Friday, 14 August 2009

Profiting from the downturn

Nat O'Connor: We are reminded again in today's Irish Times that some people are not living in the same economy as the rest of us. Despite cuts to frontline wages, managers in manufacturing are giving themselves a pay rise of 6.5 percent.

One of the results of the recession is that it shows how contingent our economic systems are on state intervention, especially as the insurer of last resort. Today's evidence is a further reminder that, once the economic system is patched up at our expense, businesses will return to business (and profit) as usual.

So, since we are funding economic recovery by risking our money on buying bad debt from the banks, maybe it's time to start raising our voices about the need to regulate profit; for example, by linking managerial wages to those of frontline staff.

3 comments:

Tomaltach said...

once the economic system is patched up at our expense, businesses will return to business (and profit) as usual..

I think it's far to easy to lump everything into one big vague blob. The main problem internationally was the financial system. In Ireland that was the main problem too, except here it was compounded by a decade of fiscal mismanagement and the disastrous nexus between politics, banking, and developers. The economic system, however, in general, wasn't the problem.

This blog site is becoming a general ranting ground against all things business. A general left wing whinge rather than a robust, fact based, critique of orthodox political economy.

The vast bulk of businesses around the country had absolutely nothing to do with creating our current problems and are clearly haemoraging workers and many of them winding down. They aren't particularly enjoying anything 'at our expense', only misdirected and self-defeating scorn. It's time to be a bit more specific and realistic.

And oh my god, shudder to think if they might return to profit! Devil take them and their damned profits. The last thing we want to see is successful businesses creating more employment and generating more taxes.

On the link between wages of managers and those of frontline staff. I think it is fair to be critical of managers taking pay increases while front line staff suffer cuts. I note the survey said average manger pay was 61k while production staff were taking 33k. Now what about the detail. What kind of link are you suggesting? A simple ratio? Would it vary across sectors? Who would set it? How often could it be changed? How would it affect businesses in terms of ability to attract or retain staff? And so on.

Some posters on this site have dispensed analysis - insightful and well thought out - but sadly it is beginning to lapse into platitudes. That's a shame.

Nat O'Connor said...

I think it is fair to be critical of managers taking pay increases while front line staff suffer cuts.

That is the main point I wanted to make. And the statistics refer to an entire sector of the economy, employing over 200,000 people, not just isolated enterprises.

Pavement Trauma said...

These are quarter on quarter figures and subject to seasonality and general variability.

Compare Q1 in 2008 with Q1 in 2009 and you'll find wage rates for manual workers in manufacturing have gone up 5.7%. In the same period rates for management have gone up 3.2%.

To put it another way, the ratio of management to manual wage rates has slightly declined over the year.