Is it time for wage increases?

[TheBigShort]

I have no problem with pay increases which are market led. If a business can’t get the people they need at the wages they are offering then they will have to offer more.

If a business has more than enough applicants for the jobs they are offering at the wages they are currently paying then there should be no pay increases.

Its too simplistic a method to determine overall income levels of an economy.
As a basic accounting exercise you are correct. But the topic is not about individual companies or even individual workers for that matter.
The topic is about economic policy in its broadest sense - my fault if the topic headline does not make this clear, but my OP sets the tone of ECB economic policy to stoke inflation into eurozone economies through QE.

I, like the people I work with, have no time for Unions or socialism and see no reason for anything other than market forces to determine wages.

Allowing market forces to determine wages is fine if applied in a free market economy. But we dont live in a free market economy, there are too many interfering factors that corrupt the notion of a free market. Minimum wage legislation is an interference, bank bailouts are an interference, energy and transport regulators interfere, RRP interfere, VAT and other taxes, tariffs, and of course you have to deal with the vast range of human emotions ranging from aggression and violence to greed and corruption to passive submission.
There is also the matter of distinguishing between those who create the wealth and those who control the wealth.
All these things, and much more, are variable factors that interfere with the concept of a free market economy.
We are closer to finding life outside the solar system than we are to living in a free market economy.
I do laugh when I get labelled as a left-wing socialist searching for some socialist paradise, especially when it comes from right-wing free marketeers who believe they live in a free market economy.

As a side, I dont know if you are familiar with the Wells Fargo bank scandal in the US. If you have 17 mins to spare, it is worth checking out this clip from the Senate hearing between Senator Warren and the Wells Fargo CEO, John Stumpf. Its a brilliant example of how some people award themselves extravagant salaries and perks on the back of ordinary workers.

https://youtu.be/xJhkX74D10M

We have gone back up to a large extent due to the fact that we have not had pay increases of any substantial value over the last few years. If we did as Dieseblue suggests and just give pay increases to everyone then we’d just lose more jobs.

The issue of pay increases correlates with a growing economy. The economy is growing, and we can point to certain sectors, be it Pharma, Food, IT etc as the generators of the growth. But without much thought, we can readily interpret that such growth in those sectors as being reliant in some form on the availability of a functioning transport sector. Be it the transport of goods and produce to ports for export and import, or the transport of workers from their homeplace to workplace.
So the argument against Luas drivers that "all they have to do is push a button", is mute. What is important is the capacity of those drivers to transport workers across the city - ( im not sure if you ever did check out the Transdev website boasting of its achievements in increased passenger numbers year in year out?) to their place of work, in order to accommodate those other industries in exploiting market opportunities for profit.

[broken link removed] is a good graph on just how crazy it got, driven by massive pay increases in construction and the public sector. Neither of these sectors create net wealth

Again, we are back to basic accounting analogies and understanding the difference between market value and economic and social value.
If the Gardai costs €x bn to fund and is supported wholly out of taxation, then you are correct. But if we got rid of the Gardai, it is reasonable to assume that crime would increase to such a level that the insurance industry would collapse (if there is no law enforcement, why not rob a bank or three). And if there is no insurance, then individuals and businesses become fully liable for injury. This will lead to mass bankruptcies and mass unemployment.

 

[TheBigShort]

By the way TheBigShort, have you read [broken link removed]? (thanks Firefly)

I have now, thanks. Is there any particular reason why you want to share this with me?

 

[Firefly]

But we dont live in a free market economy, there are too many interfering factors that corrupt the notion of a free market.
Minimum wage legislation is an interference, bank bailouts are an interference, energy and transport regulators interfere, RRP interfere, VAT and other taxes, tariffs, and of course you have to deal with the vast range of human emotions ranging from aggression and violence to greed and corruption to passive submission.

I agree with you there and you could add Bertie (the socialist) to the mix and bench-marking!

