IBEC & Irish Labor Costs

There is a steady stream of propaganda being spread throughout the media at the moment in relation to wages. IBEC/FF are determined to push down the wages of ordinary workers. It is argued by the buisness community that Ireland has priced itself out of the labor market through the successive hikes in wage experienced throughout the celtic tiger. Cuts are whats needed in order to attract/retain investment, we should all be patriotic and take our ''hard medicine''. However, do IBECs assertions have any grounding in reality ?

Lets look at the facts:

Irish private sector wages are 1% below the EU-15 average and 14% below our peer group.

Irish manufacturing wages are 2% below the EU-15 average and 16% below our peer group.

Employers in Ireland pay the lowest social security contributions in the EU at 10%.

Public Holidays/Annual leave in Ireland is below the EU average.

Ireland's tax to GDP ratio is the 5th lowest in the EU.

This understood - Ireland is actually quite attractive with regards FDI, the notion that we are uncompetitive is a myth perpetuated by a social class who want to see an immediate profit at the expense of oridinary workers. There is in fact evidence to suggest that wage reductions will only make matters worse - seeing as it would lead to a decrease in consumer demand, cumulate in higher unemployment which in turn would cost the state more in terms of welfare payments/reduction in revenue. Furthermore, wages only make up 8-9% of total enterprise costs - so wage reductions wont make much difference in boosting exports. The price of capital goods has also fallen 1.7% year on year according the CSO. Capitalists might complain about rents ect. however there is nothing stopping the Gov from forcing landlords to drive down rents, instead of providing buisness with an excuse to offset its costs onto employees.

The notion that Irish labor costs are too high simpily has no bearing in reality, unfortunately this does not stop it being repeated throughout the media on a constant basis. The buisness community spew such propaganda in the hope that society as a whole will internalize it - accept reductions in their living standards and make parihas out of those dissedents who complain.

Sources:

EuroStat: Taxation and Customs Union

Michaeltaft - notes from the front.

Central Statistics Office