Unregulated immigration and unscrupulous hiring practices are undermining wages and conditions, writes Manus O'Riordan
In December, the CSO released figures showing that average hourly earnings for skilled operatives in the construction sector increased by 7.3 per cent, in the year ending September 2005.
Unskilled and semi-skilled operatives enjoyed increases of 7.1 per cent. This was all grist to the mill for Dan O'Brien's argument that "race to the bottom fears are not based on evidence" (see Opinion, January 10th). However, the same CSO release also showed severe job losses in the construction sector. Something is wrong.
I share Dan O'Brien's concern that "currently, data on the impact of immigration on the labour market are not being gathered". But even the available figures bear out Siptu's contention that unregulated immigration and unscrupulous hiring practices are driving down real wages and conditions. Moreover, the phenomenon is spreading to other sectors.
In the year ending June 2005, average weekly earnings in banking, insurance and building societies increased by 5.5 per cent. This is compatible with a modest degree of pay drift above the 4.1 per cent basic terms of Sustaining Progress.
However, a new CSO release in December showed that in the year to September 2005, average weekly earnings in the sector were now rising at only 1.7 per cent. What had happened? In the three months from June to September, average weekly earnings decreased by as much as 2.8 per cent.
The Quarterly National Household Survey shows that in the year ending September 2005, foreign nationals accounted for more than 28 per cent of increased employment in the sector. What happened can be explained by the line in the CSO's background note that "average earnings will, for example, be decreased by staff mobility resulting in the appointment of replacement staff at lower salaries".
This phenomenon has shown itself over a longer period in manufacturing. In the year ending March 2005, average hourly earnings for all industrial workers increased by 4.7 per cent. The rate of increase fell to 2.5 per cent for the year ending June and to just 2.1 per cent for the year ending September.
The latter figure is only half the value of the pay increase due under Sustaining Progress. Given the 3 per cent increase in the consumer price index over the same period, it represents a 1 per cent cut in the real value of average industrial earnings.
Wage degradation has been occurring in absolute terms for workers in some sectors where earnings are already below the industrial average of €14.42 an hour.
For instance, CSO figures for September 2005 show that average hourly earnings of €13.24 in food products represent a fall of 3 per cent on earnings six months earlier and a rate of €12.54 in the office machinery and computers sector represents a fall of 4 per cent since March.
The decline in average earnings for the latter sector is 6 per cent since the beginning of the year. Similarly, a rate of €11.56 an hour in the electrical machinery and equipment sector represents an absolute decline of 2 per cent since March and as much as 13 per cent on average hourly earnings since September 2004.
The data on which Dan O'Brien questions the "commonly believed notion that Ireland has become more unequal" is quite old, stopping at 2001. As to his questioning that any "displacement" has occurred in more recent times, it should be noted that wage degradation in manufacturing has been taking place against the background of an increase of 8,000 in the number of foreign nationals employed over the year ending September 2005. This coincides with a decline of 19,400 in the number of Irish workers.
However, it is in construction - where the Gama scandal represents the tip of the iceberg - that most abuses have occurred. We have a steady stream of foreign nationals approaching Siptu's construction branches to seek enforcement of their rights in respect of pay and conditions.
In September 2005, Mercer Consultants issued a Review of the Construction Federation Operatives Pension Scheme, conducted on behalf of the Pensions Board and the Department of Enterprise, Trade and Employment. It drew attention to the fact that only 65,000 out of 80,000 construction employees registered with the Revenue Commissioners were included in the pensions scheme. Mercer questioned the real status of another 70,000 operatives classified as "self-employed".
The Pensions Ombudsman had specifically drawn its attention to a case where, faced with a demand to include its workers in the pensions scheme, one firm immediately converted them into self-employed contractors. Mercer observed that "it can be difficult, especially for migrant workers, to refuse work on this basis", while also expressing alarm at the growing number of employment agencies operating without legal authorisation in the sector.
As well all know, in May 2004 the Irish labour market was opened to new EU member states. Hitherto the requirement to obtain work permits, while unscrupulously abused by some employers to depress wage rates of foreign nationals, did at least require them to register such workers as employees. Up to June 2004, therefore, the CSO release on construction earnings and hours worked could be said to have had some grounding in reality.
In the year to June 2004, the number of workers covered in that CSO sample of skilled operatives increased by 27 per cent and their average hourly earnings by 3.9 per cent. At the same time the numbers in the unskilled and semi-skilled operatives' category went up by 13 per cent, but their earnings increased by only 1.9 per cent, confirming the onset of wage degradation.
The latest data for September 2005 indicates earnings increases of more than 7 per cent and totally lacks credibility. In the 15 months from June 2004 to September 2005, the number of skilled operatives covered by the survey declined by 52 per cent, while the number of unskilled and semi-skilled operatives declined by 45 per cent.
A significant pay rise accompanying a catastrophic jobs crisis in the sector? Hardly.
The Quarterly National Household Survey tells us that in the year ending the third quarter of 2005, the number of foreign nationals employed in construction doubled and they now constituted a third of the total employment increase in that sector.
This is a far cry from the 40 to 50 per cent decline in people employed that is suggested by the earnings survey. What has occurred is a rebranding of an increasingly foreign national workforce as "self-employed" to let greedy employers pursue the twin objectives of wage degradation and the withholding of legal entitlements such as pensions.
Siptu is determined to stamp out such practices. They are a threat to the existing Irish workforce, to employers who want to adhere to decent standards and most of all, to the foreign-national workers who are the main victims of intensifying exploitation.
That is why we have employed Polish and Lithuanian organisers to give these workers a voice. That is why the Irish trade union movement, together with ever-increasing sections of Irish society, remains opposed to the "country of origin" principle in the proposed services directive that seeks to extend the race to the bottom still further.
Manus O'Riordan is head of research in Siptu