Open letter sent by the Coalition to Protect the Lowest Paid to Richard Bruton, Minister for Jobs, Enterprise and Innovation about his proposal to reduce the incomes of workers covered by the JLCs.
Dear Minister Bruton,
We are calling upon you to release the economic analysis your Department has undertaken that has informed your proposals for the Joint Labour Committees which protect the wages and conditions of hundreds of thousands of the lowest paid workers in the economy. You have argued we need lower and more ‘flexible’ wages in these sectors. You claim this will create thousands of jobs. No doubt, therefore, you will agree that publication of such analysis is necessary for an informed debate. This is all the more necessary as the report of independent expert has contradicted your claim that lower wages will create more jobs.
We’d like to refer to the following issues. This is scarcely an exhaustive list.
1. How ‘uncompetitive’ are wages in the low-paid sectors? The EU Commission shows that in 2008, hourly labour costs in Ireland’s hotel, restaurant and retail sector were 6 percent below the average of the other EU-countries. Since then, Irish labour costs have fallen while in the remainder in Europe they have increased – meaning that we have fallen further behind the European norm.
Has your Department compiled a comparative analysis based on this data?
2. If cutting labour costs will save jobs, why hasn’t it happened so far? In the last two years labour costs have fallen by between 4 and 5 percent in the retail and hospitality sectors. But during that period businesses have closed and workers have lost their jobs. Yet, you insist that cutting wages even further will create jobs.
Why does your department’s analysis conclude that further wage cuts will produce a different result?
3. How much will consumer spending fall as a result of your proposals? Consumer spending has fallen by over 10 percent during the recession – unprecedented in the EU since World War II. Given that the low-paid spend almost all their income, every Euro taken out of their pocket means one Euro less in the tills and cash registers of businesses. The ESRI estimated a cut of 3.5 percent in public sector wages results will cause consumer spending to fall by three-quarters of a billion Euros.
According to your Department’s analysis, by how much will consumer spending fall if already low wages are cut even further?
4. How much more debt will we accumulate as a result of your proposals? Cutting the wages of low-paid will obviously mean less tax revenue – income tax, Universal Social Charge, employers and employees PRSI and, of course, VAT since they will have less money to spend. This will worsen the deficit and lead to a higher debt.
How much will that be, according to your department’s estimates?
5. What is the argument for weakening the Sunday premium when it’s already low by EU standards? In other countries, double-time on Sunday is standard practice – either by law or collective agreement while the standard premium in Ireland is a mere time-and-a-third. Given that the EU Commission has found that over 70 percent of Irish employees ‘never’ work on Sunday (in line with EU norms), we are sure you will agree that Sunday is not ‘just another working day’.
Does your department’s analysis show our Sunday premium out of step with the rest of Europe?
6. How will the labour market be affected by cutting young people’s pay? In your proposals, you want to exclude young people’s pay from JLC wage setting mechanisms. In fact, you leave open the possibility of pay dropping to national minimum wage levels. This would mean that a young retail worker could find their pay falling to the under-18 minimum wage of €6.06 per hour. Even for those over 18 years, their pay could still fall below €7 per hour.
Does your department estimate the impact of job take-up by letting wages fall to below poverty-line levels?
7. What is the argument for subsidising profitable companies by letting them cut their workers’ wages? Many companies in the low-paid sectors are profitable: Supermacs returned a profit of €6 million last year, supermarket chains are expanding, the hotel industry monitor reports that Dublin hotels are some of the most profitable among major European cities, while two directors of Dunnes Stores were paid dividends in excess of €14 million last year. Shouldn’t their employees share in this – rather than face the spectre of seeing their wages cut? This would be a straight transfer from the lowest paid in the economy to corporate profits.
What is your Department’s estimate of how much this transfer is likely to be?
There are some of the important questions you need to answer before pursuing your course of action.
Most of all, people have the right to know if you are aware of the poverty and stress your proposals will cause hundreds of thousands of workers – in our shops, restaurants, hotels and offices; in particular the costs you will impose on women who make up a considerable majority of low-paid workers.
Therefore, we urge you to publish the data and analysis that informs your proposals. Under the last government, we had too much policy making based on unsupported assertions. In many instances, policy operated in a fact-free zone. We hope you will agree that policy-making that is not rooted in evidence is like flying blind in a storm without radar.
Recklessness is the last thing we need in this crisis. Look where it has got us today.
Susan McKay, CEO, National Women’s Council of Ireland
John Douglas, General Secretary, MANDATE
Siobhan O’Donoghue, Director, Migrant Rights Centre Ireland
John King, Divisional Organiser, SIPTU
Anne Irwin, Secretariat, Community Platform
Steve Fitzpatrick, General Secretary, Communication Workers’ Union
Anna Visser, Director, European Anti Poverty Network Ireland
Jimmy Kelly, Regional Secretary, UNITE the Union
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