Owen Reidy: Government must not sacrifice wage growth when addressing cost pressures

It has now become the accepted paradigm in the EU institutions that higher levels of collective bargaining, such as unions and employers negotiating on pay and conditions of employment, leads to stronger and more sustainable economies for both workers and business

Fine Gael leader Simon Harris will have many demands ringing in his ears when he becomes Taoiseach tomorrow. Picture: Dan Linehan

Simon Harris is set to become Taoiseach when the Dáil convenes tomorrow and he will have many demands ringing in his ears.

Since January we have had various business groups out on the airwaves lamenting the cost of doing business, criticising the Government for their modest but necessary labour market reforms and predicting significant job losses.

Some in government have been spooked by this and there seems to be an internal debate as to whether we may even see a row back on some Government commitments which would be quite astonishing.

This would be a huge mistake and a kick in the teeth for low-paid workers who are disproportionately young and female. That is something I am sure they would not forget nor forgive.

From Irish Congress of Trade Unions (ICTU) perspective, we hope that the incoming Taoiseach will evolve his policy thinking informed by facts and data rather than rhetoric and fiction.

We have had business representatives cite that we are on the cusp of a crisis with many businesses expected to close. It is interesting that they exclusively focus on labour costs as opposed to the other professional costs such as insurance and legal fees.

They believe the solution is to challenge the modest labour market reforms that are in most cases merely bringing us into line with our European peers, such as statutory sick leave, pension auto-enrolment and transitioning to a living wage.

They have also stated that these measures have been forced upon them in one go. The facts contradict this.

Each of the initiatives are phased over several years and in the case of pension auto-enrolment over a decade. We have 2.71m at work, the highest figure ever, an increase of 3.5%.

The two sectors that have witnessed the highest level of business failures in recent times are hospitality and retail. This is no surprise given that the set-up costs for these sectors are not comparable to manufacturing. Coffee shops open and close all the time. It is ironic that these two sectors have been shouting the loudest, while we have seen some closures, their employment levels are up 7% since last year in hospitality and 6% in retail, increasing twice as fast as the whole economy.

So as businesses close, more are opening. Many face accumulative cost pressures though and most are seeking a reduction in Vat to provide some relief.

One of the business groups has even argued that the national minimum wage should be pegged at consumer price inflation, therefore consigning our lowest paid to never achieve a wage rise more than inflation, unlike the rest of the workforce.

Are they really saying that we cannot have a viable hospitality sector unless it is on the back of poverty pay?

I note that one of the stated objectives of the incoming Taoiseach is to make work pay. I could not agree more with him. The labour market must work for workers as well as business.

However, the way to do this is not to reduce and narrow our tax base but to promote collective bargaining.

It has now become the accepted paradigm across the EU institutions that higher levels of collective bargaining, such as unions and employers negotiating on pay and conditions of employment, leads to stronger and more sustainable economies for workers and business.

Ireland is obliged to transpose a new EU directive by November 15 this year. The directive obliges the state to “promote collective bargaining” and to “facilitate the right to exercise collective bargaining”, a right hundreds of thousands of workers in Ireland are currently denied.

To really make work pay, Mr Harris needs to oversee the proper and full transposition of this directive.

Over half a million members of the ICTU and the hundreds of thousands of workers currently denied this right will judge him and his government on this. An obligation in Brussels must not become aspiration in Dublin.

Owen Reidy is the general secretary of the Irish Congress of Trade Unions.