9 March 2000 Edition
The Programme for Prosperity and Fairness
Trade unionists throughout the 26 Counties will this month be asked to vote on the fifth social partnership agreement. The PPF is described by its supporters as the best deal possible and by its detractors as a failure given the current economic climate. The coming vote is likely to be the closest ever for such a deal. This week, An Phoblacht airs opinions for and against the Programme. SIPTU President Des Geraghty and ATGWU Regional Secretary Mick O'Reilly put the cases for acceptance and rejection, respectively.
BY SIPTU PRESIDENT DES GERAGHTY
Most unions in the Republic have learned the bitter lesson negotiating very significant pay increases while taxation, inflation, and unemployment robbed us of any real progress we had already made. With that we had to endure mass emigration, high unemployment, low living standards and serious deficiencies in our social services, our health and education systems. Indeed, when we entered the EEC we were among the poorest economies qualifying for the maximum benefits from the Structural Funds and under the various social and regional cohesion policies.
The PPF proposals underpin Ireland's economic advances and offer More Real Gains for workers than any previous Agreement - leaving our traditional competitors green with envy.
While we had a strong trade union movement we suffered all the handicaps of a weak dependent economy with few natural resources. The localised collective bargaining which could only address pay and conditions of employment for those at work failed to stimulate any sustainable growth in living standards. Pay bargaining was usually an inflation chasing exercise.
It was counter-productive and often divisive, leading to catch-up claims, leap-frogging, differential and demarcation disputes and never addressed the real long-term value of take-home pay and it certainly did nothing meaningful for those unemployed, retired or dependent on social welfare.
Certainly, during the 1980s earnings soared by 92 per cent. Tragically, however, this did nothing for workers as pay demands chased ever spiraling price increases, and ended up merely adding to inflation as workers got caught up in a self-defeating cycle. Governments, unrestrained by agreements with the trade union movement, simply increased the tax burden on workers in response. As a consequence, the massive 92 per cent increase was sharply reduced to a 69 per cent increase in take-home pay after tax. An 82 per cent increase in consumer prices meanwhile decimated workers' living standards. Over the `free-for-all' period, 1980-1987, the net outcome of this failed strategy, was a significant reduction of 7% in workers' living standards coupled with mass emigration and rising unemployment. So much for the good old days!
By breaking the wages and inflation cycle, and by focusing on the real value of living standards through a combined pay and tax strategy, the trade union movement arrested and reversed that process. The first two Programmes after 1987 more than made up for the losses suffered by workers during the previous `free-for-all' years. The Programme for Competitiveness and Work, which followed, limited inflation to 7% and the take-home pay increase of 13% resulted in a real living standards gain of 6%. During Partnership 2000 the 19% increase achieved in take-home pay stayed well ahead of the 7% increase in consumer prices, improving real living standards for all by a further 12%. By any stretch, that's progress.
In short, with this new strategy, living standards have improved by over 32%. Unemployment has been all but eliminated with a half a million more people now at work. Emigration has reversed and we are seeing net inflows of 40,000 people per annum. Inflation has been tamed and interest rates have fallen very significantly. The growth rate is running at 7% per annum, well ahead of anywhere else in Europe and now Ireland has an economy of which we can all be proud.
The proposed Programme for Prosperity and Fairness underpins these advances and goes further still. A combination of pay increases and tax provisions will boost the take-home pay of the average earner cumulatively by between 28%-30%. Even if we accept a pessimistic view that consumer price increases could amount to 9% during that 33-month period, this would still deliver a real gain in living standards of between 19% and 21%. That's twice the value of the previous agreement. There simply is no other mechanism that will deliver this scale of increases to workers across the board.
