Upcoming pay talks and competitiveness

[Poor Student]

Today we saw Dell cut 250 jobs between Cherrywood and Limerick: http://www.rte.ie/news/2008/0429/jobs.html . Ok, it's part of a global downsizing on their behalf but how long before we lose more jobs from other major multinationals like Microsoft, Google, Intel etc. as they tighten their belt in the global downturn? The reality is that Ireland is no longer competitive in terms of pricing especially in an expanded EU and will be ideal as a target for companies cutting their costs.

Where do we go with the upcoming wage talks between the trade unions and the government? We've already passed the point of competitiveness but on the other hand we have trade unionists complaining that inflation has already overtaken the increase agreed in the last wage talks and are calling for larger increases to claw that back and more. To me this will only further erode competiveness and fuel further price growth and inflation. Do posters here feel we should freeze wages, move them upwards at the same pace or bump them up at an even higher rate to chase inflation? Can Ireland realistically ever claim back some of its past competiveness for foreign direct investment?

[pete]

Dell are cutting jobs everywhere so I don't see that as a comment on Ireland particularly which is not say we are not as competitive as we used to be. Exchange rates might actually benefit Dell as they do most of their business from Ireland into Europe so revenue is in Euro which can can bring back to the US at better rate. 10% Corporation Tax rate is very attractive & taxes on wages (PRSI) are lower than most countries. Indirect tax doesn't affect employers directly. I am not saying we won;y lose jobs but Microsoft & Google won't be top of the list (I would guess wage costs not their biggest concern) plus the IT jobs market still fairly good.

The government has failed spectacularly to make any effort whatsoever to control inflation. They can't lecture private businesses as public service have been rising as fast as anything else. Can we really trust published inflation rates anyway?

I think the days of National Wage deals are at an end. If companies are doing well then their workers can do a deal but I see no logic in forcing the same increases across the board.

When you see foreign workers leaving you know jobs are drying up.

[GavinZac]

Google do software development and support in Dublin. Microsoft do language localisation.

Not to belittle anyone in Dell, but it was/they are a manufacturing facility. They aren't any more representative of the technology sector than DVD printing factories are of Hollywood. Those types of jobs, if we aren't competitive, will go very quickly, as quickly as they came.

[Block G Raptor]

Was watching "where's my job gone" on RTE last night.
the simple fact of the matter is with Cheap labour now available to Multinationals within
the EU Post-Nice this was inevitable and still our Poxy government forced us to vote it through. also the government have done little or nothing to replace the jobs lost in the manufacturing sector and/or to aid the re-training of a now defunct and redundant work force. And we as a nation keep voting these muppets in

[GavinZac]

Was watching "where's my job gone" on RTE last night.
the simple fact of the matter is with Cheap labour now available to Multinationals within
the EU Post-Nice this was inevitable and still our Poxy government forced us to vote it through. also the government have done little or nothing to replace the jobs lost in the manufacturing sector and/or to aid the re-training of a now defunct and redundant work force. And we as a nation keep voting these muppets in

Europe is at fault for Indian cheap labour and rising salaries in Ireland?

[Block G Raptor]

If you click on the Link to the show I was talking about you'll see that it deals with Multinational companies that have moved from Ireland to EU Excession states, which are now more attractive than the Middle or far East as they are closer to there consumer market, so by being in Poland etc. than they would be in India for example thus getting cheap labour and reduced transport costs.
It is responsible for the need for a salary-freeze IMHO

[Dodge]

It is responsible for the need for a salary-freeze IMHO

Without question. Poor ol' AIB only made €2.5 billion last year. How anyone expects the CEO to live on his high six gigure bonuses alone, I'll never know. While their fat cat frontline staff have seen their massive wages rise just 2% less than inflation. Dirty scroungers...

I agree with Pete, national agreements are ridiculous.

[jebus]

Without question. Poor ol' AIB only made €2.5 billion last year. How anyone expects the CEO to live on his high six gigure bonuses alone, I'll never know. While their fat cat frontline staff have seen their massive wages rise just 2% less than inflation. Dirty scroungers...