The issue of pay increases correlates with a growing economy. The economy is growing, and we can point to certain sectors, be it Pharma, Food, IT etc as the generators of the growth. But without much thought, we can readily interpret that such growth in those sectors as being reliant in some form on the availability of a functioning transport sector. Be it the transport of goods and produce to ports for export and import, or the transport of workers from their homeplace to workplace.
So the argument against Luas drivers that "all they have to do is push a button", is mute. What is important is the capacity of those drivers to transport workers across the city - ( im not sure if you ever did check out the Transdev website boasting of its achievements in increased passenger numbers year in year out?) to their place of work, in order to accommodate those other industries in exploiting market opportunities for profit.

I agree with you there, however, during the LUAS strike the company said it was inundated with CVs which would indicate a ready market. To think about how companies view the cost of labour, consider how you compare companies such as when you decide where to buy a TV or who to book a flight with. You pay based on the product / service and price.

 

[TheBigShort]

I agree with you there, however, during the LUAS strike the company said it was inundated with CVs which would indicate a ready market. To think about how companies view the cost of labour, consider how you compare companies such as when you decide where to buy a TV or who to book a flight with. You pay based on the product / service and price.

But that would appear to misunderstand the nature of the dispute, which is understandable given the vastly one-sided nature of the media coverage.
The notion that Transdev should have simply let the LUAS workers go on the basis of their failure to work, and then to hire even lower paid workers from the CV applications would have cost the state possibly hundreds of millions is lawsuits and legal settlements from other companies who lost out on the tender process by offering inferior pay and conditions.
Transdev only operate the Luas on the basis of a winning tender application that beat off competition from other private transport companies.
That application confirmed it would, amongst other terms and conditions, pay its workers on a set salary scale over a period of time. It also allowed for reviews of the payscales every five years, and this is where the dispute began to emerge.
In 2009, when a pay review was due, SIPTU and Transdev management agreed to a 0% pay rise in return for assurances that no redundancies were to be made. The reason for this mutual agreement was twofold. The company was projecting growth in passenger numbers and revenue streams each year for the next five years. But with the economic crash occuring in the backdrop it was up in the air if everything would fall flat on it's face. Hence the neutral position by both sides in 2009. However, both sides agreed to reserve the right to return to this agreement if 1) the company grew as planned regardless of the crash 2) if growth stalled and the company required to impose cost cutting measures.
In 2014, with the crisis receding, and Transdev having achieved its growth targets throughout the period, SIPTU sought as part of the agreement and 5yr pay review to look for pay rises that would have occured in ordinary circumstances. Transdev stalled, citing the continued existence of emergency legislation to cut workers pay. In reality, they just played SIPTU, knowing that as long as Labour Party were in government, SIPTUs hands were tied.
As soon as Labour lost office, within days SIPTU were balloting their members. The infamous 50% pay increase was a result of a claim dating back to 2009 and continuing to 2018 - a ten year pay claim. As representatives of the workers it is their responsibility to negotiate from the maximum position. In any normal circumstances where a company is growing, workers may expect to receive pay rises in the order of between around 1 and 5% a year. SIPTU simply took the max position of 5% for ten years and hence the 50% pay rise claim. It was always a negotiating position and was stated publicly.

 

[Firefly]

But that would appear to misunderstand the nature of the dispute, which is understandable given the vastly one-sided nature of the media coverage.

Would you include RTE in that group because that's my primary source for Irish news?

The notion that Transdev should have simply let the LUAS workers go on the basis of their failure to work, and then to hire even lower paid workers from the CV applications would have cost the state possibly hundreds of millions is lawsuits and legal settlements from other companies who lost out on the tender process by offering inferior pay and conditions.

I never said anything about Transdev letting their workers go, I was merely showing that it was reported that a lot of people applied for jobs there during the strike, which indicates that a lot of people would happily work for the terms & conditions before the increases. If I implied otherwise I take it back. I was also just trying to show how companies "shop around" for labour in the same way as people "shop around" for companies when both make purchases.