The first phase of the proposed agreement would ensure a pay increase of 5.5%, which will translate into take-home pay increases for the average earner of between 10% and 12%. But what about increased consumer prices now rising at an annual rate of 4%? Consumer prices are forecast to increase towards 4.5% over the next few months before being brought back down to 3% by year-end. Even if this fails to happen, the size of the increase in take-home provided for under the PPF would still see living standards over the coming 12 months increasing by as much as 6%-8%. Inflation is something that has to be managed and there is no mechanism available, which offers greater protection against it than this type of agreement. Indeed, a return to a `free-for all' would be grossly inflationary, by contrast.
Interestingly, were it not for increased indirect taxation in the last budget; the current annual inflation rate would now be 2.7% instead.
We intend to fully avail of the increased consultation provisions of the proposed PPF to ensure that Budgets 2001/2/3 alleviate rather than exacerbate inflationary pressures. Similarly, we intend to exert the maximum influence possible at the PPF Forum on Housing and will be demanding that the Government control the price of building land.
We have many serious challenges ahead of us and even if the current proposals are accepted we will be facing into a lengthy negotiations process in order to make further advances in the many areas allowed for in the agreement. That means building on the real progress we have already made.
But it also rejects the notion that we should revert to a more inferior market-driven approach much loved by right-wing Thatcherite economists.
There's been a lot of cant in recent weeks delivered up by an unlikely alliance of right-wing marketeers and some trade union voices, seeking a return to the era of the `free-for-all.' Despite an orchestrated campaign of misinformation, no credible alternative has been put forward by any of them, before, during, or after, the key negotiations between the unions, employers and Government. In particular, no trade union leader has indicated where else workers are going to get the 28%-30% net pay and tax increases or the wide range of extra welfare, social, equality and inclusion measures negotiated and included in the PPF proposals.
Social solidarity, strong trade union organisation and clear national leadership and a willingness to deal with employers locally, nationally and internationally are the hallmark of our approach to collective bargaining.
We do not intend absenting ourselves, now or in the future, from any forum where serious decisions are made which affect our member's living standards.
Reject
BY ATGWU REGIONAL SECRETARY MICK O'REILLY
AGAINST:
Let me be quite blunt about the proposed Programme for Prosperity and Fairness, from the start: I am against it. Against it because it seeks to represent the agreement as a house built on solid rock, whereas in truth and honesty, it is constructed on quicksand. Against it because it locks the vast swathe of workers in low-paid employment in an inferior position at the bottom of the economic ladder. Against it because it will ensure a greater share of profits for employers and shareholders in our surging economy, but disbars the workers who create that wealth from their fair share.
SHARE SUCCESS:
Ireland's economic success has been built on the shoulders of Irish workers. Our economic success is the success of the workers. They took the pain to make the economic gain. Now is the time for them to claim their share of that success. Let us look beyond the hype, spin and half-truths in circulation, and examine what the agreement really delivers for Irish workers and their families.
INFLATION:
Inflation is rising rapidly in Ireland, figures released recently reveal that Ireland's rate of inflation is now twice the European average and stands at 4.4%, the highest in over a decade. Some economists predict that it will rise even higher in the coming months. Yet, we have senior Trade Union figures proposing that workers accept this deal, without an inflation review mechanism, even though they know that inflation is the acid that corrodes workers' wages. When you add in rising inflation, higher interest rates, and the increased cost of living, it is no surprise that many workers believe that far from being better off they will end up worse off as result of the PPF.
INCREASE IN WAGES:
Of even more interest to workers, however, are the economic analyses which show that wages are increasing by 5%-6% anyway, without the need for a national programme. Trade unionists already know this from their practical experience in many sectors, where wages are rising rapidly to recruit or maintain staff. The irony is that many sectors will only succeed in overcoming labour market difficulties if they ignore the agreement and increase wages above the proposed rates. The question has to be asked, what good is a programme which has to be broken to maintain the economic growth it is meant to ensure?
