Co-ops call for pay freeze over the slowdown and poor outlook

THE country’s co-ops yesterday called for a pay freeze because of the severe slowdown in economic activity and poor outlook for 2009.

Their umbrella body, the Irish Co-operative Organisation Society (ICOS), said these factors should put a big question mark over the recent pay agreement.

Patrick McLoughlin, president, said it was not realistic to ignore the impact of the severe downturn in economic activity and the banking crisis, which were affecting all businesses.

This had worsened since the pay agreement was reached in September.

In the dairy sector, international markets (to which 85% of Irish dairy produce was sold) had fallen sharply throughout 2008.

For the future, dairy markets were expected to experience a greater degree of volatility.

The sector had also faced a series of cost increases, which were outside its control, he said.

Mr McLoughlin said current producer milk prices did not reflect the sharp drop in market returns.

Co-ops and dairy processors had made significant efforts to reduce the impact of this price collapse on their farmer members.

However, this level of support was very costly and not sustainable, he said. He added that the current market returns suggest that the milk price to farmers would fall to a record low in 2009.

“This will affect the viability of many farmers, most of whom are earning significantly less than the average industrial wage.

“In the present conditions, which are affecting all levels of the economy, there is need for a freeze in the pay element of Towards 2016, at least until the conditions in the economy become clearer and begin to show some improvement,” he said.

Mr McLoughlin said Ireland’s competitive position could not be taken for granted, because it was so heavily dependent on trading goods and services internationally.

“The decisions and actions that we take now will affect our future business prospects,” he said.

He added that the current economic situation was not anticipated, even a matter of months ago, and it could get worse.

“Therefore, it would be foolish to press ahead with further pay commitments, until we are certain that they are not going to affect the viability of businesses or employment,” he said.

ICOS was therefore calling for a pay freeze or implementing arrangements that would defray the cost among its member co-ops and companies, he said.