The Coming Battle – Pay

In 2009 public debate in the 26 Counties focused on the crisis in the public finances. As investment, lending and tax revenues plummeted, the government argued that economic recovery required cuts to social welfare and public spending on services and wages.
The level of policy consensus among the political establishment was clear when Fine Gael and Labour accepted the government’s assessment that a cut of €4 billion was required in Budget 2010 to stabilise the public finances.
That consensus is now moving on to what it sees as its next big battle, namely pay.
Speaking in January, Brian Cowen said that “2010 and 2011 is about rebuilding the economy”. Cowen told the Dáil that the only way the government could protect jobs was by improving the competitiveness of the economy, that it was time for the state to regain its competitive edge.
But just what does regaining our competitive edge mean?
For the business lobby, represented by ISME and IBEC, it means lowering the cost of doing business.
But the real target of the business lobby is not costs in general, but wages and specifically low wages.
At the start of February Retail Ireland called for ‘pay moderation’ if more jobs in the retail sector were not to be lost. Their call has been supported by both IBEC and ISME.
Their argument is that as the cost of living is decreasing so too should the cost of doing business, which among other things demands lower wages.
Specifically ISME and IBEC are looking for both the minimum wage and pay rates agreed through Registered Employment Agreements in sectors such as hospitality, retail and other services, to be lowered or abandoned outright.
This could affect up to 600,000 workers, many of whom live below, on, or close to the government’s own definition of income poverty.
Figures recently published by the Central Statistics Office show that of the 615,000 people living in income poverty in the state, 116,000 were in employment. These are predominantly women working in low-paid, casualised service sector employment.
The numbers of people at risk of falling below the income poverty line is even greater. 25% of households in the state live on an income of €20,000 or less a year while 50% of households in the state live on an income of €40,000 or less a year.
Falling prices in 2009 did not lift these low paid workers out of poverty. In fact, Budget 2010 pushed these individuals and families further into or closer to poverty.
Any reduction in the wages of these households will have devastating consequences for their own social and economic wellbeing, and for the economy overall.
Despite this Brian Cowen, supported by ISME and IBEC, wants to punish these low-paid workers even further, by undermining the minimum wage and sectoral pay agreements.
There is no doubt that the government needs a strategy for assisting small- and medium-sized businesses. Any such strategy must address the issue of the cost of doing business. But in doing so it must not push the already hard-pressed working poor further into poverty.