Wholesale;Banking/ Property/Renting & Business Services;Hotels/Restaurants/Bars;Personal and Other Services.

The manner in which this categorisation is derived from the standardNACE coding schema is as follows:

Sector NACE sectorsBuilding & Construction; 45Manufacture of Textiles &Apparel;

17; 18;

Other Manufacturing andProduction;

5; 10-16; 19-37; 40; 41.

Retail; 50; 52.Wholesale; 51Banking/ Property/Renting &Business Services;

70; 71; 73; 74

Hotels/Restaurants/Bars; 55.Personal and Other Services 60; 61; 62; 63; 64; 80; 85; 90; 91;

92; 93; 95.

It may be useful to illustrate the types of sub-sectors which arethen included in each of our eight sectors:

Sector NACE sectorsBuilding & Construction; 45Manufacture of Textiles &Apparel;

Manufacture of textiles andleather clothes

Other Manufacturing andProduction;

mining and quarrying; food,beverage and tobaccomanufacturing; manufacturing ofwood and wood products, pulpand paper, printing, petroleum,chemicals, rubber and plasticproducts, metals and fabricatedmetal products, machinery,electrical equipment, transportequipment, electricity, gas andwater supply

Retail; Sale and repair of motor vehicles,sale of fuel, food, beverages,tobacco, textiles, books, etc.

Wholesale; Wholesale of agriculturalproducts, food, beverages,machinery and equipment etc.

Banking/ Property/Renting &Business Services;

Banking, buying, selling andrenting real estate, renting ofautomobiles and other transportequipment, constructionequipment, hardware and softwareconsultancy, research anddevelopment, legal activities,market research, architecture andengineering, secretarial andtranslation services etc.

Hotels/Restaurants/Bars; Hotels, restaurants, cateringPersonal and Other Services Transport, post,

telecommunications,entertainment, sporting activities,gambling, dry-cleaning,hairdressing, etc.

APPENDIX2:RE-WEIGHTINGTHEDATA

Prior to analysis, the 1,430 questionnaires from responding firms werestatistically adjusted or re-weighted so as to ensure that the structure orcomposition of the effective sample was in line with the structure orcomposition of the population from which it was selected according to anumber of important classificatory variables such as size, sector etc. Thisre-weighting of the data is necessary for the reasons outlined in Chapter 2,and the way in which it was implemented is described in this Appendix.In deriving the weights or adjustment factors two related but independentweighting systems were prepared. The first is based on the firm as theentity or unit of analysis. The second is based on the employee. In thelatter weighting scheme each firm is interpreted as a group of employeesrather than as an entity in its own right. To derive these sets of weightsone has to establish the structure of the population from which theeffective sample has been selected. The structure used in this survey wasbased on size and sector. A total of 10 sectors and two size categories wasused for re-weighting purposes. The size categories were 0-99 and 100+employees for Manufacturing of Textiles & Apparel and OtherManufacturing & Production; and 0-9 and 10+ employees for the ServiceSectors and Construction. This provides one with a total of 18 strata orsize/sector cells in the re-weighting matrix (2 size categories * 9 sectors).Using a number of sources such as the Census of Industrial Production;the Annual Services Enquiries and the Quarterly National Household Surveyone can derive the overall structure of the population of relevantbusinesses in terms of both enterprises (firms) and also employees withinthe 18 size/sector strata use in re-weighting. This is outlined in AppendixTable 2.1.

The classification in this table was used to re-weight the data usinga standard ratio weighting technique in which each of the 1,432 respondingenterprises was assigned a weight corresponding to the ratio of thepopulation total to the sample total in the relevant cell. In other words, theweight is given as:

Wi = Pi/Si

where the i’s refer to the size/sector cells in Appendix Table 2.1. Pi is thetotal number in the population of each cell and Si refers to the number inthe corresponding cell in the sample which successfully completed thequestionnaire and so were included in the analysis. The Wi’s are the

weights associated with each unit in the sample and it is this whichensures that the sample figures are adequately grossed to population totals.The weights are derived using two bases viz. (i) the enterprise and (ii) thenumber of employees. The employee-based weight is used in derivingestimates of employment or employee structures, in subsequent sections of thereport. The enterprise-based weight is applied in deriving populationestimates of the characteristics of firms in other sections.

Appendix Table 2.1: Structure of Population of Enterprises as Derived from CIP, AnnualServices Enquiries and the Labour Force Survey

Number of

Enterprises Nos.Engaged

NACE Sectors Covered

Size/Sector/Stratum (000s) (000s)

Building and Construction 0-9 emps. 12.8 83.7 45

10+ emps. 2.5 80.6

Manuf. Of Textiles & Apparel 0-99 emps. 0.3 6.0 17; 18

100+ emps. 0.02 4.9

Other Manuf & Production 0-99 emps. 4.4 107.4 5; 10; 11; 12; 13; 14; 15; 16;

100+ emps. 0.6 173.0 19-37; 40; 41

Retail 0-9 emps. 19.6 68.3 50; 52

10+ emps. 1.2 106.8

Wholesale 0-9 emps. 3.4 13.4 51

10+ emps. 0.8 46.1

Banking/Property/Renting/ 0-9 emps. 17.2 87.6 70; 71; 73; 74

Business Services 10+ emps. 2.1 95.1

Hotels/Restaurants/Bars 0-9 emps. 11.0 36.0 55

10+ emps. 1.6 71.6

Computing & RelatedActivities

0-9 emps. 1.9 5.4

10+ emps. 0.2 19.6

Personal Services 0-9 emps. 4.2 12.5 93

10+ emps. 0.2 5.0

Other Services 0-9 emps. 5.0 163.2 60; 61; 62; 63; 64; 91

10+ emps. 0.6 66.2 92; 95; 80; 85; 90

TOTAL ABOVE 1,252.4

REFERENCES

Nolan, B, G. Boyle, T. Callan, A. Doris, I. Kearney, J. FitzGerald, S.Machin, D. O’Neill, J. Walsh, J. Williams, B. McCormick and D.Smyth (1999), The Impact of the Minimum Wage in Ireland, AppendixB in Final Report of the Inter-Departmental Group on the Implementationof a National Minimum Wage, Stationery Office: Dublin.

Nolan, B., J. Williams and D. O’Neill, (2002). The Impact of the MinimumWage on Irish Firms, Policy Research Series Paper No. 44, TheEconomic and Social Research Institute: Dublin.