Exactly, I'm temping with one of the largest companies in the world at the moment (won't name names) and they have basically said that the CEO's need new ivory backscratchers and so quite a few permanent staff will be laid off at some stage this year. They actually expected a round of applause when they told the staff that those left will still have the same benefits as always (they've since gone back on that). Also they are planning on slowly moving those that are left to new offices in Northern Ireland, basically you move to Derry or you get fired, it's a lovely world we live in

[ruben_sosa]

Today we saw Dell cut 250 jobs between Cherrywood and Limerick: http://www.rte.ie/news/2008/0429/jobs.html . Ok, it's part of a global downsizing on their behalf but how long before we lose more jobs from other major multinationals like Microsoft, Google, Intel etc. as they tighten their belt in the global downturn? The reality is that Ireland is no longer competitive in terms of pricing especially in an expanded EU and will be ideal as a target for companies cutting their costs.

Where do we go with the upcoming wage talks between the trade unions and the government? We've already passed the point of competitiveness but on the other hand we have trade unionists complaining that inflation has already overtaken the increase agreed in the last wage talks and are calling for larger increases to claw that back and more. To me this will only further erode competiveness and fuel further price growth and inflation. Do posters here feel we should freeze wages, move them upwards at the same pace or bump them up at an even higher rate to chase inflation? Can Ireland realistically ever claim back some of its past competiveness for foreign direct investment?

if salaries were the only factor then nobody in Switzerland would have a job. we're competitive when it comes to corporation tax and intellectual knowledge, we're not competitive on salaries compared to India or Poland... but having worked with many indians in my time i can say we don't have anything to fear about them hoovering up our high-skilled jobs, they're just not up to it. The polish who are going home now are builders, the polish accountants are staying until they choose to leave. As long as we can provide good infrastructure, educated graduates, english language skills and low tax for corporations then we'll attract investment. Unfortunately the Irish Independent will be too busy reporting on our eroding coastline, gang wars and other stories with the word 'gloom' in the headline.

[pete]

Without question. Poor ol' AIB only made €2.5 billion last year. How anyone expects the CEO to live on his high six gigure bonuses alone, I'll never know. While their fat cat frontline staff have seen their massive wages rise just 2% less than inflation. Dirty scroungers...

I agree with Pete, national agreements are ridiculous.

As I said above AIB staff can negotiate their own deals.

It is harsh to people who are already established in manufacturing jobs but unless it is very high skilled engineering there is no future. It any one starting off their career chooses manufacturing then I don't think the should be surprised in 5-10 years if no jobs left. Services is the future & the most developed countries in the world will have 75%+ employed in that sector.

With all due respect to Irish we are a English first language country which is a huge advantage. To access the impact of increasing costs need to look at the sectors with highest employment & what countries are a threat to us. In Software while there has been a lot of publicity about out sourcing to India & such I have not noticed this has any impact in last 5 years. My only direct experience is with Singapore (1/2 Irish costs), US & UK (more expensive). While we don't export jobs to Germany I know that if employer PRSI is about 12% here it is 40% there which is a huge difference. While we may enter the high tax rate relatively low overall our income taxes are low compared to other countries so we have become an indirect tax (VAT, Stamp Duty, VRT) economy.

Infrastructure & Education is the key to Irelands future. I don't know about the long term but we still need to keep the low Corporation tax rate.

[rebs23]

Tax cuts for those in work to compensate for the horrendous increase in the cost of basics. Scrap national wage deals, those who can afford to pay should pay those that can't, won't.
Scrap a load of semi state agencies eg. why do we have the NRA and the Rail Procurement Agency, why not the one National Infrastructural Agency? Why do we have the Labour Court, the Rights Commissioner, the Employment Equality Authority, the Employment Appeals Tribunal, the National Employment Rights Authority and the Labour Relations Commission all looking after Industrial Relations issues? Why not the one agency coordinating strategy and enforcement?
A proper decentralisation strategy for the major cities outside of Dublin.
Finally accelerate the roll out of infrastructural projects to help male employment levels and set us up for the future and most importantly of all finance it over 20 years and more public private partnerships in the provision of such facilities/infrastructure.
But most importantly do something quick!

