IN LAST week's Sunday Independent, columnist Marc Coleman grossly misrepresented my pre-Budget statement.
In a speech delivered on October 7, I declared our intention to ask the Private Sector Committee of the ICTU to spearhead a drive for pay increases if the budgetary adjustment exceeded the 5.1 per cent deficit target for 2014. The objective was to find the best and most painless route to reduce it to 3 per cent by the end of 2015 which is set out in the ECB/EU/IMF/Troika Programme. We will have to grow our GDP from about €168bn this year to over €181bn to achieve it, ie by a cumulative nominal 5.3 per cent. This cannot be done unless we stop suffocating domestic demand which accounts for three-quarters of the economy and which remains in freefall due to austerity policies.
I called on the Government to leverage the €6bn plus Strategic Investment Fund money and any more that can be found, into the economy as rapidly as possible, to provide social infrastructure as well as enhancing productivity and competitiveness for the future. We in the trade union movement have been calling for this since May Day 2011. It is key to meeting the fiscal target and it is also the way to generate tens of thousands of jobs and to alleviate the misery being endured in our society.
Then I went on to say that there is another way to stimulate domestic demand if the Government insisted on over-egging the pudding on the adjustment to impress the financial markets, and that is by substantially increasing pay. One of the key elements of the recovery at the end of the Eighties was that average industrial wages rose by 14 per cent between 1986 and 1989. This significantly boosted Government revenue and private consumption. A rise in real earnings would not dramatically affect our export competitiveness because our real effective exchange rate, (deflated by consumer prices) has fallen by 17 per cent relative to our trading partners since spring 2008 (Source: Central Bank).
The speech was circulated widely among journalists and it is still available on our website at www.siptu.ie. Marc Coleman disregarded all this in his article. Instead, he alleged that the pay increase I was suggesting "will benefit only membership of his Siptu union, which is politically dominated by state sector unions". Our union is not "politically dominated" by any other unions, state sector or otherwise. While we organise more workers in the public sector than any other union, two-thirds of our members actually work in the private sector. Due to our rules and structure, this ratio is reflected in the composition of our policy-making bodies, ie the democratically elected National Executive Council and the delegate entitlement to our Biennial Delegate Conference.
The article presented the impression that the call for a pay increase related to public sector workers. How could such a demand be spearheaded by the Private Sector Committee of the ICTU? Moreover, I had made it clear in an interview on Morning Ireland on Tuesday, October 8, that I was not advocating a departure from existing agreements. Most public sector unions, including Siptu, are party to the Haddington Road Agreement which is scheduled to run until 2016.
Marc Coleman went on to make the case for even more savage cuts in public expenditure, selectively attributing the recovery at the end of the Eighties to a drastic cut of the equivalent of 10 per cent of GNP in three years. He forgot to point out that this only applied on the capital side and that current expenditure went largely untouched and actually rose in one of those years. Moreover, he omitted to advise that it all coincided with a period of growth in the international economy, significant fiscal transfers from the EU and the opening of the Single Market as well as the fact that we also devalued our currency in August of 1986. (See paper by Dr Stephen Kinsella in the Cambridge Journal of Economics 2012.)
Obviously, empirically based, reasoned argument would not have sat well with Marc Coleman's concluding clarion call for the reversal of tax increases on business.
Jack O'Connor is president of Siptu