‘Considerable scope’ for private sector pay hikes, unions say

Trade unions have said there is “considerable scope” for increasing pay in private sector companies next year.

The Irish Congress of Trade Unions (Ictu) on Wednesday issued formal guidance to its affiliate member unions re-iterating its view that they should seek annual rises next year of at least €1,000 or 4 per cent - whichever figure is higher.

“Achieving the rate of increase suggested will protect the living standards of workers, increase their spending power and give them a fairer return for increased productivity,” Ictu’s private sector committee said in a bulletin.

The committee said that while some progress had been made in recouping earnings lost during the financial crisis, data showed that in general “there is still some considerable ground to be made up”.

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“In the last five years, hourly earnings have been essentially unchanged. In Quarter 3 of 2011 hourly earnings stood at €21.60. In Quarter 3, 2016 hourly earnings are €21.55,” it said.

“Average weekly earnings have increased marginally over the same period, from €688.58 in Quarter 3, 2011, to €701.87 in Quarter 3, 2016 – an average increase of just 0.4 per cent per annum.”

Wage share

The bulletin said “Ireland’s wage share was very low as a percentage of GDP, when compared to the UK, the US and the EU”.

It said it was very difficult to forecast inflation “but a baseline assumption of 2 per cent per year over the next five years” was reasonable.

The bulletin said the Department of Finance was projecting labour productivity growth of 1.4 per cent in 2017, 2018 and 2019.

“If labour productivity grows by 1.5 percent then labour will have to receive an increase of 1.5per cent in compensation (leaving aside additional compensation to account for inflation) just to maintain its current share of total compensation (leaving aside employment growth or decline).”

Ictu said the position of private sector companies had been improving over the last five years.

“Increased domestic demand is reflected in higher VAT and excise receipts, while improved profitability is being reflected in higher corporation tax receipts. Gross operating surplus (GOS) of companies has been on an upward trajectory since 2009 and passed the pre-crisis high in 2014. GOS increased dramatically in 2015 but we can assume most of this is related to Corporate tax management and the shifting of assets across jurisdictions.”