[pete]

But most importantly do something quick!

I don't have confidence the government will do anything. They did not create the good times so not as if they have plan. With tax revenues falling will have to increase taxes (not going to help a slow economy) or borrow more money (foolish to borrow for current spending). Public expenditure has been out of control for years at multiples of inflation so trying to cut it now will lead to the inevitable questions about why services not available after so much money spent already.

Slightly off topic but why does the State spend money on adverts telling us they spending E32 billion on Transport 21? Hows about actually spending that money to get the maximum value i.e. don't waste on adverts?

[GavinZac]

Slightly off topic but why does the State spend money on adverts telling us they spending E32 billion on Transport 21? Hows about actually spending that money to get the maximum value i.e. don't waste on adverts?

Perception, pete. Maintaining the idea that we are a good economy with ever improving infrastructure is vital to keeping the morale high both of our fine young graduates, and our foreign investors.

[Macy]

We cannot compete on wages, that's why talk of a wage freeze is rubbish in terms of competitiveness. We are, and have been, competing on other elements for many years now. Frankly, I can't believe everyone is taking this bull from IBEC and CIF, when their members have been creaming it in at far in excess of the national wage agreements in recent years.

Wages aren't what’s driving inflation in this country. All the national wage agreements have been given for productivity gains. In fact, if you add up the increase in productivity and compare it to the National Wage Agreements, the workers in this state have been well and truly ripped off over the boom times. (For example, in my semi state organisation the work practice changes are 30% productivity for 10% wages in the current deal!). And we're still one of the most productive workforces in Europe.

Stealth taxes and global factors (i.e. they effect everyone so aren't an impact on relative competitiveness) are the real drivers of our inflation, along with the impact of the Governments long running deals with the devils that are property developers that have lead to the personal debt levels we have now and the resultant impact of interest rate changes. It's not wages at all.

Interesting that Decentralisation raises its head again, when that will reduce productivity. Even the Government commissioned OECD report raised questions about the ongoing decentralisation process, which the Government is ploughing on with regardless.

[Superhoops]

.....All the national wage agreements have been given for productivity gains. In fact, if you add up the increase in productivity and compare it to the National Wage Agreements, the workers in this state have been well and truly ripped off over the boom times. (For example, in my semi state organisation the work practice changes are 30% productivity for 10% wages in the current deal!). And we're still one of the most productive workforces in Europe.....

If productivity was improved by 30% over a 27 month period it must have been one hell of an inefficient organisation to start with.

[pete]

AFAIK National Wage Agreements only affect unionised workers & mainly affect the public sector who will all be isolated from unemployment. To increase public sector wages will lead to reduction in services or rise in borrowing as tax revenues will drop a lot this year. The state cannot afford to pay these increases in the short term. If the state can reduce public sector numbers then can use the money saved to pay the remainder.

[rebs23]

Don't know if the public sector numbers are the problem, more like the fragmentation of the work of the public sector to so many different agencies with so many different managers thereby leading to inefficiencies. Get rid of those agencies that do nothing (Seriously has anyone heard of the Work Life Balance Agency?) and get them working together at what they do or are supposed to do.
As for Decentralisation, my point on this is that having all your public sector centralised in Dublin is leading to congestion, more competing for the same infrastructure (road, railways and houses) thereby leading to congestion and unneccessary cost increases in the provision of public transport and housing. Dublin is also geographically impeded from spreading out in all directions due to the Irish Sea, thereby increasing the cost of the provision of such infrastructure!
Let the other cities take up the slack in terms of public administration. It is also an unneccessary to have a lot of administration done in Dublin which could easily be done elsewhere and centralisation is giving the Dublin economy one hell of a government subsidy, it doesn't need. Think of the benefit that could come to the other cities if they even had a few hundred civil servant jobs located there. Why should Dublin be the only city to benefit from the jobs for public administration, especially when Dublin doesn't need it and it contributes to congestion?
Lets have a real decentralisation policy, not one that was designed to fail because Berties didn't like it. I mean seriously the Dept of the Marine to Cavan (no offence to Cavan) (Bus Eireann to Mitchelstown is another good one)Are you seriously telling me that was designed to succeed?
Stealth taxes via the local authorities (water charges, commercial rates, development charges, etc) are a huge contributer to the loss of competitiveness.
There are other ways to fund the LA's via local property taxes (everyone has to pay) or even giving them a proportion of the tax take from their area (intorducing competition between them to encourage people to live where there are better services).
As for take home pay, the cost of living is atrocious these days and the only way to really help this is to reduce taxes for those that work. Pay for it via the cost efficiencies in the state agencies.