LOWER PAID GET HAMMERED:
Objective commentators are agreed that the provisions in the proposed agreement for workers in low paid employment are extremely weak. Recently, a highly regarded political editor pointed out that:
``Another more insidious aspect of this system is that it keeps the pay of lower-paid public service workers down. These groups do not have the same clout and any concession to them will inevitably result in knock-on claims from higher paid public servants determined to keep their relativities intact. The net result is that the lower-paid get hammered while higher-paid more powerful groups continue to get special increases.''
TAX CUTS:
Workers should also remember that in the last budget (which was hailed as an IBEC-influenced budget) £1 billion was given in tax cuts. Over the next three years, they are promising £1.5 billion, or effectively £500 million in tax cuts per year, but this is only half what was given last year. On this point, despite repeated requests, the Governmnet have consistently failed to clarify whether a specific tax package was set out in the agreement. And certain trade union leaders tell us this is good for workers! How could any trade union leader claim that half of last year's tax cuts are fantastic for this year?
TRUST WORKERS:
It is time to trust Irish workers to decide major issues such as wage increases, working conditions and profit sharing in their local bargaining locations. Real democracy and decision-making must be devolved not only to the regions (an EU imperative), but also to the shop floor, in recognition of the fact that Irish workers now have the education, the skills, the commitment, the experience and the self-confidence to chart their own way forward successfully. Is it not the very essence of democracy that they be allowed, indeed encouraged to do so, without nanny-state interference or conglomerate union diktat?
REJECT:
The last time a centralised wage agreement collapsed, shop stewards and local branch officials were able to negotiate pay packages up to twice as much as what was offered centrally. This shows that there is a way of securing higher incomes beyond the strait-jacket of the present proposals. The pragmatic and sensible course, therefore, would be to reject this programme and return to the bargaining table. It is in workers' interests and their families' interests that the PPF as it currently stands is rejected, before it locks them irrevocably onto the bottom rung of the economic ladder. Lower paid workers in particular must get a much greater increase now.
This proposed agreement is great for employers and great for Government because it buys industrial peace and assures continued economic growth on the backs of Irish workers. Profits will soar, the exchequer will get fatter and the tax bills of the self-employed will be slashed. Workers are offered tiny, insulting wage increases, miniscule tax reductions, no improved childcare provision and most bitter of all, no share in the mountain of wealth they are creating. Reject this in anger and go back for more, much more. What we create we should enjoy. By right we deserve our fair share.
BY SIPTU PRESIDENT DES GERAGHTY
Most unions in the Republic have learned the bitter lesson negotiating very significant pay increases while taxation, inflation, and unemployment robbed us of any real progress we had already made. With that we had to endure mass emigration, high unemployment, low living standards and serious deficiencies in our social services, our health and education systems. Indeed, when we entered the EEC we were among the poorest economies qualifying for the maximum benefits from the Structural Funds and under the various social and regional cohesion policies.
The PPF proposals underpin Ireland's economic advances and offer More Real Gains for workers than any previous Agreement - leaving our traditional competitors green with envy.
While we had a strong trade union movement we suffered all the handicaps of a weak dependent economy with few natural resources. The localised collective bargaining which could only address pay and conditions of employment for those at work failed to stimulate any sustainable growth in living standards. Pay bargaining was usually an inflation chasing exercise.
It was counter-productive and often divisive, leading to catch-up claims, leap-frogging, differential and demarcation disputes and never addressed the real long-term value of take-home pay and it certainly did nothing meaningful for those unemployed, retired or dependent on social welfare.
Certainly, during the 1980s earnings soared by 92 per cent. Tragically, however, this did nothing for workers as pay demands chased ever spiraling price increases, and ended up merely adding to inflation as workers got caught up in a self-defeating cycle. Governments, unrestrained by agreements with the trade union movement, simply increased the tax burden on workers in response. As a consequence, the massive 92 per cent increase was sharply reduced to a 69 per cent increase in take-home pay after tax. An 82 per cent increase in consumer prices meanwhile decimated workers' living standards. Over the `free-for-all' period, 1980-1987, the net outcome of this failed strategy, was a significant reduction of 7% in workers' living standards coupled with mass emigration and rising unemployment. So much for the good old days!
