Ireland: Workers reject bosses’ solutions to crisis

Lisbeth Latham

Irish unions are threatening to escalate protests against proposals that would result in workers bearing the burden of paying for overcoming the financial crisis that has hammered the Irish economy while protecting business profits.

Both employers and the government have sought to delay previously agreed upon wage increases for workers. The Irish government is also moving to implement a levy on public sector workers to help fund shortfalls in pensions.

On February 21, 150,000 people marched through Dublin as part of an Irish Congress of Trade Unions (ICTU) rally against the government’s handling of the economic crisis. The protest was the largest demonstration in the Irish capital for 30 years.

The Irish Times reported that ICTU general secretary David Begg addressed the rally, telling demonstrators that a business elite had destroyed the economy and had not yet been held to account for it in any respect.

According to the Irish Times, ICTU president Patricia McKeown told protesters that the government wanted workers who built the economy to make the sacrifices while it protected those who wrecked it, and that the time had come for Irish workers to demonstrate the power they held.

“That power is today on the streets of Dublin, it is in industrial action but most significantly it is at the ballot box”, McKeown said.

“If our government and the elected politicians are not prepared here and now to pledge that they will act now and act on our behalf and act on the proposals we have placed before them then you must be prepared to deny them even a single vote and to send that message out loud and clear.”

The Irish economy has been facing growing difficulties since early 2008 as a result of the global financial crisis. The Irish economy grew sharply during the 1990s, with neoliberal economic policies that halved taxation, reduced import duties and encouraged foreign investment.

However, since the start of the global economic crisis the Irish economy has crashed rapidly; there has been a flight of 10 billion euros in capital during February alone and a series of closures and downsizing resulting in the loss of thousands of jobs. According to the Irish government, the country faces:

• a reduction of up to 10% in national income over the 2008-10 period;

• a loss of more than 120,000 jobs over 2009 and 2010;

• an increase in unemployment to over 10%;

• tax revenues in 2008 that were more than 8 billion euros below expectations, with a further fall projected in 2009; and

• without further adjustments, a general government deficit in the range of 11-12% of GDP for each year up to 2013.

Social ‘partnership’ in crisis

Since 1987, a major characteristic of Irish politics has been the tripartite “social partnership” between the Irish government, employer groups and unions. Social partnerships have been triennial agreements, with the objective of reducing national debt by restraining wage growth, leading to a higher rate of profit growth compared to wage growth.

The most recent social partnership agreement was signed in June 2006 and titled Towards 2016. This agreement had a 10-year framework, but wage-fixing was to be renegotiated in a series of stages.

The second stage of pay terms were agreed to in September, with workers to receive a 6% pay rise over 21 months, following a three-month wage freeze in the private sector and an 11-month freeze in the public sector. Low-income workers receiving less than 11 euros an hour were to receive a 0.5% wage rise.

The agreement also exempted any company that is allegedly unable to afford the pay rises as a result of financial or trading difficulties. Despite this exemption, the Construction Industry Federation (CIF) refused to sign the agreement as it wanted a 12-month pay freeze in construction.

On December 4, the Irish Independent reported that the CIF “will today serve a claim on unions to cut 200,000 workers’ wages by 10pc”, just a week after it rejected the national pay deal.

In response to the economic crisis, employers, unions and the Irish government began a new round of talks to develop a recovery plan. The intention of employers to make workers bear the brunt of the crisis was made clear by the Irish Business and Employers Confederation’s January 23 demand that the previously agreed pay rises be deferred and the increase in the minimum wage be indefinitely delayed.

On January 28, all three sides in the negotiations signed a document that stated: “In developing a Pact, the Government and Social Partners are fully committed to an approach in which all sectors of society contribute in accordance with their ability to do so, and conversely the most vulnerable, low paid, unemployed and social welfare recipients are insulated against the worst effects of recession.”

However, on February 3, the Fianna Fail-led coalition government announced plans for an austerity plan that would cut 2 billion euros from the government’s budget.

The key features of the plan were a freeze on the wage increases for public sector workers previously agreed to under Towards 2016 and a sliding levy on public sector workers to fund government guaranteed pensions — effectively a wage cut. Even public sector workers who are not eligible for a government pension would be levied.

The attacks from both business and government have caused widespread anger across the Irish working class.

The leaderships of the ICTU and its affiliated unions are attempting to harness this anger and draw business and government into negotiations for a new social partnership — despite Irish workers experiencing a decline in real wages of around 3% per year during the first stage of Towards 2016.

In response to government and business withdrawal from the social partnership, Irish unions began organising protests aimed at lobbying government members of the lower house of Ireland’s parliament to oppose the austerity package, culminating in the February 21 mass rally in Dublin.

Trade unions have repeatedly called for the government and business to adopt their new 10-point Social Solidarity Pact, which includes a proposed 48% tax on high earners, full public control of the banks, a three-year moratorium on house repossessions, a national recovery bond, measures to protect the unemployed involving retraining and up-skilling, and income protection.

Unions are planning industrial action in defence of wages and conditions and in support of the Social Solidarity Pact.

On February 24, the ICTU executive council advised the federation’s affiliates that where employers were not adhering to the transitional agreement of Towards 2016, they were “entitled to resort to industrial action”.

The council advised that “to be prepared for this contingency, it is recommended that unions should ballot members” from March 2, “seeking a mandate for industrial action up to and including strike action, to achieve compliance with the terms of the Transitional Agreement, or to achieve an acceptable alternative”.

