Rising pressure for an increase in pay packets
Siptu general president Jack O Connor has talked of plans for a campaign to raise the wages of the lower paid, while the CEO of the Labour Relations Commission, Kieran Mulvey, has raised the prospect of a rise in the number of pay claims targeted at more successful firms.
The union leadership continues to argue that a boost to domestic spending from higher pay for low- to middle-income earners would produce economic benefits that outweigh any impact on competitiveness.
Employers frequently beg to disagree.
Mr Mulvey’s comments, however, are significant given that he is one of the most experienced players on industrial relations, holding the stage at the LRC in the negotiation cockpit, having in the 80s run the secondary teachers’ union, ASTI.
Danny McCoy, CEO of employers group, Ibec, in his end of year review, indicated half of members surveyed are now prepared to pay increases to their staff over the next two years, a rise on the 39% prepared to consider increases a year ago.
His UK counterpart, John Cridland, in a new year statement, talked of the need to boost worker take-home pay, but with this rise coming in the wake of a rise in productivity and not before. The big difference between Britain and Ireland is the much higher inflation faced by UK workers, most of whom have seen their real pay drop markedly — this also helps, in part, to explain why unemployment across the Irish Sea is so much lower. Many are paid far less than here, outside greater London and the south east.
The union leadership is showing no signs of rushing to the battlements with big pay claims, though there is some concern that the Government may unwittingly foster high expectations among the grass roots.
Set against this are the following facts:
While unemployment is down from over 15% to 12.3%, there is plenty of spare capacity in the economy;
Irish inflation is very low, just 0.5% in 2013. A rise in inflation to 1% in 2014 is predicted by Ibec;
The popular mood is likely to be dead set against generous wage claims, particularly in the commercial semi state sector;
Globalisation means that competitiveness issues loom large.
Total wages in Ireland have fallen since the onset of recession, but hourly wages have remained stable. Wage recovery looks set to take the form of more hours worked and higher overtime. Flexibility is the name of the game.
Weekly pay in Ireland stood at €686 per person in early 2010, with considerable variations around the mean. It averaged at €916 in information and & communications and at €1,013 in finance and real estate.
In unionised employment in manufacturing and retailing, the ability of employees to secure rises has been more circumscribed.
Analysis by Industrial Relations, last year, indicated that Siptu, has been following a 2% pay strategy, amounting to a hybrid of the social partnership pay deal model that existed up to 2009 and local bargaining.
The union has consciously avoided moves to lodge larger pay claims in successful companies for fear of damaging the economy. It believes that its 2% approach has resulted in pay increases being secured across a wider number of companies in return for cooperation with ongoing change.
One union that has succeeded in boosting the income of its relatively low paid membership is the retail union, Mandate.
It claims to have secured €15m worth of pay rises for its 41,000 members over the past 18 months, with 3% increases at Dunnes Stores, Argos, and Penneys. The annual cost of the Dunnes deal is put at over €6.3m. A 2% cent deal at Tesco is costing the firm €4.2m.
The current deal with Tesco is due to expire in February. The company has been enduring a torrid time commercially, but its refusal to share detailed information on profits in the Republic has not helped relations with the union.
According to assistant general secretary Gerry Light, some companies have disclosed confidential figures during negotiations.
He is concerned at the impact on his members from the shift towards online shopping. In Mr Light’s view, guarantees in respect of working hours for his members are every bit as important as hourly rates. The union has negotiated, ‘banded hour’ deals with top retailers, the latest being Penneys, with a view to ensuring that part-time staff are guaranteed a certain minimum number of hours. Dunnes remains the major hold out, in this regard.
Tackling the growth in the amount of precarious employment is also a major priority for Tom Healy, director of the ICTU research body, Neri.
Mr Healy warns against an exclusive focus on hourly wage rates at the expense of issues such as sick pay and short working hours.
According to Ibec Chief economist, Fergal O Brien, the pressure for an increase in wages is coming from a rise in Government taxes and charges.
When this is stripped out, the rise in the cost of living is minimal. Indeed, there is deflation of around 2% in the cost of goods.
Ibec is pressing the Government to ease the tax burden by reducing the top tax rate of 52% which kicks in at €33,000 for single earners.
In his view, pay claims are currently coming in at around 2% and are productivity related.
“We very much leave it up to our members. Our view at the macro level is that the competitive impact [of pay increases] is all about productivity.
“What will drive local agreements is the dynamics of individual sectors and companies. There is a big move away from across the board increases.”
“You saw a considerable improvement in 2009-2010 in terms of workplace change. Over the past two years, there has been a bit more investment in innovation and capital deepening. We are at the very early stages of a return to normality.”
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