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There’s more costs than labour costs… or don’t ask the question if you don’t like the answer. July 31, 2009

Posted by WorldbyStorm in Economy, Irish Politics.

Crocodile on Wednesday pointed me to an interesting snippet from the RTÉ news that morning, an interview with Denis Brosnan chair of the mid-west Task Force. The line taken by RTÉ is fascinating. The heading for the piece is “Government urged to reduce labour costs”. What’s odd though is that Brosnan doesn’t emphasise labour costs over all other costs, and is indeed at pains to articulate that this is a much broader problem of costs, despite the interviewer attempting to shepherd him down that line. Also of interest is the glaring fact that the interviewer has a somewhat vague idea – clear from the transcript – as to what the function of the Report is…

Interviewer: Well the Mid West Task Force was set up following job losses at Dell… we’re joined by it’s chairman well known business man Denis Brosnan. Can we deal first with the Reports recommendations about reducing labour costs. How important a part of this Report are those recommendations?

Brosnan: I don’t think it’s labour costs alone… basically the country itself and the mid-west region has become cost uncompetitive. It’s the total area of costs… in the mid-west there’re fewer tourists coming because we’ve priced ourselves out of a lot of markets. In the area of manufacturing we’ve priced ourselves out of markets… so it shouldn’t be labour, virtually in all areas of costs in Ireland are out of line with any competitor.

Interviewer: And what are the specific proposals in this report about reducing those costs?

Brosnan: Well the report is basically about unemployment and how to reduce it. There are 36,000 on the Live Register this year… it’s growing rapidly. It’ll peak at 50,000. So what we’re saying to government is in the short term all you can do is get people to stay in education, have community schemes, get involved in infrastructure. In the second half of the Report we’ll look at how to create jobs, but it’s impossible almost to be looking at the creation of jobs as we continue to lose them and as we do virtually nothing about cost-competitiveness.

Interviewer: We heard earlier from FG TD Kieran O’Donnell, he welcomed the job creation proposals in the report but he shied away from any suggestion that there be a reduction or review of the minimum wage or decreases in social welfare payments.

Brosnan: Well we’re not [sigh]… we said they need to be looked at. Everybody has a choice to make. Perhaps Government more than anybody else has a choice to make that we cannot get new manufacturing to come into this region or to many parts of Ireland while we’re uncompetitive in the area of labour, but let’s not think of labour alone, we’re seriously uncompetitive in the area of energy, which is electricity and gas, we’re seriously uncompetitive in many other areas, the area of professional services, everywhere we’re uncompetitive so if we don’t tackle it…then we have the choice of very high unemployment until people can emigrate again.

Interviewer: So in other words will this exercise have been pointless unless the Government doesn’t take on board the recommendations on making ourselves more competitive.

Brosnan: I don’t think they have to take on board all our recommendations but certainly it makes the task almost very difficult if not impossible for IDA, Enterprise Ireland and all the agencies to persuade foreign investment that Ireland is a good place to invest.

Interviewer: Will the final report touch on rationalisation of the agencies themselves. You saw the McCarthy Report recently suggest that Shannon Development shouldn’t have any role in the future creation of jobs and its functions should be transferred to Enterprise Ireland and the IDA.

Brosnan: Well we’ve met all the agencies. We’ve met 24 bodies in compiling this Report and part of our second stage and final report will be to get the agencies back and we want to meet them, and we think there’s a lot of duplication there. Whereas we mightn’t go as far as McCarthy which was very much get down costs get agencies under control but certainly there is duplication there and we find we have found for investors that they’re very much confused who they go to. They would like a one-stop-shop.

Interviewer: So the final Report could well recommend that there be some elimination of red tape.

Brosnan: Well I wouldn’t like to say that just yet. But we will be calling the four or five agencies back in again and asking them to present to us and they have been very good so far…

And so on… there’s a wrap up where Brosnan reiterates that people staying in education and job growth is the only way to prevent people joining the Live Register. That’s a depressing prospect, isn’t it?


