Managing wage & pay claims
13 May 2015
L to R: Conor O'Connell, Chartered FCIPD, Chairman, CIPD Southern Region; Peter O'Shaughnessy, Regional Director, Ibec; Liam Linehan, Chartered FCIPD, Vice-Chair (outgoing)
An increasing challenge!
So says Ibec Regional Director, Peter O’Shaughnessy, keynote speaker at CIPD Southern Region’s final event of their 2014/2105 programme held at the Port of Cork offices on Wednesday 13th May 2015 at 5:30pm.
Peter made his presentation under the following headings:
- Economic Context - Sectoral Divergence
- Labour Market
- Cost of Living Environment
- Take Home Pay
- Ibec Survey
Indications show that the outlook for 2015 remains very promising, with the more positive macroeconomic context impacting wage expectations. Growth has returned, however trading conditions remain difficult and turnover is well below the pre-crisis peak.
With the recovery broadening out from export to investment and consumer demand, the main drivers were high-tech goods and services export sectors. With total domestic demand is about 20% below where it was in 2007, business will therefore require a number of years of very good trading to get back to 2007 levels. Those who adjusted their cost base in line with turnover collapse are again trading successfully.
Peter spoke about the war on talent and it was clear that some skill shortages still remain in the economy, resulting in a limited pool of appropriate skills. He highlighted the excellent job creation numbers in the tenure of the Fine Gael/Labour government and predicted a return to single digit unemployment in 2015.
Cost of Living Environment
Peter suggested that the facts do not support the idea that the cost of living continues to rise while incomes fall. He said that inflation was practically nil in our economy and by way of example he pointed to the cost of a representative basket of groceries which according to official CSO data is still below autumn 2008 figures. While agreeing that health insurance and education fees etc have obviously increased - others draws on household income had fallen and therefore he maintains that there is no real basis for a cost of living wage increase.
Take Home Pay
Irish workers have lost between 8 & 10% of their take home pay to higher income taxes as well as other non-income taxes which have increased sharply in recent times. It is clear that these taxes rather than wage cuts are responsible for a drop in living standards. From January of this year, some reductions in tax have eased the burden with workers approximately 1% better off and this will be a factor in wage expectation.
According to Ibec’s most recent 2015 survey:
- 57% of companies plan to increase basic pay in 2015.
- In 2014, 49% of companies increased basic pay, 50% kept pay the same and 1% reduced basic pay.
- Increases in basic pay and are likely to occur in high-tech sectors:
- Medical Devices (91% increasing basic pay)
- Pharma-chemical (89%)
- Electronic services/telecoms (81%)
- Electronics manufacturing (87%)
Collective bargaining is the most high profile form of negotiation, with larger companies more likely to increase pay rather than smaller ones. Three out of five companies with more than 50 employees expected to increase basic pay in 2015. Local /direct bargaining is still the main source of pay negotiations, with media reports of a 5% ask and some in double digits. Peter suggests that companies should focus on the duration not the number (2% over 13 months = 1.85%). Longer term deals are also prominent 2+ years… High profile employers are targeted and 'wins' are widely reported.
Peter also spoke briefly about the work of the Low Pay Commission and its likely outcome in relation to the minimum wage.
Conor O’Connell, Chairman CIPD Southern Region thanked Peter for his very informative and relevant insights into the challenges faced by employers in the coming year and presented him with a gift which was kindly sponsored by the Irish Examiner to mark the occasion. Sincere thanks also extended to the Port of Cork for their support in organising this event.
For further information please contact
Branch Secretary - CIPD Southern Region
Peter O’Shaughnessy, MA, FCIPD, FIITD, MCMI, Regional Director, Ibec
A commercially focussed practitioner, consultant, proven leader and change manager with 15+ years senior generalist operational and strategic management experience currently working for Ibec, Ireland's largest business & employers representative body with more than 7,000 members in 70 sectors employing over 70% of the private sector work force.
As leader of the Ibec Cork team he is responsible for driving priority initiatives for the regions employers, setting the agenda for preventative employee relations and leading negotiations on complex change, transformation and key pay negotiations for indigenous companies and the largest enterprises within the pharma-chemical, medtech, consumer goods, healthcare, information technology, manufacturing and professional service industries.
A visiting lecturer in management at University College Cork (UCC) a world-class research-led University, a Chartered Fellow of the Chartered Institute of Personnel and Development (FCIPD), a Fellow of the Irish Institute of Training & Development (FIITD), and a long time Member of the Chartered Management Institute, UK (MCMI).
Address: Ibec Cork, Knockrea House, Douglas Road, Cork.
T. +353 0 21 – 4295511 M. +353 (0) 87 -0678590 E. email@example.com W. www.ibec.ie