Unions and employers clash over the cost of doing business

Trade union leaders and an employers’ representative group have clashed over whether the Government’s pro-worker policies have gone too far too fast and were now imposing an unfair burden on businesses.

In a hard-hitting paper entitled Challenging Myths And Improving Working Conditions In A Strong Economy, the Irish Congress of Trade Unions (Ictu) has challenged what it calls the “false perspective” put forward by employers’ groups about the rising cost of doing business.

But Isme, which represents small and medium enterprises, hit back at Ictu, saying it was “entirely incorrect” to suggest that recent changes in the labour market are merely bringing Ireland into line with EU counterparts.

“While trade unionists are describing the labour-cost adjustments as ‘modest’, the fact is that the open market has decided otherwise,” Neil McDonnell, CEO of Isme, said.

At issue are the transition to a higher minimum wage, the extension of statutory sick pay, the introduction of a pension auto-enrolment scheme, new parental leave and domestic-violence leave, the right to request remote work, PRSI increases and even the introduction of a new public holiday.

In an introduction to the Ictu paper, general secretary Owen Reidysaid these reformswere flagged in the Programme for Government, began in 2022, and in some cases are staggered over 10 years.

“Despite the cries of the threat to jobs, we actually have a record number at work, ie 2.7million,” he said.

“Some of the sectors shouting the loudest – such as hospitality and retail – have seen real employment growth in the last year.”

Ictu also pointed out that Irish businesses had received additional government supports for nearly a decade, due to Brexit, Covid and the cost-of-living crisis.

“But it seems some business groups expect unique and additional supports for specific factors to be mainstreamed and become the norm,” Mr Reidy said.

The trade union group calculated the number of business failures last year was 27 per 10,000, but the average over the last 19 years has been almost double that, at 50 per 10,000. This period included the financial crash.

Congress also claimed Irish employers pay half of what other wealthy EU countries do in taxes on labour.

They said an employers’ call for reduced Vat rates “makes little economic sense”, while the argument for disproportionately benefiting low-value-added sectors “is very weak if not actually counter productive in the long run ”.

Calls to exclude some high-paidworkers from the calculation of the minimum wage “also makes little sense”, Ictu said, while capping the minimum wage increases at the level of consumer price inflation (CPI) was “inherently problematic”.

In response, Is me pointed to the recent rise in the number of insolvencies and to the forecast by PwC Ireland that up to 1,000 businesses will go to the wall this year.

“Wage inflation is the precise reason we are witnessing significant business closures around the country, particularly in the services sector,” Mr McDonnell said.

“Consumers, including Ictu members, are unwilling or unable to pay the price increases which this year’s increase in labour costs are dictating.”

He said Ireland had the second-highest national minimum wage in Europe and argued that “lowwages are not the problem here; high costs and lack of accommodation are”.

“Low wages are not the problem here; high costs and lack of accommodation are” Neil McDonnell