Ibec chief rules out pay increases

Ibec chief executive Danny McCoy has once again ruled out across-the-board pay increases in the private sector while maintaining the need for unions, the Government and employers to formulate an “incomes policy”.

Speaking in advance of his organisation’s CEO conference which begins in Dublin today, Mr McCoy said instead of companies which “remain in survival mode” having to give pay increases they cannot afford, the Government should reduce the tax burden on “hard-working families”.

Under the heading of “incomes policy”, Mr McCoy will tell the 400 business leaders at the conference that now is not the time for any central wage directions. “Many companies, in certain sectors will be in a position to award modest pay rises this year, and this is very good news. However, many companies remain in survival mode and pay expectations need to reflect this reality,” he said.

Nonetheless, he will add it is important that clear lines of communication exist between business, Government, and trade unions.

“Employment issues and industrial disputes which will inevitably arise must be addressed effectively and in a timely manner,” he said. “Over the coming months and years this will involve important conversations on incomes and tax policy, and how the two interact.”

On tax policy, Mr McCoy said the tax burden is too high and the negative impact on the wider economy is too great.

“Income tax rates are out of line and are a disincentive to work, consumption and job creation,” he said.

“Hard-working families need a break. At 52%, we now have one of the highest marginal tax rates in the OECD — well above the average of 36%. It also kicks in at a low income level.

“The unfair pensions levy should also be dropped and excessive excise increases, which are way out of line internationally, should be reversed.”

Earlier this week, Siptu leader Jack O’Connor denied reports that he was discussing an “incomes policy” with Ibec. He said there appeared to be a drive to restrict the level of pay rises in the private sector — something Siptu would oppose.

However, while Transport Minister Leo Varadkar ruled out any return to a social partnership-style national wage agreement, he did praise the merits of an “incomes policy”.

Mr Varadkar said social partnership “involved too many interest groups, circumvented parliamentary democracy and contributed to the inflationary bubble in prices and wages which led to the crash”.

“But an ‘incomes policy’ could make sense so long as the deal was a good one,” said Mr Varadkar. “Pay rises paid by profitable companies make sense. It puts more money in people’s pocket thus boosting demand, growth and tax revenues.

“But it is very important that any pay rises that do occur are affordable and do not put companies out of business; do not cost us jobs; and are paid for through productivity gains.”


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