By breaking the wages and inflation cycle, and by focusing on the real value of living standards through a combined pay and tax strategy, the trade union movement arrested and reversed that process. The first two Programmes after 1987 more than made up for the losses suffered by workers during the previous `free-for-all' years. The Programme for Competitiveness and Work, which followed, limited inflation to 7% and the take-home pay increase of 13% resulted in a real living standards gain of 6%. During Partnership 2000 the 19% increase achieved in take-home pay stayed well ahead of the 7% increase in consumer prices, improving real living standards for all by a further 12%. By any stretch, that's progress.
In short, with this new strategy, living standards have improved by over 32%. Unemployment has been all but eliminated with a half a million more people now at work. Emigration has reversed and we are seeing net inflows of 40,000 people per annum. Inflation has been tamed and interest rates have fallen very significantly. The growth rate is running at 7% per annum, well ahead of anywhere else in Europe and now Ireland has an economy of which we can all be proud.
The proposed Programme for Prosperity and Fairness underpins these advances and goes further still. A combination of pay increases and tax provisions will boost the take-home pay of the average earner cumulatively by between 28%-30%. Even if we accept a pessimistic view that consumer price increases could amount to 9% during that 33-month period, this would still deliver a real gain in living standards of between 19% and 21%. That's twice the value of the previous agreement. There simply is no other mechanism that will deliver this scale of increases to workers across the board.
The first phase of the proposed agreement would ensure a pay increase of 5.5%, which will translate into take-home pay increases for the average earner of between 10% and 12%. But what about increased consumer prices now rising at an annual rate of 4%? Consumer prices are forecast to increase towards 4.5% over the next few months before being brought back down to 3% by year-end. Even if this fails to happen, the size of the increase in take-home provided for under the PPF would still see living standards over the coming 12 months increasing by as much as 6%-8%. Inflation is something that has to be managed and there is no mechanism available, which offers greater protection against it than this type of agreement. Indeed, a return to a `free-for all' would be grossly inflationary, by contrast.
Interestingly, were it not for increased indirect taxation in the last budget; the current annual inflation rate would now be 2.7% instead.
We intend to fully avail of the increased consultation provisions of the proposed PPF to ensure that Budgets 2001/2/3 alleviate rather than exacerbate inflationary pressures. Similarly, we intend to exert the maximum influence possible at the PPF Forum on Housing and will be demanding that the Government control the price of building land.
We have many serious challenges ahead of us and even if the current proposals are accepted we will be facing into a lengthy negotiations process in order to make further advances in the many areas allowed for in the agreement. That means building on the real progress we have already made.
But it also rejects the notion that we should revert to a more inferior market-driven approach much loved by right-wing Thatcherite economists.
There's been a lot of cant in recent weeks delivered up by an unlikely alliance of right-wing marketeers and some trade union voices, seeking a return to the era of the `free-for-all.' Despite an orchestrated campaign of misinformation, no credible alternative has been put forward by any of them, before, during, or after, the key negotiations between the unions, employers and Government. In particular, no trade union leader has indicated where else workers are going to get the 28%-30% net pay and tax increases or the wide range of extra welfare, social, equality and inclusion measures negotiated and included in the PPF proposals.
Social solidarity, strong trade union organisation and clear national leadership and a willingness to deal with employers locally, nationally and internationally are the hallmark of our approach to collective bargaining.
We do not intend absenting ourselves, now or in the future, from any forum where serious decisions are made which affect our member's living standards.
Reject
BY ATGWU REGIONAL SECRETARY MICK O'REILLY
AGAINST:
Let me be quite blunt about the proposed Programme for Prosperity and Fairness, from the start: I am against it. Against it because it seeks to represent the agreement as a house built on solid rock, whereas in truth and honesty, it is constructed on quicksand. Against it because it locks the vast swathe of workers in low-paid employment in an inferior position at the bottom of the economic ladder. Against it because it will ensure a greater share of profits for employers and shareholders in our surging economy, but disbars the workers who create that wealth from their fair share.
