LOW WAGES WILL LEAD TO SOCIAL AND RACIAL TENSIONS – Irish trade union leaders warn

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THE Irish trade union movement has been discussing the dangers that a low rate minimum wage, if not corrected, will lead to it being the wage rate for immigrant workers in Ireland and in the future lead to major social and racial tensions if it is not rectified.

The Irish Congress of Trade Unions told the corporatist Labour Court yesterday there was a ‘compelling case for a significant rise’ in the National Minimum Wage.

At a Labour Court hearing on the issue, Congress argued that a significant rise was necessary in order to keep pace with wage growth and price rises since 2005, when the wage was last adjusted, and prevent the emergence of a ‘two-tier’ workforce.

According to Congress General Secretary David Begg, the number earning the Minimum Wage has increased by 40 per cent, since its introduction in 2000. More than 100,000 employees are now on the Minimum Wage.

‘This trend is likely to continue. Unless we see a significant rise in the Minimum Wage, this could lead to the emergence of a two-tier workforce, with very negative consequences for the economy and society.

‘We also know that some seven per cent of those in work are at risk of poverty.

‘It is clear that the Minimum Wage can be utilised both to combat inequality, address the problem of low incomes and help close the Gender Pay Gap.

‘We must also remember that this is the only, legally-enforceable wage rate covering the whole economy.

‘Thus, it has a crucial role to play in the protection and enhancement of labour standards generally by setting a threshold of decency below which no employer can legally go.

‘In the context of strong inward migration and the protection of all workers, there is a compelling case for a significant rise now.’

The current rate for the Minimum Wage is 7.65 euros per hour and it was last adjusted upwards in May 2005.

The Minimum Wage was to be set at 60 per cent of median earnings, as recommended by the National Minimum Wage Commission, prior to its introduction in 2000.

‘However,’ said Begg, ‘the level has consistently fallen below 60 per cent, falling as low as 47 per cent, in 2003. It currently stands at just under 51 per cent. We believe it is time to make serious and significant progress towards restoring that linkage.’

The Congress submission pointed out that all evidence indicated that the Minimum Wage increase in 2005 had not contributed to a growth in unemployment – if anything, the opposite was the case, while a rise would also have no impact on inflation or affect competitiveness.

Congress General Secretary David Begg also warned a Business seminar that the creation of a ‘two-tier labour market’ in Ireland could lead to serious racial and social tensions.

Speaking at a seminar on Business & Immigration, organised by the Institute of European Affairs, Begg said that immigration was not a tap ‘to be turned on and off to suit our economic needs.’

Warning on the avoidance of a two tier labour market, with immigrants occupying the lower tier, Begg said: ‘Even if this first generation of immigrants is willing, for reasons of expedience, to stay at the bottom rung of the ladder, their children will expect to be treated equally with all Irish citizens.

‘If they are treated unfairly, in the manner of France and the UK, then we cannot expect but to have the same kind of race relations problems.

‘The minimum wage is already the default position for an increasing number of employees.

‘It is no longer regarded as a social safety net but rather as an acceptable wage for non-Irish nationals.

‘If that is to be the case then Congress believes there is a compelling reason to increase it substantially, as we have stated in our recent submission to the Labour Court.’

‘Begg said globalisation – particularly worldwide migration – was putting downward pressure on the lower-skilled wages, a phenomenon observed by commentators as diverse as economist Joseph Stiglitz and Samuel Brittain of the Financial Times, although some in Ireland preferred to believe we alone are immune to such forces.

‘The net result of these pressures is growing inequality in circumstances of increasing wealth.

‘It needs to be understood that this causes ambivalence at best, and hostility at worst, towards migration.

‘The fact that this is often misdirected towards people who are even more vulnerable, does not make it any less a reality.

‘These negative effects of immigration could best be mitigated through preventing the emergence of a two-tier labour market; operating an effective employment standards regime, as per the measures agreed in Towards 2016; ensuring the minimum wage was kept above the threshold of decency; investing in integration and ensuring migrants get jobs commensurate with their skills.’

Meanwhile the TEEU (Technical, Engineering and Electrical trade union) biennial conference yesterday attacked privatisation as an enemy of the working class.

‘A classic example of how privatisation is failing the workers is the Greencore situation where a company which had made 600 million euros in profits and was receiving over 140 million euros in EU restructuring grants was refusing to pay redundant workers a 4.4 million euros Labour Court award’, South-West Regional Secretary Pat Guilfoyle told the TEEU.

‘Irish Sugar was handed over to the private sector in 1991 and to date it has made 600 million euros for Greencore.

‘Greencore also has its plant in Carlow, which is valued at 300 million euros and one in Mallow, which is valued at 100 million euros.

‘It continues to be a major sugar importer, is fulfilling its contracts to customers in that role and making a profit.

‘The cost of closing the Irish sugar operation is being financed with EU restructuring grants equivalent to over seven years profits for Greencore, but it is refusing to pay the full Labour Court award to employers with 20 and 30 years service.

‘In fact, the employees have been out of work since May 12th and have still to receive their Labour Court award.

‘If we contrast the hardship they are experiencing with the extremely lucrative position of Greencore we have to ask what is the value of partnership to workers?’

The conference passed an emergency motion ‘condemning the shameful treatment by Greencore/Irish Sugar of its former employees’.

It called on ‘the Government, in particular Minister for Agriculture Mary Coughlan, to ensure no restructuring monies are paid to Greencore/Irish Sugar until the former workers have been paid their redundancy payments, in accordance with EU regulations, the company-union agreement, and in line with the Labour Court recommendation, as clarified on three occasions.’

The threat to the Electricity Supply was also discussed at the TEEU conference.

‘Ireland could face serious power cuts during the winter of 2008-2009 because of a serious shortfall in generating capacity,’ according to senior TEEU official Davy Naughton.

Naughton, who is a National Industrial Officer for the union covering the energy sector said yesterday that, ‘I do not know where responsibility for the delay in processing applications for power stations lies, the Commission for Energy Regulation, the Department of Communications, Marine and Natural Resources, or the Cabinet.

‘However, I am concerned that in their anxiety to open up the energy market at any cost, some members of the Government would rather see power cuts than allow the ESB to fill this vital gap.

‘A key policy objective of the Government’s Green Paper on the Security of the Electricity Supply is already under threat.

‘At present we are well on target for power cuts by October 2008, due to a shortfall in the country’s generation capacity for October, 2008.

‘Unless the way is cleared for construction of a new station now it will soon be too late to avoid this scenario.

‘This can be seen from the Generation Adequacy Report for 2006-2012, published by the Transmission System Operator Ireland in November 2005.

‘It sets out a number of criteria for assessing projected generating surpluses or deficits.

‘The base case assumptions assume Fully-Dispatchable Plant‚ for 2006 to be 5836 MW, plus Partially/Non-Dispatchable Plant‚ (including renewables) of 1007MW. This gives a total of 6843MW.

‘Already the assumptions made for 2006 have proven incorrect due to technical and other difficulties arising from the ESB having to operate a plant that is 30 to 40 years old and well past its normal lifespan.’

He concluded that the ‘Responsibility for Generating Capacity rests formally with the Commission for Energy Regulation (CER), which has had a request for a license to construct a new station from ESB on its Aghada site for almost 10 months.

‘To date no licence has been issued. As there are no other proposals to construct a station that could be completed in the time necessary, we are almost guaranteed power cuts.’