Irish wages too high to justify pay rises, Ibec says

COMPANIES SHOULD not entertain claims for pay increases from staff this year, the employers’ group Ibec has recommended.

Ibec said yesterday a comprehensive survey of its members had found pay freezes would be the norm in 2011 but that wage cuts were still being implemented in some places.

Ibec director of industrial relations Brendan McGinty said few pay claims had been lodged so far this year.

Speaking at the annual conference on industrial relations, organised by the specialist publication Industrial Relations News, he said that at least one in four firms had reduced nominal wage rates so far during the recession.

He said the vast majority of firms had put in place wage freezes in 2009 and 2010. “Nominal wage levels have fallen by about 5 per cent since mid-2008, but they remain up to 20 per cent higher than those of our main trading partners. To close the gap, wage growth in Ireland needs to remain below the EU average for some years to come.

“Almost half of all companies surveyed expect no change to their pay bill in 2011, with nearly seven out of 10 freezing basic wage rates. The average expected change to basic pay rates in 2011 is near flat at 0.4 per cent. For most companies, the necessity of a pay pause and, for about 10 per cent of companies, pay reductions, remains. Ibec expects that the high degree of realism in 2010 concerning pay developments will remain in 2011.

“We recommend that, in light of the continuing weak economic conditions, employers should not entertain pay claims this year.”

Industrial relations consultant Tommy Cummins said the country was heading back towards a more adversarial form of industrial relations which would result in an increase in days lost to strikes.

“If you get inflation up to 2 per cent and you have a company that is making any level of profit, even if it is in trouble, you will have pay claims. Typically if these claims went to the Labour Court, it is more than likely to be granted.”

Siptu vice-president Patricia King said official figures showed the level of pay cuts experienced by managers and professional staff over recent years were lower than those for other groups.

“From the beginning of 2009 to the first quarter of 2010, managers, on average, had reductions of 4.68 per cent, clerical and sales [staff] had reductions of 6.8 per cent and production, transport, craft and manual [staff] had reductions of 9.6 per cent. What story does that tell you?”

Michael McEntee, head of human resources for aircraft maintenance company Lufthansa Technik Airmotive Ireland, said multinational companies were demanding pay cuts.

“The shift premiums in this country average at 20 per cent. These guys in Germany could tell you that shift pay in Germany is 3.5 per cent.”

He said that getting this message across proved a huge problem at both management and shop steward levels. He said a lot of people could not think beyond simplistic solutions.

“On the management side we have a proliferation of . . . people who are coming in as consultants and saying to the board: ‘All you have to do is call these guys in, put the gun to their head and you will get everything you need.’ End of story and who cares a toss about all the dead bodies.

“On the other side of the coin you have a large cohort of shop stewards who have never negotiated and who, in a lot of cases, have become shop stewards for reasons more to do with their own sick leave – wrap the red flag around me and by the way do not question my sick leave.”