Last week IMPACT welcomed the change to the Financial Emergency Measures in the Public Interest (FEMPI) Act which was announced by the Minister for Public Expenditure and Reform, Brendan Howlin TD. The FEMPI laws were first introduced in order to cut the public service pay bill in 2009. Last week, the Government announced its intention to remove part of the most recent Act, introduced as a limited contingency measure in 2013.
Minister Howlin told the Dáil last month of his intention to begin the process of dismantling the legislation. He told the Dáil he would “open the books in the same open way as I did in the negotiations for Haddington Road and come to an orderly and, I hope, fair mechanism for unwinding the emergency provisions that were necessitated by the economic collapse”, and followed a similar statement in a press interview last August.
Not long after that my colleague Bernard Harbor wrote in the IMPACT blog about bracing ourselves for increasing levels of opposition and criticism as any such negotiations draw closer. While last week’s announcement attracted some media attention, developments elsewhere continued to dominate the front pages and airtime. Only RTE’s Prime Time picked up on the FEMPI story and I was invited on the programme to take part in a studio debate with Patricia Callan of the Small Firms Association, who argued against pay restoration and said income recovery needs to be through tax cuts (a default argument of any employer body).
Wage recovery needs to be happening across all sectors if the current economic growth is to have any hope of continuing. Money in workers pockets is of greater value to the economy than retained company profits. Continuing wage stagnation will depress domestic demand.
November CSO figures revealed that average annual earnings have fallen by almost €700 in only the last three months in spite of economic growth and longer working hours. This year saw a fall in domestic demand in September after nine months of improvement since the start of the year, demonstrating that optimism can’t and won’t be sustained without real wage recovery.