Tackling inequality starts in the workplace #Unionise #WeAreSIPTU
We are entering a period of increased uncertainty: with geo-political instability, climate change, and artificial intelligence automation as well as interruptions to trade.
Our response must be to build a resilient economy — one that can withstand shocks and exploit opportunities despite wider risks. These shocks and risks can be external, arising in other parts of the globe.
Or they can be homegrown like the recent housing crisis. A resilient economy is built on strong foundations that can reduce risks, adapt to changing circumstances and still prosper.
A number of policies must be put forward to build resilience. For instance, if an economy relies too heavily on one sector, it could suffer a severe downturn if there was a shock to that sector. This describes Ireland’s reliance on multi‐nationals.
We need to diversify and build a strong domestic sector that can compete in international markets. There is one policy approach that doesn’t get much mention but which can be a major contributor to resilience; namely, equality.
Studies conducted since the great recession have identified rising inequality as a contributor to the crash. The OECD recently did an about‐face on this subject. Prior to the crash, it championed ‘market liberalisation’, a code word for weakening labour bargaining power.
Today, since it discovered the debilitating effects of inequality, it is producing papers celebrating the benefits of collective bargaining.
Equality is at the heart of a resilient economy. When we discuss the issue of inequality in society, we usually think of the inequality between rich
and poor households; and how we can address this through taxation and social protection benefits. This is an important issue. But for trade unionists, equality starts in the workplace.
We can measure this in three ways.
First, the relationship between profits and wages. Since 2000, profits have grown at a faster rate than wages. This means that workers’ pay is not keeping up with productivity.
During the Covid lockdown and cost‐of‐living crisis, inequality between profits and wages has grown further. In fact, the Central Bank has stated that excessive profits are a major contributor to inflation.
This established the profoundly unjust situation whereby wages were suppressed below the rate of productivity and workers had to pay higher prices.
Second, Ireland has one of the highest levels of market inequality in the EU. This measures the level of inequality in the economy before taxation and social protection payments. Ireland has the third highest level of the 27 EU countries.
Third, Ireland has one of the highest levels of wage inequality, this is the gap between the highest paid and the lowest paid. We rank near the top of this depressing table.
This is the inequality that starts in the workplace, the inequality between employees and employers, the inequality between the lowest paid and the CEOs and senior managers.
Excessive profits are a major contributor to inflation. This set up the profoundly unjust situation whereby wages were suppressed below the rate of productivity and workers had to pay higher prices.
None of this is the basis of a resilient economy.
We are seeing low pay, precarious work contracts, lack of bargaining power and gender pay gaps, with more and more income and resources flowing to the top. This is an economy ill‐prepared to withstand future shocks, never mind ensure a prosperous society.
If inequality starts in the workplace, then that is where we must address it. This is what trade unions do. When workers organise through a trade union, when they negotiate a collective agreement, inequality is reduced. Collective bargaining is key to increasing labour’s share of income, especially for the low paid. It is key to closing the gender pay gap.
We can start to redirect the flow of income from profits and dividends to the living standards of the women §and men who produce the goods and services.
But we must also redirect policy as well: vindicating the right to collective bargaining, taxing excessive profits, reducing precarity and raising statutory wage floors. We have had some success but we still have a long way to go.
We can start to redirect the flow of income from profits and dividends to the living standards of the women and men who produce the goods and services.
By reducing inequality in the workplace and in the economy, we can make it easier to ensure inclusive living standards for everyone: pensioners, people with disabilities, children living in disadvantaged areas and the long‐term unemployed. Reducing inequality is a win‐win for society.
That’s why, for SIPTU, we cannot build a resilient economy without growing equality, starting in the workplace.
This article was written by SIPTU General Secretary, Joe Cunningham and appears in the latest Liberty. Download the paper here.