In addition to action by individual unions, the ICTU is calling a national strike for March 30 in support of the adoption of the Social Solidarity Pact.

Originally published in Green Left Weekly #785

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Can wage restraint save jobs?

Lisbeth Latham

In the last month, Australian mine workers and mining communities have been rocked by layoffs and mine closures as mining companies have moved to reduce production in response to collapsing commodities prices.

In this context it is understandable and important for workers and their unions to explore solutions that will protect their communities from the devastation of closure. Two weeks ago, workers at Alcoa, who are members of the Australian Manufacturing Workers Union, decided to defer a four percent pay rise they had won in 2008 until 2010 in exchange for Alcoa not sacking workers.


This decision was made following Alcoa’s January 6 announcement that it would be shedding 15,200 jobs, or 13% of its global workforce, although no announcement had been made of job losses in Australia.

While the willingness of the workers to collectively share pay cuts is a significant display of collective solidarity, it is highly questionable that it will be effective in avoiding job losses and could result not only Alcoa workers but other workers losing more.

The Alcoa workers’ decision follows an ongoing push from the federal government, business and the media that workers should sacrifice wages now in order protect jobs.

No guarantees

While the workers are specifically offering pay cuts in exchange for no job losses, there is nothing to guarantee this is what will happen in the present circumstances: the offer to defer wage is not tied to Alcoa not proceeding with job cuts in Australia. Even if such an agreement was made, it would not guarantee that Alcoa would not conduct sackings in the future, as Alcoa would be able to blame any subsequent deterioration in the company’s financial situation for the job losses.

Previous experience shows that when companies are successful in gaining concessions (whether from workers or governments) they are quick to demand even greater concessions, with jobs ultimately being shed anyway. This should come as no surprise. Capitalism operates on a relentless drive to increase profits: if companies are able to secure an agreement that provides wage cuts under the banner of “saving jobs”, there is an incentive.

A central component of contract negotiations between the US United Auto Workers and US car manufacturers since 1978 has been the union making concessions in the wages and conditions of workers in order maintain the competitiveness of the automakers and preserve autoworker jobs. Despite ongoing promises that concessions would result in jobs being saved, employment at General Motors alone had fallen from 450,000 in 1978 to 73,000 in 2007.

In addition to the logic of concessions within a single company, workers giving up conditions at one company will encourage other companies to seek the same concessions — irrespective of whether they are in need of those concessions — in order to remain competitive.

Following the conclusion of the 1998 waterfront dispute between the Maritime Union of Australia and Patrick’s Stevedores, where the MUA agreed to a range of concessions in exchange for its members being allowed to return to work — including increased casualisation and reduction in staffing cranes — the other major Australian stevedore, P&O, moved to include the same conditions in its next enterprise agreement with the MUA.

It is also important to recognise that job losses have no direct link to either the wages that workers earn or the profits that companies make. Over the past two decades, thousands of bank workers have been made redundant across Australia during periods of high profits. In 2005, the National Australia Bank announced 2000 redundancies immediately following a quarter in which it made a record profit.

A more important factor influencing employment levels is the question of the amount of work to be performed; if this is reduced then capital will look to sack the workers that it deems to be unnecessary. Given the collapse in Alcoa’s revenue is a consequence of both declining commodity prices and declining demand, which has resulted in Alcoa moving to reduce production, Alcoa can be expected to reduce its workforce with the new levels of production that it is looking to achieve.

The only mechanism to avoid this would be to insist that working hours of workers be reduced in proportion with any reduction in production. However wages should be maintained by increasing the hourly rate by the same proportion.

Alcoa’s exact financial situation

A significant factor contributing to further threats of job losses is that company financial figures are not readily available to workers and their unions. This makes it possible for companies to manufacture a financial crisis in order to justify calls for concessions or job losses.

An important factor in Alcoa’s decision to shed workers globally was its poor performance during the December 2008 quarter, when it lost US$929 million. While this did reflect the impact of halving alumina prices between July and December, $708 million of the loss was a consequence of restructuring carried out by Alcoa.

This makes it important that unions have access to a companies’ books to have a clearer indication of their financial situation.

Who should pay?

Calls for workers to defer wage rises in order to limit job losses reflect an outlook that workers should bare the burden of the financial crisis. No such sacrifice has been made by Alcoa’s management or shareholders.

On January 23, Alcoa announced that it would pay a dividend of 17 cents per share, the same payment as had been made for the previous nine quarters. Over the same period of time, Alcoa had made profits totalling $4486 million. These massive profits should now be being used to offset the current losses being made by the company, rather than forcing workers and their communities to suffer.

Workers who sacrifice today to offset the declining incomes Alcoa and other companies are experiencing during the current downturn will not be reimbursed for their sacrifices in the future. Instead, everything given up today will have to be fought for again, as companies attempt to maintain any concessions that they are able to extract.

Unlike Alcoa, workers’ living costs are not going to be reduced during the economic downturn — indeed crucial costs of living such as rent are likely to continue to increase over the coming year. The only way workers can avoid seeing their incomes decline, and the flow-on effects to the rest of the community resulting from declining purchasing power, is for workers to continue to receive the pay rises that they have already won and that they are able to win in the coming years.

Originally published in Green Left Weekly #781

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