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Sunday 17 December 2017

Dan White: Want a pay hike? Well you better be in the right sector

Jack O'Connor
Jack O'Connor

SIPTU, the country's largest trade union, last weekend launched a campaign for a 5pc across-the-board pay increase and a one-third increase in the minimum wage to €11.45 an hour.

SIPTU president Jack O'Connor (below) said that unions were "back on the offensive".

Employers' body IBEC responded with both barrels, describing it as "reckless, foolish and utterly detached from economic reality".

IBEC boss Danny McCoy said that: "Talk of widespread large pay increases is ludicrous when the country is only starting to get back on its feet. Clearly lessons have not been learned from the crisis."

Even by the usual Punch and Judy standards of industrial relations this was strong stuff.

So, after seven years of static or falling wages, what are the chances of workers getting a wage increase this year?

The latest CSO figures show that average earnings are still falling with a 0.9pc decrease being recorded in average public sector earnings and 0.4pc decrease in average private sector earnings for the year to the third quarter of 2014.

slack

What these figures show is that, despite the recent fall in the unemployment rate (now expected to drop to under 10pc by the end of this year compared to its 2012 peak of over 15pc), there is still plenty of slack in most segments of the labour force.

Unless you are an IT specialist or a hospital consultant the odds are that the supply of labour on offer from workers exceeds employers' demand.

This shouldn't come as any great surprise. The Irish economy is still 6pc smaller than it was at its peak and prices are lower than they were in 2008 when the downturn began - seven years ago.

Yes, things are getting better, but the patient is still a long way from being totally cured.

So does this mean that all workers can forget about pay increases in 2015? Not necessarily.

For a start there is the parallel universe of the public sector. Despite the cuts of recent years average public sector wages are still almost 50pc higher than those in the private sector - at €906 as against €606 per week.

There is a general election due by April 8, 2016 at the very latest.

That's just 14 months away. Will our politicians be able to resist the temptation to buy the votes of public sector workers with goodies such as wage increases? What do you think?

But what about the rest of us out there in the real world? That's a very, very different story.

intoxicated

The latest retail sales figures from the CSO provide a good snapshot of what's happening in the indigenous private sector. While the volume of retail sales was up by 5.1pc in December 2014, the value of retail sales rose by just 2.3pc.

In other words, retailers are having to slash prices to entice customers through their doors. That's the new normal but try telling it to the comrades at SIPTU intoxicated by the success of the far-left Syriza party in the recent Greek election!

On a more serious note, unemployment will have to fall a good bit further, probably to less than 7pc, before most private sector workers can realistically expect a wage increase.

That's far more likely in 2016 than in 2015.

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