Wages prices and profits

     
A simple principle has been forgotten by McCreevy and the directors of IBEC. It is this - a labourer is worthy of their hire.
Can anyone answer two simple questions? Why is it that house prices can rise, the profits of Irish companies can rise, executive salaries and bosses wages can rise without a peep from the vast array of economists, politicians and media commentators that inhabit this island?

Why is it that when workers' salaries increase alarm bells are rung and the same economists, politicians and commentators run to the barricades to sound the warning cry of inflation?

Last weekend the Central Statistics Office (CSO) in the 26 Counties produced statistics on industrial earnings and unemployment. The CSO figures showed that industrial earnings rose by 6.8% between June 1997 and 1 June 1998. 26-County unemployment fell by 6,715 people in October.

The employers' organisation IBEC were ``deeply concerned'' by the earnings figures. Finance minister Charlie McCreevy declared that the figures ``highlighted the need for continuing wage moderation in public and private sectors to maintain competitiveness, particularly in the light of the EMU''.

     
Charlie McCreevy wants to maintain an unequal status quo where bosses get the benefits and workers get the leftovers.

Inflation Fears


McCreevy was hitting on all the now traditional inflation fears. According to the twisted logic of McCreevy and IBEC, workers wages must be controlled in order to make sure that Irish Industry remains competitive; that inflation is controlled; and that it will not prevent the rush to Economic and Monetary Union.

The issue of ``worrying'' wage increases was highlighted again this week by McCreevy. Figures released from his department to the media showed that public sector pay increases will contribute to an 8% rise in the cost of running Dublin government departments.

The early release of the figures is part of the ongoing campaign of selective leaks by McCreevy to highlight the issues he wants the public to focus on in the run up to his 2 December budget. Interesting that he chose the cost of workers as one of the factors that is constraining his budget.

Benefits For Workers


It seems that a simple principle has been forgotten by McCreevy and the directors of IBEC. It is this - a labourer is worthy of their hire. What is the point of having the fastest growing economy among industrialised states if the benefits cannot be given to all workers? If the wages and by consequence the living standards of Irish workers are not rising in the current economic climate then who is benefiting?

The beneficiaries are the bosses and executives of the hugely profitable array of Irish and multinatioal companies that are making huge profits in the Tiger economy.

It seems that in the mind of Charlie McCreevy when a company increases its profits this is a good thing and does not cause inflation. However, when workers in these companies see the increased profits and turn to their bosses and say, increase our wages so we can have a share in the profits our work created, this is suddenly inflation.

Economic Myth


For years a myth has been peddled that wages and prices are inextricably linked. An increase in wages will increase inflation making the increase meaningless. However, when profits increase there is no such link made.

This economic myth is one of the reasons why there is so much opposition among employers to the minimum wage proposals. But a closer examination reveals that the attitude towards wage increases is selective.

For example, wages in the computer industry have shot up in recent years because of the skills shortage generated by Dublin Government mismanagement of education spending. Rarely if ever are concerns raised about the inflationary consequences of these wage increases.

No Comment


Directors at Independent Newspapers enjoyed a 37% rise in their 1997 earnings without any comment from Charlie McCreevy. He was also silent about the 14% wage increase enjoyed by Fyffes directors in 1997, the 32% increase for Green Property directors, the 37% increase for Readymix directors, the 35% increase for Smurfit directors.

There was also no comment from McCreevy about the inflationary consequences of data from his own department released last February. The Finance Department statistics showed that the number of people earning more than £100,000 a year doubled over the past four years. In the 1993-94 tax year there were 2,100 people earning more than £100,000.

Why is it Wrong?


Now in 1997-98 the figure has risen to 4,600. The most common income bracket was the £10,000 to £12,500 which accounts for 133,000 tax payers. Nearly 600,000 people earned less than £10,000. This shows conclusively that though some are creaming it at the top end of the wage scale the vast bulk of workers whose efforts have actually created the economic growth are living on below average incomes.

However, in McCreevy's mindset any increase in wages for these workers must be stopped. It is clear that Charlie McCreevy or IBEC are not really concerned about inflation. Wage increases do not cause inflation. Charlie McCreevy wants to maintain an unequal status quo where bosses get the benefits and workers get the leftovers.

Irish workers created the Celtic Tiger. It is their work that generated the record profits and the wealth. Why is it so wrong when they get a small sliver of the benefits they created? Answers to Charlie McCreevy at Scrooge.com.

Poverty increase

More people are suffering deprivation despite ten years of record economic growth in the 26 Counties. A survey produced by the Conference of Religious in Ireland has highlighted the growing inequalities in Irish society.

They found that 18.5% of the 26-County households earn less than 50% of average income. In 1987 the figure was just over 16%.

CORI said that the last budget widened the gaps in society. Their report concludes that ``a relatively small group of wealthy individuals benefited disproportionately from the main personal tax reductions'' in the last budget.

Housing solution


Dublin Corporation's purchase of 54 flats in Dublin's Temple Bar for £3.5 million showed an interesting solution to the Housing crisis in Dublin. At just over £64,000 each the apartments are relatively cheap for a city centre location.

The clear message is that the solution to the housing problem lies with central and local government. They can act and intervene in the commercial housing market. The only unanswered question is when will they realise this simple truth?