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Challenges for workers in 2017

Posted on January 06, 2017 by Tom Healy

Tom Healy, Director NERI
Tom Healy, Director NERI

By now many a new year resolution has been ‘postponed’ until the days get a little longer!  What immediate challenges arise for workers in Ireland in 2017?  These are about the staple bread and butter issues of (i) Wages, (ii) Jobs .......and not forgetting pensions!

Wages

Wages have been remarkably flat over an eight-year period with the exception of the high-tech sector and certain occupations in keen demand.  As the Irish economy continues to recover from a deep recession and financial shock there is mounting pressure to increase wages at least to a level and pace of growth that matches ‘underlying’ economic growth. Alas, ‘underlying’ economic growth has become extremely difficult to measure due to the tax-avoiding behaviour of certain multinational enterprises (readers may note this blunt manner of expression). While the official price inflation measure has been reasonably stable over recent years it is certainly the case that rental costs, motor insurance, public transport, private health insurance for those who belong to the top tier of our three-tier non-national health service and other charges and levies that crept in over the austerity years and are here to stay.  Restoration of ‘living standards’ as measured by net cash earnings from employment will take time. Some occupations and sectors as well as some categories of the self-employed ‘liberal professions’ have hardly seen any dent in living standards since 2008 (thought personal income taxes were increased from a very low base in the period 2009-2010).  In both the private and public sectors, employee workers will, very understandably, seek as rapid as possible a restoration of real wages over the coming period.  In the face of this there will be strong resistance from the predictable sources urging caution, delay and citing the uncertainties of Brexit (not to mention Trump) to resist any wage increases that impinge on public expenditure or cost competitiveness. There is a whole army of media commentators, economists and politicians to argue the case for cost-containment as the only relevant consideration in town.

Jobs

Unemployment has not gone away. A lazy assumption seems to have gained ground in the last few years that when the unemployment rate is somewhere below 8% (why 8%?) then the country is close to ‘full employment’. Any lingering unemployment is described as ‘structural’ or ‘frictional’. Moreover, ‘full employment’ understood as consistent with an unemployment rate of under 8% is cited as grounds that the Irish economy is ‘overheating’ and that, as a consequence the brakes need to be put on wages generally across the economy as well as on public expenditure because the government deficit (or what economists call the ‘structural deficit’) is too high. Absent from such analysis is a more comprehensive measure of ‘under-employment’ that takes account of involuntary part-time hours as well as the ‘discouraged worker’ effects of under-employment. Just as important as the level of employment and rates of participation in the workforce is the quality of work. This concerns the level of pay, social protection, worker participation in decision-making and other factors.  Many speak of the rise of the ‘gig economy’ in which more and more people do ‘gigs’ here and there online or offline but do not hold down a ‘job’ in the more traditional sense of the term. A key challenge now and in the coming years is the extent of inter-generational worker solidarity.  Unequal pay for equal work is a violation of the most basic trade union principles. Restoration of parity of treatment will take time and effort.  Yet, the ‘pay’ of workers is not just about rates of pay today but entitlements to ‘pay’ in the future when people are sick, on parental leave or in retirement. This leads to the next big challenge …

Pensions

A boring subject and not one that anyone under a particular age wants to hear about. Who cares about actuarial estimates, minimum funding standards, defined benefit versus defined contribution, career-average versus end-of-career and AVC’s?  We should care if for no other reason because we are likely to live longer (unless some completely unforeseen plague of extreme obesity, pollution or climate change reverse the remarkable progress in life expectancy in recent decades across the developed economies). Those of us likely to retire within the next, say, twenty years will need to be reasonably confident that there will be enough workers to pay for our nursing and/or hospital care. Sorry to be so blunt this early in the new year! Pensions is a big ticking clock in Ireland because it doesn’t explode as quickly or dramatically as in other countries due to our unique demographics (late fall in births and high youth inward migration except the period of 2009-2014). We should think of pension entitlements – whether related to an occupation scheme for the less than 50% of employee workers covered by such an arrangement – as a form of ‘deferred income’. OK we may not live long enough to draw a pension. But, most of us will. There is a very high risk that we will make it to 65 or 70 if we haven’t already! The issue of pensions is part of a bigger question to which I now turn..

Social wage

You will not hear this term too often. It covers all the benefits – immediate as well as deferred – of health, public housing, education and income protection.  The way we do ‘social wage’ in Ireland is copied from the Anglo-American world and modified in some ways. Essentially, we rely a bit more on private endeavour and individual responsibility than is the case in mainland Europe (and I am not just talking about the Nordic countries). Reliance on private responsibility so much might be acceptable if we inherited an equal playing pitch or if everyone was prepared to pay a fair share by way of taxes to support a good and adequate ‘social wage’. Not so here and not so now. Populations across the world have been seduced by the music of ever lower taxes – personal and corporate. So powerful is this music that even many workers find it difficult to resist the mantra that we ought to pay less taxes and, thereby, maximise the ‘cash net wages’ we get every week or month.  Sometimes we fail to ‘join up the dots’ so that a hike in public transport costs or private health insurance (for example) leaves us no better off than before tax cuts.

And these are only some of the challenges facing workers in 2017. It would be easy to miss the really important stuff like:

  • Climate change and carbon foot print (how do we save the planet and create new types of industry and jobs?)
  • Technological hallowing out of many jobs and industries (how do we deal with automation and digital economies?)
  • The power of labour to defend and advance its interests in an increasingly unbalanced labour market and society?

Clear, constructive and ‘out-of-the-box’ thinking is required to advance awareness, understanding and practical action to advance new policies. The current generation of trade union activists and leaders can make all the difference. There is a need to move from the defensive and from the survival mode to the proactive and cooperative especially when many outside the ranks of trade union membership and involvement need to be included and associated in joined-up thinking and activity.

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