EU ‘must co-ordinate efforts on wage rises’

European leaders should instigate a co-ordinated effort to increase wages for low- and middle-income earners if they are genuine about ensuring a recovery.

Economist Professor Ozlem Onaran urged the move at a conference held at Croke Park by the Think-Tank for Action on Social Change. He said the Government should link the minimum wage to cost of living.

Prof Onaran said

while “low-wage policies are counter-productive and lead to stagnating economies”, wage policy co-ordination was needed to protect the EU economy from future instability.

“Underpinning the grandiose strategy [of making the EU one of the world’s most competitive economies by 2020] are ever more deregulated labour markets and policies that keep wages low.

“However, our research shows these type of policies have delivered poor economic growth over the last three decades and rising inequality. Wage moderation policies are counter-productive and lead to stagnation of economic growth.

“Wage policy co-ordination among the EU member states would not only improve economic performance but would also help tackle unsustainable growth. While a higher wage policy can be implemented in a single country, the impact would be stronger if co-ordinated.”

Tánaiste Joan Burton said what was even more important was to “ensure that anybody who has a particularly high level of income should actually pay a contribution”. She said the Coalition has “reduced USC and raised the threshold for entry to top level tax, and I’d like to see more in the next budget”.