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

Urgent need for Irish pay moderation says IBEC but silent on the taboo issues that impact competitiveness
By Finfacts Team
Feb 15, 2008 - 11:34:34 AM

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Turlough O' Sullivan, Director General, IBEC and David Begg, General Secretary, ICTU - Irish Congress of Trade Unions.

IBEC, the main employers' group today said that pay moderation is essential if we are to safeguard our economic success and protect jobs, in an increasingly challenging economic climate.

Speaking at the social partnership plenary session in Dublin Castle, IBEC Director General Turlough O’Sullivan said: "Any new pay agreement must not hinder economic development or damage our ability to trade successfully with other countries.

"Pay rates in Ireland have been growing at twice the pace of those in other euro area countries, this is simply not sustainable. In the upcoming negotiations, pay moderation is an urgent requirement. If this does not happen jobs will be lost and everyone will eventually lose out.

"The current agreement has provided for cumulative pay rises of 10.4 % over 27 months, while pay growth in the euro area has been 6.6%. In future, pay moderation is an urgent requirement. The tax cuts and changes to mortgage interest relief in the past three budgets have had a significant impact on the take-home pay of workers, but now appear to be forgotten by some. On an after tax basis average pay has increased by 14.4% over the 27 months, and this excludes the increases in mortgage interest relief.

O'Sullivan continued: “In these internationally turbulent times, Ireland has particular strengths. A flexible labour market is a prerequisite to economic success. This is always so, but is even more the case at this time of greater economic uncertainty. The new negotiations must aim to ensure that the labour market is able to respond quickly to fast changing global and domestic economic circumstances, thereby safeguarding jobs and investment in the long-term.

“Business will oppose any measure that will make it more difficult to get a job and keep a job, including any attempts to make the labour market less flexible,”
he concluded.




Finfacts Comment: Public sector reform anyone?

Last week it was reported that Bord Gáis workers are set to share a tax-free €34m bonanza as a result of a share giveaway that values the company at €1 billion. Workers at the state company were given  given ballot papers following a briefing on a proposal for a 3% shareholding that would see each of its 900 employees receive shares valued at up to €38,000.

The average industrial wage in the Gas and Electricity sectors is already double the overall average of €32,000 per annum.

35 ministers in a country of 4m and 99 TD's given additional paid committee positions and so much more in the past year. The Dublin City Manager gets a 36% pay rise! Ministers get double digit rises.

The highest land prices in Europe in a country  that is 4% urbanised while the landowners are on a public welfare system known as CAP.

Why wouldn't the pharmacists not wish to continue to be part of the bonanza?

Where is the Outrage? Gombeenism thrives at home while in Paris, OECD staff work on proposals for Irish public service reform

Pharmacy survey suggests over 300 Irish pharmacies "could" close as a result of threatened HSE cuts in payment; State payments have jumped from €332 million in 1997 to €1.5 billion in 2006

Tánaiste and Minister for Finance, Brian Cowen, TD commented today:

In relation to short-term economic prospects, it is fair to say that domestic demand, and in particular new house building could not sustain overall GDP growth in the longer term and we are now seeing a re-balancing towards more sustainable, export-led growth. In this regard, a renewed emphasis on improving competitiveness is required to ensure that the re-balancing towards export-led growth is achieved in a smooth manner.

While there are many aspects to this, labour costs are a key component. In this regard, a renewed emphasis on improving productivity is required so that wages can rise without jeopardising our ability to generate export-led growth. The Government continues to implement measures to enhance productivity – investment in human and physical capital under the National Development Plan is just one example. Nevertheless, it is crucial that wage expectations are kept in line with the rapidly changing economic environment in which we are operating. Over the last number of years, wage increases have exceeded productivity growth, with a resulting loss in competitiveness. Regaining market share will require an approach to wage determination which takes greater account of productivity developments as well as labour cost developments in our major trading partners.

Inflation developments are also crucial from a competitiveness perspective. Much of the increase in the consumer price index over the last number of years was due to factors beyond our control, namely the impact of rising mortgage interest rates and higher oil prices. In relation to mortgage interest rates increases that have occurred over the past year or so, my Budgetary changes to mortgage interest relief will help to offset the impact. Furthermore, it is now clear that the rate of inflation has peaked – the January CPI figure was the lowest since late-2006, and for this year as a whole, almost all economic commentators are forecasting a continued improvement. Pay negotiations should, of course, be cognisant of these prospective developments

One of the core strengths of Social Partnership has been its strong foundation in realism regarding the nature of the competitive challenge for Ireland. I remain confident that Towards 2016 offers an important and strategic framework for meeting the economic and social challenges ahead.



Check below for relevant links on the housing system - Ireland among top 3 countries for house price rises since 1970 - any competitive issue here?

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