Transdev only operate the Luas on the basis of a winning tender application that beat off competition from other private transport companies.
That application confirmed it would, amongst other terms and conditions, pay its workers on a set salary scale over a period of time. It also allowed for reviews of the payscales every five years, and this is where the dispute began to emerge.
In 2009, when a pay review was due, SIPTU and Transdev management agreed to a 0% pay rise in return for assurances that no redundancies were to be made. The reason for this mutual agreement was twofold. The company was projecting growth in passenger numbers and revenue streams each year for the next five years. But with the economic crash occuring in the backdrop it was up in the air if everything would fall flat on it's face. Hence the neutral position by both sides in 2009. However, both sides agreed to reserve the right to return to this agreement if 1) the company grew as planned regardless of the crash 2) if growth stalled and the company required to impose cost cutting measures.
In 2014, with the crisis receding, and Transdev having achieved its growth targets throughout the period, SIPTU sought as part of the agreement and 5yr pay review to look for pay rises that would have occured in ordinary circumstances. Transdev stalled, citing the continued existence of emergency legislation to cut workers pay. In reality, they just played SIPTU, knowing that as long as Labour Party were in government, SIPTUs hands were tied.
As soon as Labour lost office, within days SIPTU were balloting their members. The infamous 50% pay increase was a result of a claim dating back to 2009 and continuing to 2018 - a ten year pay claim. As representatives of the workers it is their responsibility to negotiate from the maximum position. In any normal circumstances where a company is growing, workers may expect to receive pay rises in the order of between around 1 and 5% a year. SIPTU simply took the max position of 5% for ten years and hence the 50% pay rise claim. It was always a negotiating position and was stated publicly.

Interesting insight there. Particularly the bit about "SIPTU, knowing that as long as Labour Party were in government, SIPTUs hands were tied." I thought Labour would be more pro unions?

 

[TheBigShort]

Would you include RTE in that group because that's my primary source for Irish news?

I wouldn't single out any media outlet as being biased on one side over the other. It is my perception from what I read and heard on TV, radio, papers etc.
As an example, the 50% pay claim was derided in many quaters, but I rarely heard any detailed analysis of how it was derived at.
A second example was providing ample air time to a well-known CEO, with a track record of not recognising trade unions, to demean the workers themselves and hurl personal insults at them, even though the dispute had nothing to do with him. Furthermore, no questions asked over his enormous salary and wealth, and what he actually does himself to earn this money.

I never said anything about Transdev letting their workers go, I was merely showing that it was reported that a lot of people applied for jobs there during the strike, which indicates that a lot of people would happily work for the terms & conditions before the increases. If I implied otherwise I take it back. I was also just trying to show how companies "shop around" for labour in the same way as people "shop around" for companies when both make purchases.

Transdev were engaged in a recruitment program to enable their expansion of the tram line, hence the collection of CV's. Im sure their are plenty of people willing to work for less than the rates provided. But that misses the point. Transdev would still be obliged to enter into pay negotiations with workers with a view to improving their pay based on company performance.
Its nice that there are workers prepared to work for less, but I would guess there would be customers willing to pay less for fares too. But it doesn't work like that, prices are set, and so are wages.

Interesting insight there. Particularly the bit about "SIPTU, knowing that as long as Labour Party were in government, SIPTUs hands were tied." I thought Labour would be more pro unions?

A portion of SIPTU members subscriptions goes towards funding the Labour Party. If SIPTU had striked earlier then it could have put a strain between the FG/Lab coalition.
I may have got my timelines wrong, but if you go to SIPTU website, you can see from Jan 2016 press releases and onwards, the sharp rise in actions relating to industrial disputes.

 

[Gerry Canning]

On thread there are 2 clear and opposing views.
Both have merit and both have flaws.

It appears that life expenses for workers , eg rents ,are increasing.
It appears that wages for workers have reduced since (fluffy) times.
It appears that (austerity ) type taxes have reduced real income.
It appears that unionised workforces are to the fore in requiring more .( if unionized workers achieve more the rest will get more)
It appears that most employers are making more profits.
It appears the economy is (mended) to a fair degree.



If things have/are improving then of course its time for real wage increases.
It is too trite to yowl about (the economy is still fragile) or ( we still have too much debt), ie, the Dim Capitalist model !
It is too trite to yowl about ( companies are now in good profit) = a pay increase.ie . The Dim Socialist model!

No harm being back to sectoral type negotiations,
Common sense will rule in most cases ,
1. If employers are leg-lifting = long strikes.
2. If workers/unions are leg-lifting = jobs gone.

In spite of what passes for Newspapers/News , most employers/workers are sensible and most things get sorted before they make headline grabbing stuff.

