Unions are not under threat from employers but foreign competition, writes Turlough O'Sullivan
Today will see a most extraordinary event. The winners of an international competition are marching on the streets - not to celebrate, but to protest.
In pay terms, Irish workers have sprinted far faster than their European neighbours. Over the past 10 years wages have risen by almost 70 per cent while, in the rest of the EU, wages have risen by just 28 per cent.
We have combined this with a regime of low income tax. Wednesday's Budget continued to boost living standards with its substantial increases in income tax bands and tax credits. It is against this background that the trade unions of Ireland are calling a work-stoppage protesting about "a race to the bottom". It does not stand up.
Yes, the protest is also against the background of one particularly difficult industrial dispute in Irish Ferries. Whatever one's views on that dispute, it is very difficult to understand how trade unions can justify calling for a national work stoppage when discussions are under way at the Labour Relations Commission (LRC) on a formula developed by the Irish Business and Employers Confederation (Ibec), the Irish Congress of Trade Unions (Ictu) and the Government.
The Government and Ibec have already agreed to engage in the next partnership talks with Ictu on the issues raised by the dispute in Irish Ferries. On this basis, the reasons for the protest should have dissolved last Sunday evening.
Following exhaustive discussion and consideration between employers and unions at the National Implementation Body, there is already an agreed framework for getting a solution to the Irish Ferries dispute. These discussions also broke the log-jam that had prevented discussions on a national agreement to follow the present three-year partnership arrangement "Sustaining Progress", which is due to expire shortly.
The trade unions have not properly explained why they are persisting with this damaging work-stoppage or why they think this is more constructive than building on last weekend's agreement.
Our young people live in a very different world to that of their parents and grandparents. They are not caught in the time warp that puts employers on one side and employees on another. They know that everyone survives and prospers by working together to sell goods and services to customers who want good value.
They live and thrive on a world stage. They know that no one owes them a living. They know that actions have consequences.
Unlike them, those organising this march have lost sight of the real world. They are right that their members are under threat but this threat is not from the vast majority of decent employers, the Government or anyone else at home. They are under threat from those who are producing similar goods and services in other countries and selling them at a cheaper price. It is time to wake up. We are losing our competitive edge. That is what the social partners should be united in addressing.
Wages are rising faster here than anywhere else. In 2004, the annual average employee in Ireland cost €38,100 per year. This is total remuneration paid by the employer and includes taxes and social security contributions. The comparable amounts in other countries are €33,200 in Germany, €28,400 in Spain, €11,300 in Hungary and €7,700 in Poland. These are all EU members and, as we know, there are even lower wages further east.
Suggestions that Ireland's current economic model is delivering a better return to capital than to labour are incorrect. Indeed, the National Income and Expenditure data for 2004, released just yesterday by the CSO, shows that business and other profits increased by just 2.6 per cent last year while employee remuneration grew by 8.9 per cent. This demonstrates that the opening of the Irish labour market to residents of the new member states in 2004 has not benefited business profits over employee wages.
It is not just pay that is threatening our jobs. Non-pay costs such as waste collection, insurance, professional services, rents, local authority charges, energy and transportation are rising much faster than general inflation. In the two years to 2004, inflation went up by 5.9 per cent but these costs to business rose by 19.1 per cent.
This should be setting alarm bells ringing. Because of international competition, Irish industries cannot pass these extra costs on to customers. If they did, they would lose business. Instead, they have been forced to reduce their prices to meet competition. Factory gate prices have fallen by just under 12 per cent in the five years to date.
Manufacturing companies cannot survive with their costs rising and their sales income falling. No household could survive if its costs rise three times faster than the rate of inflation while its income falls. Business is no different.
This squeeze is taking its toll on jobs. Manufacturing industry is the heart of the Celtic Tiger and it is under intolerable strain. Some 33,400 manufacturing jobs have been lost over the past four years. Meanwhile, the public sector has recruited an extra 73,800. In quarter three of 2001, manufacturing industry employed 249,900 and the public sector (public service, health and education) employed 335,500. In quarter two of 2005, manufacturing industry employed 216,500 and the public sector employed 409,300.
The Irish economy is losing muscle and is gaining fat.
Policymakers, those in protected jobs, and those disrupting their working lives today should take a long, cold look at the big, bad world out there.
This is not the time to disrupt business and to tell the international community that we are incapable of solving our problems through dialogue. Instead, we must show our determination to get back into the race and compete successfully.
Turlough O'Sullivan is director general of the business and employers organisation, Ibec