Pension levy “a sensible place to start” on pay recovery

coinsIMPACT general secretary Shay Cody has said that, in terms of achieving pay improvement in the public sector, he hoped that there would be a consensus between the employer and unions that the pension levy would be “a sensible place to start.”

Shay was taking part in a discussion about pay restoration on the Today with Sean O’Rourke radio programme last Monday (1st December).

Shay emphasised that pay recovery was needed right across the economy, “Wage movement is just one ingredient of economic recovery, and public service pay improvement is just one element of that. The whole country needs a pay rise.

“Wherever it’s possible, and where employers can afford to, it’s good for domestic demand.  Be it in the public sector, or retail or manufacturing, wages should be increased. Wages haven’t been increased in seven or eight years.”

Economist Jim Power also took part in the discussion, acknowledging what he described as the “pain of public sector pay cuts” as well as cuts and job losses across the private sector. He said that people were generally more confident about the future but “don’t yet feel it in our pocket.”

While Power said that reductions to the Universal Social Charge (USC) would be of more widespread benefit, Shay said that these weren’t exclusive choices. He pointed out that both the USC and pension levy apply “at a very high rate and at a very low level” and described both as anomalies caused by the economic crisis.

“Now that we’re moving out of the crisis, pay increases right across the board would be beneficial. Those employers who can afford it in the private sector, including multinationals, are already increasing pay” he said.

On the question of Ireland’s economic circumstances in 2015, Shay said that it is now widely expected that the deficit will go below the 3% target set by the Troika, and that Ireland’s deficit and borrowing costs would be lower than those of France, Britain and other EU states.

Shay also spoke about the burden of private debt, and its continuing effect on domestic demand. “There are only two ways out of the burden of private debt and that is either a tax cut or pay improvement.”

On the question of pay comparisons with other EU states, Shay referred to Ciaran Lyng’s research for IMPACT in 2012, comparing the pay of German and Irish public sector workers.  The research showed that many grades, including clerical officers and school teachers, and at every point on the scale, German pay was higher and the cost of living significantly lower.

You can listen to the full discussion HERE (via RTE website)