| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

We provide access to live business television and business related videos from: Bloomberg TV; The Wall Street Journal; CNBC and the Financial Times. Click image:

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax 2008

Climate Change Reports

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Irish Last Updated: Apr 24, 2009 - 5:31:05 PM


IBEC Director General says pay deal which chases inflation would be bad for Ireland
By Finfacts Team
Apr 14, 2008 - 2:20:30 PM

Email this article
 Printer friendly page

Turlough O' Sullivan, Director General, IBEC and David Begg, General Secretary, ICTU.

IBEC Director General Turlough O’Sullivan said today said that a pay deal which chases inflation would be bad for Ireland, and put more jobs at risk at a time when the Irish economy is facing its biggest economic challenge in twenty years. Irish pay rates have been growing at twice the pace of those in other euro area countries. This cannot continue he said.

O'Sullivan said: "We now need leadership from Social Partnership. We have to be strategic and do what is right for the country, for enterprise, for jobs and to make sure that we regain our lost competitiveness. The only way to maintain jobs is by controlling costs, moderating pay growth to low single figures, maintaining labour market flexibility, embracing change, driving public sector reform, delivering productivity, improving R&D performance, effective capital investment in infrastructure, training/education and upskilling and adding value to what we produce.

"The increase in inflation in March is a reflection of persistent international price pressures which are outside our control. The harmonised index of inflation at 3.7% is broadly in line with the average across Europe. Record global prices for food commodities and energy are causing inflationary difficulties throughout the world and unfortunately Ireland is not immune to these pressures.

"It is not sustainable to suggest that pay should chase inflation. Inflation is a problem for all of us, consumers and business alike. Business cannot seek an automatic inflation adjustment in the marketplace. No sensible person would suggest that the more difficult it becomes for Irish companies to do business, the more we should push up costs and further damage our ability to trade and to protect jobs.

"We export 85% of everything we produce in goods and services. With consumer spending, construction activity and net export growth slowing in 2008, we cannot further undermine our ability to trade successfully with the outside world. Irish exporters are already suffering the effects of the strength of the Euro against both the Dollar and Sterling. Pay is one of the few economic factors that we have within our own direct control."

O'Sullivan said that all parties need to be conscious of the realities:

"Pay rates have been growing at twice the pace of those in other euro area countries. Over the last 27 months, the current agreement, Towards 2016, provided for cumulative pay rises of 10.4% while pay growth in the euro area has been 6.6% and the harmonised index of consumer prices also rose by 6.6%.

 

 

 

With the Government’s associated tax concessions, average pay has increased by 14.4% over the 27 months (excluding mortgage interest relief changes).

As a result of high nominal wages and the lowest effective tax rate in the OECD, Irish workers benefit from the second highest level of take-home pay in the EU. Average earnings in 2007 were €45,000 p.a., ie. 17% above the euro area average.

Over 27,000 manufacturing jobs have been lost in the six years to 2006 and already this year, close on 1300 redundancies are being declared every week.

"Those calling for high pay increases also ignore the fact that Irish aggregate productivity growth has been below the OECD average over the last 4 years. Every one of us has an interest in Ireland succeeding as a trading nation. We have lost ground in recent years. It is time for us to be strategic about our future," O'Sullivan concluded.

The average industrial wage is €32,000 and 900,000 workers - a majority in the private sector - have no occupational pensions.

As usual, there is a problem when pay restraint is called for. A different rule appears to apply to the Insiders and last year when high pay increases were proposed for the elite of the public service, including politicians, IBEC's Director of Policy Danny McCoy did not appear to have a problem with it, when asked about it in a radio interview.

Direct taxes are low in Ireland but private health insurance has to be bought in Ireland at a cost in the general range of €2000-€3,000 annually because of the poor standard of the public health service. The average cost of a new car in Ireland is 30% above the Eurozone average because of high taxes.

In November 2004 the Minster for Finance Brian Cowen said that 28% of the average cost of a new Irish house is paid in taxes and public charges - about €100,000 a pop!

Last October, Ministers got pay increases up to 15%; the Dublin Manager and retirees got a 36% hike and the Secretary of the Department of the Taoiseach got a 25% rise.

TDs have got pay hikes of 120% since 1997 - double the rate of increase of the industrial wage.

IBEC also played a weak hand in the partnership process and there has been no significant public service reform as it expanded in the Celtic Tiger years, while opening areas of the private service sector to competition, has proceeded at glacial pace. Yes indeed, Ireland needs pay restraint but within the past year, the expansion of the ministerial payroll to 35 in a country of 4.2 million and the provision of 99 paid positions in Oireachtas committees in a country where it's rare that politicians or senior public servants, accept responsibility, is an example of the unfairness of the current system.

Related Articles
Related Articles


© Copyright 2009 by Finfacts.com

Top of Page

Irish
Latest Headlines
Ryanair revises up full-year profit guidance
AIB bank profitable in third quarter
Ryanair announces half-year profits up 32% to €795m
Ryanair benefits from improved customer service
Ryanair to buy 100 new Boeing 737 MAX 200
Finfacts server migration Thursday
State-owned Allied Irish Banks reports H1 2014 profit as bad loan charges plunge
Ryanair reports profit in its financial first quarter soared 152%
UK firm opens van dealership in Dublin
Ryanair reports 8% fall in full-year profit; US services to commence in 2019
Global Financial Centres Index: New York overtakes London; Dublin slips to 66 of 83 cities
Bank of Ireland reports “significant” improvement in 2013 results
Sale process of IBRC UK projects Rock and Salt completed
CRH says 2014 will be year of profit growth after reporting 2013 loss
Ryanair reports third-quarter loss
Irish Water says it saved €100m in setup costs
RSA Insurance fires two Irish executives for large loss/ accounting irregularities
Bank of Ireland will have to raise provisions by €1.4bn; AIB says it's "well capitalised"
CRH reports slightly improved third quarter
Central Bank says ownership of Newbridge Credit Union transferred to permanent tsb
Ryanair reports H1 profits rose by 1% to €602m
Dublin Web Summit: Irish Stock Exchange and NASDAQ OMX announce dual listing plan
Irish pension managed funds returned to growth during September
Dan O’Brien resigns as economics editor of The Irish Times
Central Bank says no action required on Anglo tapes revelations
Ryanair flew 9m passengers and Aer Lingus carried 1.1m in August
UK Competition Commission says Ryanair must cut Aer Lingus stake to 5%
CRH reports H1 2013 revenue dip and loss
Vodafone refunded UK after discovery of Irish tax haven deal
RBS reports half year profit; Ulster Bank posts reduced loss
Bank of Ireland cuts pretax losses in HI 2013 to €504m
Irish State-owned Allied Irish Banks reports losses of €758m in H1 2013
Service Announcement
Irish managed pension funds declined in June
VHI reports 2012 surplus of €54.3m; Health insurance made loss
Ex- Elan director says management / board "not competent to run a business"
Aer Lingus to put €140m in employees pensions fund; Ryanair apoplectic
Wednesday Newspaper Review - Irish Business News and International Stories - - May 22, 2013
Tuesday Newspaper Review - Irish Business News and International Stories - - May 21, 2013
Ryanair, Europe’s biggest low cost carrier, announced Monday record annual profits of €569m - - up 13%