EMPLOYERS’ GROUP Ibec has proposed that there should be no pay increases for workers in the private sector for two years.
In a major policy position, the organisation has advised its members not to entertain any claims for pay rises in 2011 or 2012 on the basis that wage levels remain significantly out of line with many of the country’s key trading partners.
Previously, Ibec had said that pay increases for workers before 2011 were unrealistic.
Under its new advice, which was issued last night, the pay freeze in place in the majority of companies around the country would remain in place for a further two years.
The Ibec policy position deals with the private sector and makes no reference to the public service.
Under the Croke Park agreement, staff in the public service could be reimbursed following a review next spring for some of the pay cuts they have experienced over the last year or so if sufficient savings are generated from reforms.
Speaking last night in advance of Ibec’s annual human resources summit in Dublin today, director Brendan McGinty said: “Ireland is under unprecedented international scrutiny. Now more than ever we need to demonstrate that we can take the resolute action required to get our labour costs back into line.”
“While some progress has been made, our economic recovery, which is being led by the traded sector, will not take hold without fully pricing ourselves back into international markets.”
He said that an extended period of pay restraint in the economy was required.
Mr McGinty said the lack of jobs was the single biggest issue facing the economy, but that only competitive businesses could sustain and create employment.
Mr McGinty said most businesses had been unable to award pay increases in 2010 and many enterprises were continuing to reduce their pay bill. He said up to one in four companies had reduced nominal wages over 2009 and 2010 and that wages for new staff had fallen by up to 25 per cent from the levels on offer prior to the recession.
However, a new survey on pay in the private sector published by Ibec last night also revealed once again that for its member companies at least pay freezes for staff were far more common than pay cuts.
“The Ibec national pay survey of 467 companies shows that the total pay bill of companies fell by 2.9 per cent this year. Some seven out of 10 enterprises had pay freezes and 13 per cent reduced basic rates by an average of 11 per cent.”
“Half of all companies expect no change to their pay bill in 2011, nearly two-thirds [62 per cent] will freeze basic rates, while a further 6 per cent expect to reduce basic pay rates by an average of 9.5 per cent. Across all respondents the average expected change to basic pay rates in 2011 is zero”.
Mr McGinty said that pay restraint on a national basis was essential to restoring competitiveness.
He stressed that there was a need for employers “to have regard to the effect of their actions on other employers”.