 

[PGF2016]

It appears the economy is (mended) to a fair degree.

The country is still running a deficit and has a large pension time bomb. Now is not the time for large scale wage increases.

 

[Purple]

I find it amusing that people accuse the Irish media of being right-wing.

It is a highly unionised sector and the main media outlet in the country, RTE, is almost totally unionised and the employees are effectively on semi-state/public sector contracts.

Note that employees are referred to as “workers” by just about every media outlet. That is a quintessentially socialist term.

Note that the pay increases being looked for by the protected sector are referred to as “pay restoration”, the term used by Unions to justify the increases they are looking for.


My gripe with the media in general, and RTE in particular, is the tabloidization of their news coverage. Every story on RTE, from the evening news and Clare Byrne Live is covered from a human interest point of view. There is a report with an ashen-faced mother/father/victim etc. and lots about how they feel. Once the emotions of the viewer have been stimulated there follows a panel discussion grounded firmly in the emotive specifics of such cases. The broader causes of the issue, the personal responsibility of the protagonists, the negative societal impact of the proposed solutions or the financial costs and their implications on other social programmes are never discussed.


Socialist or realist, I would like to see the standard of the discussion being raised from the tabloid and the emotive.

 

[TheBigShort]

I would agree with a great deal of that sentiment (Gerry Canning) but the topic has gone off track somewhat (im as much to blame for that, a poorly worded title if anything).
Regardless of whether the economy is growing or not, regardless of whether that should result in wages increaes or not, the real topic here is the ECB QE money printing program designed, apparently, to stoke inflation into eurozone economies.
My view is that this is lunacy and that ultimately wealth will be destroyed, companies will fail, wages will fall, and we will be back to another deep recession before too long.
Instead, I think governments could borrow from the ECB at 0%, to initiate capital spending programs. Resulting in real job creation, real wage growth, real inflation, real debt reduction.

 

[Gerry Canning]

PGF2016.

I understood the deficit is workable ie we can service everything ie we are ok ish ?

The Pension time bomb is on my reading, still solvable and indeed maybe a consequence of lower than need be wages in sectors.

No one said large scale increases and, I take from your tone and I agree that we need to be careful about increases.

Over the years I have worked, there has never been a good time for wages to increase , but c,est la vie !

 

[Purple]

On thread there are 2 clear and opposing views.

Both have merit and both have flaws.


It appears that life expenses for workers , eg rents ,are increasing.

It appears that wages for workers have reduced since (fluffy) times.

It appears that (austerity ) type taxes have reduced real income.

It appears that unionised workforces are to the fore in requiring more .( if unionized workers achieve more the rest will get more)

It appears that most employers are making more profits.

It appears the economy is (mended) to a fair degree.

The economy is far from mended.

Many employers are still struggling under debts and in dire need to investment into businesses which haven’t seen a profit in nearly a decade.

If unionised employees get a pay rise the non-unionised employees will have to pay for it and so will probably end up with less.

We haven’t had any austerity in Ireland; we continue to borrow to live beyond our means.

If people have less money due to higher taxes then reduce taxes.

If things have/are improving then of course its time for real wage increases.

Why? If my employer invents a good piece of technology (and I had nothing to do with it) and makes more money why should I get a pay rise?

It is too trite to yowl about (the economy is still fragile) or ( we still have too much debt), ie, the Dim Capitalist model !

It is utterly trite to ignore reality. We did that for a decade and a half and ended up bust.

It is too trite to yowl about ( companies are now in good profit) = a pay increase.ie . The Dim Socialist model!

That’s what you just said above; “If things have/are improving then of course its time for real wage increases”.

No harm being back to sectoral type negotiations,

Common sense will rule in most cases ,

1. If employers are leg-lifting = long strikes.

2. If workers/unions are leg-lifting = jobs gone.

Pay etc should never be negotiated on a sector by sector basis. It should be on an employee by employee basis.

Nobody should get a pay increase due to someone else’s hard work.

In spite of what passes for Newspapers/News , most employers/workers are sensible and most things get sorted before they make headline grabbing stuff.

True.

