Some retail companies are Milking the Recession

Mandate Trade Union today, Sunday, 25 April 2010, accused some retail firms of attempting to take advantage of the economic downturn by forcing unnecessary redundancies, pay reductions and reduced terms and conditions onto low paid workers despite maintaining extremely healthy profits.

This was according to the union’s General Secretary, John Douglas, who was speaking at Mandate’s Biennial conference in the Radisson Blu Hotel in Galway city. According to Mr Douglas during the last few years the union has seen:

· The introduction by one profitable company of a highly questionable redundancy scheme that enabled it to replace workers on a higher pay scale with workers on a much lower pay scale. The scheme only offered employees the minimum redundancy terms allowable under law, which is two weeks per year of service. The company then claimed 60% of the cost of these payments back in a rebate from State funds. In reality the company shouldered little of the cost of the redundancies and pocketed the difference in pay rates between the workers it let go and those it took on.

· Another of Ireland’s leading grocery and drapery stores – which is still highly profitable – is pursuing the suspension of allowances for late night, early morning and overtime work. They are also actively undermining the terms and conditions of workers protected by a transfer of undertakings agreement put in place when the company entered the Irish market.

· Finally, one of Ireland’s leading retail outlets has attempted to cut the wages of the staff at the top of their pay scale by 15.5% along with a reduction of 25% in public holiday pay and a 25% reduction in Sunday allowances.

Mr Douglas went on to say, “In addition to these specific cases, the feedback from our members suggests that right across the sector most retail workers have lost approximately 8-12 hours per week as a result of cutbacks from their employers. This has resulted in a reduction in income of around €100 for those working full time in the industry.”

According to John Douglas, the argument often put forward for cutting workers’ pay is that our rates of pay are out of line with our European counterparts. However, a new research document produced for the union, entitled Milking the Recession, reveals that Irish retail wage costs are not as uncompetitive as some of the employers’ bodies argue.

“For instance, a report by FGS Consulting for Forfás estimates that the average annual wage for a Sales Assistant in Dublin in 2008 was €22,000 and in Cork, Galway or Limerick was just €17,500. Despite claims of some industry lobbyists, pay rates in Ireland are not significantly higher than in the UK or other comparative European cities.

“It’s interesting to note, however, that FGS Consulting have identified a whole range of factors, outside of payroll, where costs in Ireland are significantly ahead of the UK or our European counterparts. These include rental costs, utilities, telecommunications, professional fees and local authority charges. Mandate firmly believes that all of these avenues should be explored and addressed before a debate is even considered about pay reductions for retail workers.”

John Douglas said that, ironically, the attempts at pay-cutting by profitable retailers in the Irish marketplace are clearly not that well thought through.

“For example, Irish retail workers tend to spend almost all of their income in the local economy. They tend to buy groceries in their local shop, buy clothes in their local drapery store and buy drink in their local pub. Without this spending, the Irish economy would crumble. When a profitable retailer takes money out of the pockets of their employees, it obviously means there is less spending in their local communities and therefore more jobs are lost. It’s a vicious circle.

“What we need in order to get out of this crisis is for profitable companies to live up to their obligations and stop hiding behind bogus calls for wage restraint and pay cuts. In reality, any firm participating in this type of action is not only increasing the hardship on many already low paid and vulnerable families but they are also contributing to the longevity of the Irish economic recession and therefore acting in an unpatriotic manner,” John Douglas concluded.