Unions question troika austerity and say pay cuts would damage growth

22nd October 2012

IMPACT general secretary Shay Cody has rejected Central Bank claims that a 10% cut in wages – across all sectors – is necessary to boost Ireland’s productivity. He was responding to the bank’s chief economist Lars Frisell, who recently said public and private sector wages need to fall if Ireland is to regain competitiveness in international markets.

Mr Cody pointed to a recent National Competitiveness Council (NCC) priority list of obstacles to Ireland’s competitiveness. “Pay cuts didn’t appear on the list of competitiveness issues,” he said.

He said the real problem was the negative impact of austerity measures on domestic demand, which would be further depressed by more pay cuts. “Ireland’s exports are booming and are expected to continue to grow throughout 2013, based on current wage costs. It’s the depression of the domestic economy that’s the crux of our problem,” he said.

Meanwhile, the Irish Congress of Trade Unions (ICTU) today asked troika officials to reveal their plans for growth and job creation after the IMF recently admitted it had totally underestimated the impact of austerity.

“Austerity does not generate recovery. It just makes the situation worse. Now the IMF has confirmed this to be true. In that context, you would expect a degree of soul-searching and humility from the troika. Their plan has not worked and we need to hear how they expect to get growth and jobs back into the economy,” said ICTU general secretary, David Begg.

Earlier this year ICTU published a costed investment plan to create 100,000 jobs over three years. “If the troika finds fault with that, I think they should put alternatives on the table,” said Begg.

Austerity budgets will have taken almost €25 billion out of the Irish economy by the end of this year and troika-imposed budget plans will increase this to over €31 billion by the end of 2014. Meanwhile, the Irish League of Credit Unions’ (ILCU) today said the number of people left with only €100 a month to live on after paying bills has increased by 35,000 to 1.85 million.

The NCC report revealed that, as recently as July 2012, Irish pay costs were almost exactly in line with the OECD average, while Ireland’s is the only OECD country whose unit labour costs are falling.

IMPACT says cuts in incomes would push struggling families and citizens over the economic edge while taking more money out of the real economy.

Paddy Cole