1. Fergal - July 31, 2009

Looks like another chapter in this one-sided class war.How many RTE presenters would work for the minimum wage?Before this you had Martin declaring that the minimum wage(MW) needs to be discussed,that we had the “second highest MW in Europe”.Even this contains a tissue of lies.A quick internet search shows that our hourly rate is behind Luxemburg(1st) and backward,over-regulated,overtaxed France(2nd).In the relative purchasing power league we come 5th.
What should be on the table is a maximum wage.If the state accepts low-paid work,actually lauds it in the interests of competition,then those who seek a progressive state should be arguing the case for a maximum wage.
Renting commercial property here must be astronomical.How come no TDs talk about capping rents?Running a restaurant in Dublin must cost an arm and a leg as rents are so high,as is insurance,supplies and energy but the media insists on hammering the lower paid.The realist in me says that the class of people who let properties tend to vote for FF and FG.The cynic in me believes that larger companies are protected from high rents through the IDA/Enterprise Ireland and it’s the small operator who pays the full whack.
It looks like we’ll all end up paying more taxes not for better public services,more social equity,solidarity with the poor,and employment but for worse public services,less social equity,solidarity with the rich and powerful(banks and property speculators) and more unemployment.
What a prospect!On a more positive note…..worms do turn..


Tim Buktu - July 31, 2009

The idea of a maximum wage is interesting. In the London House of Commons, a bill to set a maximum wage will get a second (and final!) reading under the ten-minute rule. any chance we could get that discussion going here?


WorldbyStorm - July 31, 2009

A maximum wage bill… bleeding hell…


2. Drithleog - July 31, 2009

of course a reporter worth his / her salt would have asked how much Denis Brosnan and his task force mates are costing the taxpayers and indeed how many jobs have they created since being established in the wake of the Dell pullout.

It’s time that trade unionists in RTÉ realised that while it’s the unemployed and low-paid who are being targetted one day, it could be them tomorrow. A bit of social solidarity would be helpful and stop being mouthpieces for right wing economics.


WorldbyStorm - July 31, 2009

It is a bit contradictory, isn’t it? I’ll be we’ll be told that’s objectivity. Well. Perhaps.


3. Mack - July 31, 2009

Good point. The focus should be on reducing other costs first, and only reducing wages as a last resort (if necessary at all).

Fergal –

“Renting commercial property here must be astronomical.How come no TDs talk about capping rents?”

Not sure about capping rents, but contracts that only allow upward revisions (or favour upward over downward revisions) should be illegal.


4. WorldbyStorm - July 31, 2009

Mack, that would be my view, to an extent. It depends of course on the global situation (in the country)…

BTW, if you’re the Mack who posts over on NOTF I have a response to your questions but I forgot to put it up, apologies…


5. Niall - July 31, 2009

Reducing the minimum wage sends a message that other moves just don’t. It makes people feel like something is being done. People are so frightened, and FF knows that if they want to get the media on-side, this is the kind of dramatic move that gets good headlines.

While such a move might be selfish on the part of the government, the interesting question is to what extent the government should play the image game. While no economist, it seemed to me that while bank nationalisation might have been the logical option, the headlines such a move could have generated in the financial capitals of the world would have been unfavourable. To what extent should the government court media/investor approval?

And of course, we also have to get people spending, which is difficult with all of these doom and gloom headlines. How does the government release accurate information to the public without creating an atmosphere where thrift helps to sink the economy?


6. WorldbyStorm - July 31, 2009

That’s the central paradox isn’t it Niall? Cut the minimum wage and one guarantees that spending will slump further and that in a cohort who spend almost all that they earn. And it’s like that all the way out. I spent a few years working for a manufacturing/wholesale group of companies and one really got a sense of how various costs impact (including labour too) and that makes me wonder how sustainable the deflationary model is. Like, we can cut wages, so far… but then we have to ensure that other costs in the economy go down i.e. food/energy to name but two and there it seems to me that we could lose control of the vehicle very rapidly indeed. Internal producers/suppliers may well be able to keep those and all other costs low, but anything imported is going to be hugely problematic.

A huge gamble. It really is.

I think you’re dead right that the optics is something followed very closely by the Government. For better and for worse.


7. steve white - August 1, 2009

who is the interviewer?


8. WorldbyStorm - August 2, 2009

good question steve, I’ll have to go back and check.


9. That NAMA bailout… « The Cedar Lounge Revolution - September 4, 2009

[…] how labour costs have been – in the media – made out to be a central villain of the piece, when it is clear, as others even on the […]


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