Notes on the Front

It must be great to be a spokesperson for employers.  You can just plonk yourself in front of a microphone and say anything that comes into your head, no matter how outrageous or unsubstantiated.  On Thursday's Morning Ireland Mark Fielding of ISME was being interviewed together with UNITE's Jerry Shanan.  Mr. Fielding was giving the country a tutorial in the 'make-it-up-as-you-go-along' school of rhetoric, a school which doesn't get too fussed about the facts.

First, Mr. Fielding unveiled a new argument – arguably the most ridiculous yet to come out of the debate over wage increases:

To be looking for a flat-rate increase of €30 (per week) for small and medium businesses – it's just not on.  For instance, I would have a finite amount that I have to pay for my 10-staff or 20-staff (business).  Now, if you're looking for a 5% or 8% increase in that I would have to look for a 5% or 8% reduction in head count . . . For every 1% increase in wages, there will be a 1% decrease in head count.'

I'm guessing that 'head count' refers to people's livelihoods but, in any event, fair dues to Mr. Fielding.  He has discovered a hitherto unknown iron law of economics – for every percentage increase in wages, there will be a corresponding percentage increase in unemployment.  So, on the planet Mr. Fielding occupies a 5% increase will see unemployment heading towards 350,000.

Now this is muppet economics.  Let's look at this from the perspective of Planet Fact.  A 5% wage increase for small and medium-sized businesses in the service sector is equivalent to 0.5% of total turnover for such businesses.  That's right – a half percent.  If Mr. Fielding is trying to tell us that this half percent will collapse businesses like dominos he's really taking us for fools.  Indeed, when UNITE's Mr. Shanahan made it clear that trade unionists would work cooperatively with companies that are truly going through a difficult period, Mr. Fielding refused to even acknowledge this – he just kept chanting his mantra, 'Not on, not on'.

Mr. Fielding was also upset that we were paying ourselves 'over the odds', stating that our wage increases were twice those elsewhere in the EU. Does this come anywhere near Planet Fact?  Not really.  Our old friends over at AMECO – the EU Commission's comprehensive database – have shown that Irish wage increases in the manufacturing sector were on a par with the EU average and actually less than some of our poorer relations among the New Member States. 

Irish manufacturing wage increases are coming in about 7th out of 14 countries (I've excluded the UK, which has a much higher average wage than Ireland, given the slide in Sterling).  Right smack in the middle.  Even workers in the Czech Republic and Latvia received higher wage increases, with Slovakia and Poland only a few Euro behind us. 

So, we're slightly above average – by about €1.86 more per week.  For less than €2 a week, Mr. Fielding calls down a legion of economic plagues on our house. 

One day I'd like to go to that place where Mr. Fielding gets his arguments from.  It must be a magical, wonderful place where everything you claim to be true is true, regardless of whether it is or not.  But until then I will remain where most people are – on Planet Fact, trying to get our heads around the real causes of the recession and coming up with practical solutions to get the economy moving again.