Pay and incomes As the economy slowly recovers NOREEN MOLONEY asks if we dare to dream of increased incomes.
An end
REMEMBER WHEN you looked forward to pay day? A time to catch up with the bills, indulge in the rewards of your hard work, and make plans about how to spend your wages? These days the pay day countdown is instead fuelled by fear for many, as we worry about how our shrinking incomes will stretch to cover the essentials. When you saw the word ‘pay’ over the last five years, it was usually followed by the word ‘cuts’ or ‘freeze.’ But, as Ireland’s economic outlook becomes more positive, talk of pay recovery has begun. The departure of the troika, improving unemployment figures and positive growth predictions have spurred expectations for the Irish economy. And, despite hiccups on the road to recovery – recent figures show the economy contracted by 0.3% in 2013 – economists generally argue that progress, though slow, is well underway. Some openly say record-current-account-surplus-shows there are grounds for wage increases. This theme will feature at IMPACT’s biennial conference in May, where a motion from the union’s executive will shift the focus towards a more positive future pay outlook. The motion would see the union “prepare and implement a strategy of income recovery for IMPACT members in the public, private, community and commercial sectors.”
It’s happening Shrill political warnings that pay rises should be avoided essentially ignore what’s already happening, as unions, industrial relations observers and private consultancies describe a trickle of modest pay increases turning into a steady stream in manufacturing, retail and other parts of the economy. Consultants Price Waterhouse Coopers report that 73% of companies will increase pay this year – up from 62% last year. IMPACT national secretary Matt Staunton, who leads for the union in commercial and private sector organisations, said the findings chime with his recent experience. “IMPACT has been negotiating modest pay deals in commercial and private companies that are able to pay. But this has invariably involved productivity measures or changes to pay structures,” he says. Even the public service has seen slight but significant positive movement on pay and incomes this year, with the abolition of two-tier pay scales (see page 9) and a slight easing of the so-called ‘pension levy.’
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SPRING-SUMMER 2014
But let’s face facts. When it comes to recovering living standards, we’ve got a long way to go. Public sector average hourly earnings have fallen by 5.4% since the end of 2008, according to official data from the Central Statistics Office (CSO). Weekly public service earnings decreased at nearly the same rate (5.1%) – or just under €50 a week. These figures don’t include the so-called ‘pension levy,’ which reduced earnings by a further 7% on average. There’s a slightly different picture in the private and commercial sector. Here hourly earnings were stagnant over the last five years while weekly earnings fell by €21.63 (3.4%). The difference in weekly and hourly earnings reflects decreases in private sector working hours, which have hit many family incomes.
Jobs The apparently more positive story in the private sector is balanced by the impact of unemployment. Job cuts – including compulsory redundancies – was the preferred way of cutting private sector pay bills during the recession, along with reductions in paid hours and pay reductions for some who kept their jobs. Unemployment and underemployment remain a fact of life, with youth and long-term joblessness particularly stubborn despite a welcome reduction in the number of people on the live register. The pay figures are averages, which mask variations between and within different sectors – some experienced rising pay X