Tax cuts are not an alternative to pay increases says union leader

Issued 14.05.14

A leader of one of Ireland’s most influential trade unions has rejected the idea that tax cuts can be an alternative to pay increases as Ireland comes out of recession. Speaking at the opening of IMPACT’s biennial delegate conference In Killarney this evening (Wednesday) the union’s president Kevin O’Malley said focussing solely on tax cuts would leave taxpayers subsidising low-paying but profitable employers, and would mean more cuts in public services.

Mr O’Malley said income restoration was now IMPACT’s first priority after six years in which living standards had been “battered” for all but a small elite. “You cannot restore living standards without restoring incomes, and that means pay,” he said.

Mr O’Malley said Ireland already collected less tax as a proportion of GNP than most EU countries. “Employers’ organisations are telling us that pay must stay static while taxes fall. I’ll translate that argument for you. It means working people must trade any sort of income recovery for worse public services, while profitable businesses and their shareholders make no contribution at all. It means profitable companies can continue to have their low-pay business model subsidised by taxpayers through the benefits system, which is fast becoming a safety net not for citizens who are down on their luck, but for profitable corporations exploiting the minimum wage and zero-hours contracts. That is not acceptable to us and it should not be acceptable to the politicians who run the country,” he said.

Late last year official figures showed that almost 90,000 employees were receiving jobseekers’ benefits because their pay was too low or their working hours were too few, while over 40,000 working families were receiving family income supplement. The number of public servants who receive family income supplement (FIS) has increased by 32% since 2008.

Mr O’Malley said there was no conflict of interests between workers in the public and private sectors on the issue of improved living standards. “Virtually all workers have suffered reduced incomes, but it has happened in different ways. That means income recovery has to happen for all workers across the economy – public, private, voluntary and community – even if it has to happen in different ways.

“In 2009-2010, politicians and business organisations, cheered on by commentators and most of the media, successfully drove a wedge between workers in different sectors. The result was declining incomes for all. As soon as public service pay was cut, the minimum wage was attacked; then the wage-setting mechanisms in low paid sectors; then voluntary sector – and some private sector – employers cut their pay rates, pointing to the public service as an example. I don’t think unions handled the public-private issue too well. In the dismay and confusion of the time, we fell into a trap. That isn’t going to happen this time,” he said.

IMPACT’s conference will tomorrow (Thursday) debate pay policy, including an executive motion that calls on the union to pursue a strategy for income recovery for workers in the public, private and community and voluntary sectors.

IMPACT’s biennial delegate conference opened in the INEC, Killarney this evening (Wednesday) and concludes on Friday afternoon. The union represents almost 60,000 workers, mainly in the public service but also in private companies, commercial semi-state organisations and the voluntary and community sector. Tanaiste Eamon Gilmore is scheduled to address the conference on Friday morning (16th May).