Belfast Telegraph

Saturday 20 September 2014

Viewpoint: Rein in excessive wage demands

As fuel, utility and food costs continue to rise, the Government is bracing itself for a summer of discontent over pay.

The latest sign of revolt comes from local government workers who have moved a step closer towards strike action, having rejected a 2.45% pay offer and voted by a relatively slim margin for industrial action.

It is difficult not to have some sympathy with these workers, many of whom are on relatively low pay. They see the cost of living eating into their salaries and believe the only solution to their problems is higher pay. They have seen how action by Shell tanker drivers, who were on good salaries already, garnered a 14% deal over two years. However, it must be remembered that the Shell drivers literally had their employers over a barrel and that deal should be regarded as a one-off due to exceptional circumstances.

There is strong evidence that the economy is in difficulty through a combination of the global credit crunch and the rising price of commodities. Those difficulties will be compounded if wage demands in the public and private sector are excessive. At a time when money is in short supply for investment or expansion, the last thing employers need is to see staffing costs rising.

If workforces try to hold employers to ransom, there is a good chance that employers will react in the age-old fashion through redundancies. What is needed is discipline in public and private sector pay. Workers have a good case for a reasonable pay increase as living costs increase, but their demands should not be excessive nor should those in the public sector engage in industrial action which would harm areas like cleansing services, housing or education. Workers in the private sector, who probably have less leverage than their public sector counterparts, will have little sympathy if they find essential services hit on top of the other problems they face.

It is natural for workforces to denounce the Government's warnings on excessive pay demands fuelling inflation and harming the economy. Yet workers in Northern Ireland need only look across the border to the Republic of Ireland to note how an economy, once hailed as the best in Europe, is now facing grave difficulties. There are forecasts that unemployment there could rise to more than 8%, forcing emigration again. Whilst there is no suggestion that pay demands are to blame for the difficulties in that economy, there is every indication that pay increases will be reined in as companies try to ride out the storm.

The scene is set in Northern Ireland for tough negotiations on pay. The problem is even more complex as regards the public sector. The reform of local government over the coming years will inevitably lead to public job shedding and that programme may be given added impetus if there are excessive pay demands in the interim.

However, if those on the shop floor have to exercise restraint in their pay demands, then it follows that the same discipline should be shown in the boardroom. Double digit pay awards for executives will only fuel the ire and demands of employees.

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