April 2007 Archives

National Wage Agreement Cop-Out

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Minister Martin's reported willingness to consider opt-out clauses in future national wage agreements for exporting businesses is a bit rich coming from a minister who had more pay rises in recent years than most people in the private sector have had hot dinners.

This cop-out would allow the public and non-traded sectors which are immune to economic realities and real competitive pressures to continue to enjoy unsustainable pay increases. As a consequence our national competitiveness would be further reduced and with corporate tax rates within the EU likely to converge we would see an eastward flight of investment from Ireland. In these circumstances, the only solution may be to abandon the euro and revert to a floating Irish pound. This would improve competitiveness but at the expense of higher prices and interest rates.

The bottom line is that if national agreements are not suitable for the traded sector then they are inappropriate for everyone.

For Richer or Poorer

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Mr X quoted EU statistics (Letters, 5th June) to suggest that Ireland has become more equitable since Bertie Ahern came to power. He indicated that the gap between the incomes of the top 20% of the population and bottom 20% declined from 5.1 times to 5.0 between 1995 and 2005, an improvement of 2%.

It is a pity he did not look more closely into the figures as he would have found that EU countries improved their overall score over the same period from 5.1 to 4.8, a 6% improvement; Ireland's score improved by 12% from 5.1 in 1995 to 4.5 in 2001 and deteriorated by 11% to 5.0 over the subsequent four years; and Ireland had the tenth widest gap between rich and poor out of 28 countries in 2005.

Ireland's score would need to fall to 4 to match the equalities in most Northern Europe states. At the current rate of progress, this will take a hundred years.

Letter published in the Irish Times on 7th June 2007.

Nurses Pay - Symptom of Deeper Problems

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The central issue in the nurses dispute is not that they may be paid too little but that other people get too much, too easily.

For example, the Taoiseach and his cabinet are amongst the best paid in the world; unjustifiably high fees are charged by many sheltered professions offering critical services; price gouging is widespread amongst many local private and public services; house prices are set by an unholy alliance of builders and bankers with predictable results; wage inequities have intensified due to continual use of percentage increases under successive national agreements which, in addition, have mainly applied to the public sector; and superfluous tax reliefs have ensured that people who should pay the most tax can actually pay the least.

The net result is that competitiveness has declined alarmingly and consumer price increases are amongst the highest in the world. The remedial action is straightforward - hold back wages and prices.

The starting points could be benchmarking mark two which must roll back the first one and more; the next national wage agreement must deliver absolute rather than percentage increases; the income tax system must be rebalanced to ensure that the higher rate applies to all higher incomes; meaningful powers must be given to regulators and the Competition Authority; and, most critically, the next Government must be willing to play hard ball with vested interests in the national interest. Predictably, none of these actions feature in election promises.

Letter published in the Sunday Business Post on 15th April 2007.

When the Wind Doesn't Blow

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In his opinion piece on behalf of the Irish Wind Energy Association, Paddy Teahon (2nd April) suggests that Ireland has one of the best wind resources in the world and that wind is the only creditable option to achieve the one-third renewable target. He highlights the main challenges confronting his industry including uncertain policies, moratoriums and planning restrictions. However, he completely fails to mention the greatest challenge of all - uncertain supply of wind. At time of writing, wind is supplying just 13 MW out of a total demand of 3,885 MW, that is 0.33% of demand. Is the wind industry whistling in the wind or in the dark?

Letter published in the Irish Times on 6th April 2007.

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