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Column: As a society, we can't afford to pay Irish workers so little

The term ‘working poor’ should be an oxymoron but it’s a reality in Ireland – a wage increase is desperately needed, writes Jimmy Kelly.

Jimmy Kelly

IRISH WAGES ARE low, Irish productivity is high and Irish profits are rising.

Research carried out by Unite shows that Irish employee compensation is around 14 per cent below the average of most other EU 15 countries, and that in the last two years wage increases have been minimal compared to other European countries. This is borne out by the latest CSO figures, which show earnings stagnating, and by the European Commission which just this week warned that Irish wages are set to fall in real terms (after inflation) this year and next.

The picture is particularly bleak when it comes to the low paid sectors – workers in areas such as shops, restaurants and hotels cost their employers around 20 per cent less than in other EU-15 countries.

Low pay comes at a cost – to families and to the economy

The term ‘working poor’ should be an oxymoron, but in Ireland it’s a reality: over one in four households with one person working suffer multiple deprivation experiences as defined by the CSO – and, staggeringly, over one in ten households where two people are working also suffer from deprivation.

That may mean, for example, that they have been unable to afford heating at some point during the last year – or are unable to afford a meal with meat, chicken, fish or the vegetarian equivalent every second day. It may mean that they cannot afford a weatherproof coat.

And it certainly means that they are not spending in their local shops and businesses – and that’s bad for the economy and, ultimately, bad for all of us.

At the same time, Irish productivity per hour worked is high – well above the EU-15 average. And Irish employee compensation – what it costs a business to hire a worker – makes up a smaller proportion of total operating costs than in any other EU 15 country for which data is available.

Irish profits are rising

Low wages and high levels of productivity equal profits – and Irish profits are rising, substantially so in some sectors. In fact, the EU Commission projects that Irish profits will greatly outstrip other EU-15 countries up to 2015 – at the same time that wages are set to stagnate or fall.

Employers are campaigning for tax cuts rather than wage increases. But tax cuts will not help those living in deprivation, or the one in ten of us who experience food poverty, or the 150,000 precarious workers. Tax cuts will make it more difficult to deliver the vital services and income supports which form the basis of a truly prosperous society: affordable childcare, free health and education at the point of use, eldercare and affordable nursing care.

Wage increases, on the other hand, will not only put more money in people’s pockets – they will also increase revenue for the Government (through increased income tax, USC, PRSI and indirect taxation). And that means more money to invest in our public services and social infrastructure.
And that investment will help drive growth and raise living standards for all of us.

Irish wages should reflect Irish productivity

The employers’ demand that wages be kept down in return for tax cuts is not only a signal that they are not serious about economic recovery. It is also a cynical ploy to get workers to subsidise their own tax cuts. Any gains (and let’s remember that a substantial number of workers won’t benefit from tax cuts because their incomes are too low) will be cancelled out by further cuts in public services and income supports.

Just this week the Community Platform released a report telling the human stories behind poverty in Ireland. Those stories are the inevitable result of a low-tax, low-spend, low-waged, low-service economy.

It is time for Irish wages to reflect Irish productivity and Irish profits. It is time for us to reject the illusory promises of tax cuts in favour of a sustainable wage-led recovery – a recovery in which we can all share equally. 2014 must be the year when Irish workers get a wage increase – and when the Irish economy gets a much-needed boost in domestic demand.

Jimmy Kelly is Regional Secretary of Unite Ireland. Byline photo by Mark Stedman/Photocall Ireland.

News: Irish people are working longer and earning less than 2012

News: 250,000 households have less than €15,000 a year to live on

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Jimmy Kelly

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