 

[Purple]

I would agree with a great deal of that sentiment (Gerry Canning) but the topic has gone off track somewhat (im as much to blame for that, a poorly worded title if anything).
Regardless of whether the economy is growing or not, regardless of whether that should result in wages increaes or not, the real topic here is the ECB QE money printing program designed, apparently, to stoke inflation into eurozone economies.
My view is that this is lunacy and that ultimately wealth will be destroyed, companies will fail, wages will fall, and we will be back to another deep recession before too long.
Instead, I think governments could borrow from the ECB at 0%, to initiate capital spending programs. Resulting in real job creation, real wage growth, real inflation, real debt reduction.

I'm with you on all of that; if the choice is QE or borrowing for capital expenditure then the latter is by far the best option.

 

[Purple]

I have now, thanks. Is there any particular reason why you want to share this with me?

Is speaks to the danger of what you are concerned about (QE) and the danger of the state controlling such a large part of the economy. Just because the state doesn't own a business it still effectively controls a large part of it when it takes two thirds of peoples marginal income in payroll and sales taxes and redistributes so must of the nations wealth.
There is a reason we (Europe) are falling behind Asia so quickly and indeed slipping against the USA at the same time. We are closer to a command economy now than at any time in our history.

 

[Purple]

I would agree with a great deal of that sentiment (Gerry Canning) but the topic has gone off track somewhat (im as much to blame for that, a poorly worded title if anything).

Discussions like this go off topic no matter how you word them.
Reading your first post again the topic is quite clear.

 

[Firefly]

Instead, I think governments could borrow from the ECB at 0%, to initiate capital spending programs. Resulting in real job creation, real wage growth, real inflation, real debt reduction.

I would agree with you but I wouldn't do the latter until we are comfortably running a current account surplus and are paying down our national debt. Even at 0%, the money will still need to be repaid by our children / grandchildren. It's like all those buying cars on PCP at the moment - they're having a great time now but it won't be as funny for them down the road when the balloon payments need to be repaid.

 

[PGF2016]

No one said large scale increases and, I take from your tone and I agree that we need to be careful about increases.

Sorry, badly phrased. This captures what I meant:

Pay etc should never be negotiated on a sector by sector basis. It should be on an employee by employee basis.

 

[Firefly]

Its nice that there are workers prepared to work for less, but I would guess there would be customers willing to pay less for fares too. But it doesn't work like that, prices are set, and so are wages.

Prices change all the time! Granted in the case of LUAS I haven't seen them come down, but lots of other businesses raise and reduce their costs continually.

 

[Gerry Canning]

Purple,

As usual; agree mostly with you. (I know we could and should do things smarter)

If we require services ,we can,t really reduce taxes.

Decade and a half = bust.
Caused by weak management and greedy capitalism,
I hope with current uplift we are not re-cycling into another bubble ?

Someone invents good technology , then he/she must largely benefit, but generally he/she benefitted by our paying for roads/education , so its fair that the rest , (in that case employees, whose taxes paid for infrastructure ) get something.

Pay to be done employee by employee.
Ideally = yes,
But gets caught poor reviewing .
Generally , give a set wage and promote incentivise better workers . (hard to do well).

Utopia in wages is far off !
Reckon things level off every decade.

 

[Purple]

Decade and a half = bust.
Caused by weak management and greedy capitalism,
I hope with current uplift we are not re-cycling into another bubble ?

Financial collapse caused by utter incompetence by the people running our banks and the people running the Central Bank, Financial Regulator and the Department of Finance. Greed in only a problem when it trumps competence and rational behavior. Of course the greed and stupidity of the people who did the borrowing is just as big a factor. We are after all grown-up's and therefore responsible for our own decisions.

The rest of the collapse was caused by a narrowing of our tax base until only the top 20% of earners made any meaningful contribution through income tax, a massive increase in the size and pay rates of the state sector, a massive increase in the size of our welfare payments and a massive increase in the amount of money we wasted, sorry, spent, on Health (mainly in the form of pay increases). That bit had nothing to do with greedy capitalism and lots to do with the greed and selfishness of lots and lots of other people.

The latter is by far the biggest factor in our current woes and yet it is that which the be-whiskered brothers now wish to replicate.