SHARE SUCCESS:
Ireland's economic success has been built on the shoulders of Irish workers. Our economic success is the success of the workers. They took the pain to make the economic gain. Now is the time for them to claim their share of that success. Let us look beyond the hype, spin and half-truths in circulation, and examine what the agreement really delivers for Irish workers and their families.
INFLATION:
Inflation is rising rapidly in Ireland, figures released recently reveal that Ireland's rate of inflation is now twice the European average and stands at 4.4%, the highest in over a decade. Some economists predict that it will rise even higher in the coming months. Yet, we have senior Trade Union figures proposing that workers accept this deal, without an inflation review mechanism, even though they know that inflation is the acid that corrodes workers' wages. When you add in rising inflation, higher interest rates, and the increased cost of living, it is no surprise that many workers believe that far from being better off they will end up worse off as result of the PPF.
INCREASE IN WAGES:
Of even more interest to workers, however, are the economic analyses which show that wages are increasing by 5%-6% anyway, without the need for a national programme. Trade unionists already know this from their practical experience in many sectors, where wages are rising rapidly to recruit or maintain staff. The irony is that many sectors will only succeed in overcoming labour market difficulties if they ignore the agreement and increase wages above the proposed rates. The question has to be asked, what good is a programme which has to be broken to maintain the economic growth it is meant to ensure?
LOWER PAID GET HAMMERED:
Objective commentators are agreed that the provisions in the proposed agreement for workers in low paid employment are extremely weak. Recently, a highly regarded political editor pointed out that:
``Another more insidious aspect of this system is that it keeps the pay of lower-paid public service workers down. These groups do not have the same clout and any concession to them will inevitably result in knock-on claims from higher paid public servants determined to keep their relativities intact. The net result is that the lower-paid get hammered while higher-paid more powerful groups continue to get special increases.''
TAX CUTS:
Workers should also remember that in the last budget (which was hailed as an IBEC-influenced budget) £1 billion was given in tax cuts. Over the next three years, they are promising £1.5 billion, or effectively £500 million in tax cuts per year, but this is only half what was given last year. On this point, despite repeated requests, the Governmnet have consistently failed to clarify whether a specific tax package was set out in the agreement. And certain trade union leaders tell us this is good for workers! How could any trade union leader claim that half of last year's tax cuts are fantastic for this year?
TRUST WORKERS:
It is time to trust Irish workers to decide major issues such as wage increases, working conditions and profit sharing in their local bargaining locations. Real democracy and decision-making must be devolved not only to the regions (an EU imperative), but also to the shop floor, in recognition of the fact that Irish workers now have the education, the skills, the commitment, the experience and the self-confidence to chart their own way forward successfully. Is it not the very essence of democracy that they be allowed, indeed encouraged to do so, without nanny-state interference or conglomerate union diktat?
REJECT:
The last time a centralised wage agreement collapsed, shop stewards and local branch officials were able to negotiate pay packages up to twice as much as what was offered centrally. This shows that there is a way of securing higher incomes beyond the strait-jacket of the present proposals. The pragmatic and sensible course, therefore, would be to reject this programme and return to the bargaining table. It is in workers' interests and their families' interests that the PPF as it currently stands is rejected, before it locks them irrevocably onto the bottom rung of the economic ladder. Lower paid workers in particular must get a much greater increase now.
This proposed agreement is great for employers and great for Government because it buys industrial peace and assures continued economic growth on the backs of Irish workers. Profits will soar, the exchequer will get fatter and the tax bills of the self-employed will be slashed. Workers are offered tiny, insulting wage increases, miniscule tax reductions, no improved childcare provision and most bitter of all, no share in the mountain of wealth they are creating. Reject this in anger and go back for more, much more. What we create we should enjoy. By right we deserve our fair share.