Ibec thinks demands for higher wages are 'ominous'
CEO Danny McCoy says the Luas dispute is an example of ‘exaggerated’ pay claims.
CLAIMS FOR EXCESSIVE wage hikes risk undermining Ireland’s economic recovery, according to the head of the country’s biggest business group.
In a speech to be delivered at the Ibec CEO conference in the RDS today, the group’s chief executive Danny McCoy said that much of the current debate around wages was “ominous”.
“Pay rises and budget tax cuts mean workers will get the equivalent of about two weeks additional pay this year. Compared to 2014, the average worker will be better off by almost one month’s pay by the end of the year,” he said.
“This is at a time of historically low inflation. The cost of goods and services across the economy is similar to what it was in 2008. This reality needs to be reflected in wage expectations.”
House prices
McCoy also focussed on rising house prices, arguing that the increasing cost of buying a home should not necessarily result in an increase in pay for workers.
Ibec CEO Danny McCoy
He said although a “minority” of workers are under a large amount of financial pressure either as a result of renting or trying to buy a home, “this is not a sound reason for economy-wide pay increases”.
“The suggestion that wages should increase to make property more affordable suggests one of the big lessons of the crisis has been forgotten,” he said.
“A major and far-reaching new approach is needed to improve the supply and affordability of new housing, but wage hikes are not part of the solution. If labour costs spiral and we lose our competitive edge, we will pay for it in jobs.”
Pay disputes
The business boss said that Ireland is likely to see more industrial disputes after “the difficult crisis years and the pent-up frustrations that have built up”.
However, he added: “Much of the current debate around wages is ominous. In many cases pay claims go far beyond what is reasonable or affordable.
“The Luas dispute is a case in point, but it is just one example of a series of ongoing, exaggerated pay claims that risk undermining the economic gains of recent years.
“There can be no return to bubble-economy wage inflation or spiralling relativity pay claims, because ultimately everyone loses.”
Regarding the public sector, he said that while there must be pay rises “over time”, any increases must happen at a sustainable rate “and it must balance the legitimate expectations of workers with the pressing need to invest more in the quality and capacity of our public services”.
Despite the warning around pay disputes Ibec remains upbeat about the state of the Irish economy and McCoy will say that “Ireland is doing well and has a great future”.