[Macy]

Don't know if the public sector numbers are the problem, more like the fragmentation of the work of the public sector to so many different agencies with so many different managers thereby leading to inefficiencies. Get rid of those agencies that do nothing (Seriously has anyone heard of the Work Life Balance Agency?) and get them working together at what they do or are supposed to do.

And I don't think most public sector workers or unions would have a problem with that. The work will still have to be done, so it's cutting out boards (the real reason they're created - to look after their cronies?) and higher managers rather than the lower level workers? Speaking as someone who works in an agency that is constantly having elements of it's work duplicated by new quangos when we have the staff.

As for Decentralisation, my point on this is that having all your public sector centralised in Dublin is leading to congestion, more competing for the same infrastructure (road, railways and houses) thereby leading to congestion and unneccessary cost increases in the provision of public transport and housing. Dublin is also geographically impeded from spreading out in all directions due to the Irish Sea, thereby increasing the cost of the provision of such infrastructure!
Let the other cities take up the slack in terms of public administration. It is also an unneccessary to have a lot of administration done in Dublin which could easily be done elsewhere and centralisation is giving the Dublin economy one hell of a government subsidy, it doesn't need. Think of the benefit that could come to the other cities if they even had a few hundred civil servant jobs located there. Why should Dublin be the only city to benefit from the jobs for public administration, especially when Dublin doesn't need it and it contributes to congestion?
Lets have a real decentralisation policy, not one that was designed to fail because Berties didn't like it. I mean seriously the Dept of the Marine to Cavan (no offence to Cavan) (Bus Eireann to Mitchelstown is another good one)Are you seriously telling me that was designed to succeed?
Stealth taxes via the local authorities (water charges, commercial rates, development charges, etc) are a huge contributer to the loss of competitiveness.

Has to be done on a business/ organisational/ Public Sector benefit basis not on a political benefit basis. The current proposal totally has Aherns stamp all over it - someone for everyone in the audience, with no logic and no attempt to make hard decisions.

There are more people employed in the public service outside Dublin anyway, the whole congestion arguement is a bit of a myth (afterall, presumably the sites/ offices would be re-developed/ re-leased to other companies to fill the space). Only way decentralisation could work is to decentralise decision making, not people.

If productivity was improved by 30% over a 27 month period it must have been one hell of an inefficient organisation to start with.

Depends what you measuring and how you're measuring it. Throughput or outcomes? We could see 30% more people, but wouldn't have the time to spend with them to give them the outcome both the person, and the state, want. Basic lack of understanding by the managers of the process, trying to put a measure on intangibles.

[pete]

Cowan is going to make a quick decision that for once will affect himself. Will he agree to cancel the Ministerial pay rises? Will be impossible to negotiate & take 30k+ raise himself.

A slowdown in the economy should mean more attention is paid to the price of goods & services. Depending on the service (is there an alternative supplier) I think a lot of people will be rejecting automatic 5% price increases which will ultimately filter down to wage increases.

A good example of bureaucracy is the newly proposed Dublin Transport Authority. Presumably the DTA is just another layer on top of existing bodies?

Ten years ago the government created the DTO (provides transport and land use planning advice to the agencies and organisations) & then added the RPA (Secure the provision of, or to provide, such light railway and metro infrastructure as may be determined from time to time by the Minister for Transport). DTO seems like one of the most pointless organisations around, just slightly worse than the RPA.