Monday Interview: Unions' demand for 4pc pay rise in private sector a 'try on' - Ibec's McCoy
Ibec CEO Danny McCoy pulls no punches when it comes to industrial relations, writes Anne-Marie Walsh
The leader of the country's largest employers' group has described unions' demand for a 4pc pay rise for private sector workers next year as a "try on".
Ibec CEO Danny McCoy said there was no justification for an across-the-board wage increase, although he said the economy was "back to Celtic Tiger levels of activity".
Mr McCoy said experience of that time showed "things can turn quite quickly" and warned that Brexit could threaten the future of the European Union. He also said people's disposable income had surged, although this was not part of the popular narrative.
In an interview with the Irish Independent, he also described the concept of a 'living wage' as "complete bunkum" and said only increases in employees' productivity at work justified wage hikes.
However, Mr McCoy, a former senior economist at the Economic and Social Research Institute and Central Bank, also said the Government may be able to afford a pay rise for public servants but should reject union demands for full restoration of the pay cuts they suffered during the recession.
A total of 71pc members of Ibec have said they expect to give wage hikes worth 2pc of pay in 2017, similar to the last three years.
Its members represent the employers of over 70pc of the private sector workforce.
Mr McCoy said there may be room for pay rises of 4pc at firms that can afford them, but this should be negotiated at local level and not because "someone at Liberty Hall" said so.
He said there had been a huge surge in disposable income, although this was "not part of the narrative that's out there". He said the Central Statistics Office reported that Irish households experienced an increase of nearly 6.5pc in disposable income last year, while Ireland was among the top 10 countries in the world in terms of average income.
The employer representative said this was due to more people working, workers getting more hours, wage increases and tax cuts.
He also said Irish living standards were spectacular and the dole paid here was twice its level in the UK, despite the fact that price levels were not twice as high.
Mr McCoy said Irish people had huge wealth as there was very high levels of home ownership.
The private sector union leaders of the Irish Congress of Trade Unions recently set a benchmark of 4pc for pay rises next year, or a minimum of €1,000 per worker.
When asked if he felt it was realistic, Mr McCoy said: "No, it's not, not at all. In fact, it's a try on."
He said the demand was "kind of pivoting off the fact" that public sector unions were back in a debate with the Government, so the private sector unions of ICTU wanted to feed into a narrative that there's been no pay restoration in the private sector.
"And the reality is that going back to 2010, when the Troika first arrived here and my first conversation around this table, as it happens, with (ex-IMF chief) Ajai Chopra, was that they were asking us what did we think would happen in 2011, so we said 25pc of companies will be paying pay increases next year and the median will be 2pc," said Mr McCoy.
"And they looked at us, going 'You're nuts. You're bust. That's why we're here'."
But he said exports in Ireland had a record year and in 2011 25pc of employers gave pay rises.
Mr McCoy said that the unionised portion of the private sector workforce was now less than 20pc and unions should be careful, particularly at companies where there was a capacity to move operations outside Ireland like Bausch and Lomb.
When put to him that unions would give employers an 'opt out' of paying increases if they opened their books to show why, he said: "That's big of them."
"A more enlightened union leadership would behave more properly towards those companies rather than issuing dictats," he said.
He said those who threw open their books were at a disadvantage to their competitors and this should not be determined "by a dictat by Jack O'Connor".
"No good turn goes unpunished," he said.
"Staff can see what's going on. There are many proxies, including orders, and the volume of production."
He said it would be a fairly ignorant workforce that did not know how its employer was doing.
"It is not up to trade union leaders sitting in Liberty Hall to say we want 4pc right across the private sector," he said. "It's a nonsense."
Mr McCoy said inflation was never a justification for a pay rise and there was no rationale for pay rises now as inflation was falling.
He said if the cost of living was used, unions had no incentive to keep their members' expectations down.
"The lesson of the 1970s was that if [pay was] indexed to prices, unions didn't give a monkey's what the inflation rate was."
He said if inflation was 20pc, there would be an expectation of 20pc pay rises.
He also said the cost of childcare and housing should not be mediated at the workplace.
"Why should employers be taking account of the living circumstances of their workers?" he asked.
"When somebody shows up at work, as an employer their circumstance should be of no concern when you come in the door, because if you take the world in which we live in, in the politically correct world, you're supposed to be blind to difference.
"So, if you're coming from a household that has 10 kids, with a single income earner, taking a bus ride five hours away, all you should be concerned about is is that worker productive when they get here? And their productivity should be rewarded with a fair wage but their circumstances should be irrelevant. So the living wage concept is a complete bunkum."