The War on Wages

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Originally posted on Unite the Union’s Croke Park Report blog on the 2nd of April.

It is now clear that a systematic attack on wages is currently underway.  This attack stretches across the private and public sectors, aimed at both low and higher income groups.  It is nothing less than an attempt to re-order the economy into a low-wage, high profit economy – with the Government playing a leading role.

Croke Park 2 is a crucial part of this wage-cutting strategy.  With the economy having returned to recession – and with key indicators (retail sales, industrial production, merchandise trade surplus) indicating that the decline has continued into the early part of this year – cutting wages makes no sense except as part of a long-term strategy to depress wages.

But it is not just the public sector.  The Minister for Finance recently called for wages in the covered banking sector (AIB, Permanent TSB, Bank of Ireland) to be cut despite the fact that 40 percent of employees earn an average of €30,000 per year or less.

Private sector employers are getting in on the act.  In the low-paid sectors, workers’ wages have been falling back to the national minimum wage level since the Joint Labour Committees (JLCs) were, first, struck down by the High Court and, then, reconstituted in a much weaker form by the current Government.

Even in companies with high profits, employers are seeking to cut wages.  The Irish Independent reported that Boots is targeting workers earning over €12 per hour, claiming they are ‘over-paid’.

In all this Croke Park 2 is key.  The Government, as the largest employer in the state, provides signals to other employers through what is called ‘the demonstration effect’ – that is, what the Government does, others follow.  When the Government ripped up the last national agreement in late 2008, IBEC followed suit a few weeks later.  Strangely, IBEC didn’t do this to protect vulnerable employers who couldn’t afford wage increases for they were already protected under the national agreement through the ‘inability to pay’ clause; IBEC walked away from the national agreement to help employers who could afford to pay.  This signalled a clear intention to use the recession as an excuse to cut wages.

When the Government froze wages in the first Croke Park agreement (in effect, cutting wages in real terms – that is, after inflation), employers in the private sector, again, followed suit though organised workers have had some successes in particular companies and sectors.

This is where Croke Park 2 fits in.  It’s not just about cutting wages.  The Government is giving key signals to other employers by:

  • First, requiring employees to work extra hours with no additional pay:  we should expect this demand to be taken up in the private sector (and early anecdotal evidence suggests this is happening).  More work, no extra pay could become a common demand throughout a number of domestic sectors if Croke Park 2 is successful.
  • Second, reversing ‘labour-friendly’ work patterns such as flexi-time – which features in Croke Park 2 – could, again, start a trend in the private sector.

These signals are important, as shown in the treatment of the Sunday premium.  The premium was first targeted in the low-paid sectors covered by the JLCs.  Having successfully removed the premium from the protection of collective bargaining among the low-paid, this ‘trend’ is now moving to the public sector.  A number of vox pops have featured in the media where people claim they don’t get any extra compensation for working Sunday even though this is against the law.  These are mainly workers in the domestic sectors (offices, shop floors, etc.) where there is no trade union representation.  So with Sunday premium protection removed from the low-paid sectors, with the premium being cut under Croke Park 2, what chance of compliance throughout all sectors of the economy?  Not much.

We should be aware that the onslaught on wages is insidious. It doesn’t happen all at once; it doesn’t announce its strategy in a press statement or White Paper. It first starts in one sector and moves to another.  It can take the form of wage cuts, cuts in working conditions, cuts in hours worked.  However, it is done, wherever it starts, the end result is the same – a driving down of living standards.

The latest EU Commission report projects that real pay (after inflation) will fall each year up to 2015.  This doesn’t factor in tax increases or cuts in income support (Child Benefit) which will reduce disposable income even further.  Living standards are going to fall if current trends hold – and Croke Park 2 is a key instrument in ensuring this.

So when public sector workers reject Croke Park 2 they are not just protecting their own wages and living standards – they, too, are giving a signal, a signal that challenges the Government and private sector employers: that workers everywhere can resist the attack on wages.

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