Nevermind the data, it’s got to be true, it just has to be! Private sector pay cuts. September 30, 2009Posted by WorldbyStorm in Economy, Irish Politics.
Well, there I was, standing in a newsagents scanning the front of the Irish Times and what do I see but those comments by John FitzGerald of the ESRI who speaking in perhaps the most unforgiving environment possible at the Small Firms Association’s annual conference questioned whether
…costs had actually come down in the private sector. “In our modelling we felt that wage rates, for example, would fall by 7 per cent over two years in the private sector. However, the latest data suggests that, in spite of what people are saying, costs are not coming down significantly. They are still rising, according to CSO data.”
He said there had been a 7 per cent wage cut in the public sector, and many of his European colleagues were “staggered” this had been accepted by Irish public sector workers.
That’s quite some statement in itself. One of the tropes abroad in this state is that somehow the 7 per cent (which by the way I’m pretty agnostic about) was entirely minimal. That in international terms it is regarded as otherwise is instructive.
But he continues…
“In terms of where we go from here, it will be important that it is seen that here is some reaction from the private sector and so far the data suggests that there has been no significant cuts in labour costs or wage rates in the private sector . . . Until we see the data from the CSO, there cannot really be further cuts in the public sector.”
What a turnaround in this debate. For up until now the idea has been that the public sector must follow a private sector that has taken all the pain. But… if there have been ‘no significant cuts…in the private sector’… and for the record I know a number of people who have taken wage cuts so it’s not unknown, merely not anywhere near as pervasive as IBEC or the SFA or indeed the median economic commentariat would like us to think… then that necessitates the private sector absorbing pain.
I’m no more convinced by that particular argument than its opposite. Firstly, and in fairness FitzGerald doesn’t use the word pain, job losses across the private sector are a very real phenomenon (I can point also to the loss of contract workers in the public sector and there are many many of us hanging on in similar positions unsure as to what happens next). But as ever, how this can be ‘applied’ across the society seems difficult to gauge. Unless the argument is that the private sector must now impose reductions in pay in order that more still can be cut from public sector wages.
A race to the bottom indeed.
Anywhow… immediately IBEC sprang to the defence of it’s previous position on this matter…
His claims were refuted by a representative of employers’ group Ibec, who said payroll costs had fallen by 12 or 13 per cent in the private sector, although this was not attributable solely to reductions in pay.
“Pay reductions account for around 2 per cent of falling costs, but we’re seeing it in reduced bonuses, reduced working time and unemployment increase,” he said.
Hmmm… a 12-13 percent fall in payroll costs, but only 2 percent from pay reductions.
I think they might want to shore up that argument a little.
Still, yet more evidence that the arguments that we have seen arrayed have been built on partial and anecdotal evidence. And if they remain so thin on matters such as this which are relatively easily amenable to a degree of objective analysis it does make one wonder about other, less transparent matters.