Tuesday, 28 July 2009

The IDA and the wages debate

Michael Taft: A couple of weeks ago, the Chief Executive of the IDA, Barry O’Leary, jumped into the debate about wages – suggesting they were undermining our ability to attract multi-national companies. He proposed they should be cut (though later he backtracked somewhat, suggesting that he was only referring to a few companies, a few sectors). Still, it was one more hailstone in a hailstorm that has been pummelling us – we must cut our wages to ‘restore competitiveness’.

I could suggest that Mr. O’Leary read some of the posts on this site, or UNITE’s ‘The Truth About Irish Wages’, or research by both ICTU and SIPTU. But I can appreciate he is a busy man. So I’ll just suggest that he read his own website. The IDA makes wonderful play over the fact that we are a relatively low-waged country when compared to other EU countries. From their Vital Statistics webpage they show just how low our labour costs are, using data from the European Federation of Employers. The IDA is so proud of this table that they feature it twice on their website.

They also present comparative data with the UK. On this measurement, Irish wages are higher for all the non-managerial categories. This is not so much a function of actual higher wages, as of Sterling’s depreciation. When the UK and Irish wages are compared through purchasing power parities- Irish wages trail behind as well.

None of this should be too surprising. The OECD recently published its 2007 update of its Benefit and Wages database. It showed Irish private sector wages trailing the EU-15 average by over 7 percent. And when one takes the average of our peer group – the Top-10 economies (excluding the poorer Mediterranean economies) – we trail by over 14 percent.

The question is not whether Irish wage are too high – they’re obviously not. The real question is – on what basis, on what empirical evidence, do the real devaluationists base their contention that our wages are too high?

1 comment:

conor mccabe said...

your argument is fundamentally flawed, Michael. It is based on empirical evidence, when everyone knows that it should be based on a bunch of stuff you've picked up from your girlfriend's mates at a dinner party. Furthermore, you don't have a job in I.T., and your lack of knowledge of computer programming means that you couldn't possibly understand how the real world works. May I suggest that you get a job in a bank, and start using phrases such as "well, in fairness to David McWilliams..."

Once you do that, then we can start talking about analysis. Until then, there is no hope for you - or should I say, "01110100 01101000 01100101 01110010 01100101 00100000 01101001 01110011 001000000 01101110 01101111 01110000 01100101 001000000 01100110 01101111 01110010 00100000 01111001 01101111 01110101"