The Small Firms Association (SFA) has looked deep into the problems of the economy and has come up with a solution: cut people's wages. Not just cut, but do a right machete job on them. And not just any ol' wages, but the wages of the lowest paid in society. Wow, that's a recipe for growth.
The SFA has called for the minimum wage to be cut by €1. That would constitute a 11 per cent cut. But it's even worse. The last increase in the minimum wage was back in July last year. So, just to keep in line with inflation, the minimum wage would have to increase to about €9.05. But the SFA is demanding a new minimum wage at €7.65. So they are, in real terms, demanding a 15 per cent cut in wages.
In support of this outrageous demand the SFA has produced a table from Eurostat. It claims to show that Ireland has the second highest minimum wage in the EU. This is junk-mail economics. The SFA knows (and if it doesn't it should be statutorily barred from uttering anything until it raises its IQ) that international comparisons of this sort only makes sense when you factor in living costs - the how-much-bread-does your-Euro-buy' measurement (or Power Purchasing Parities). The SFA had access to this information because it comes side-by-side in the same Eurostat release. What does this show?
My gosh, it shows that of the countries that have a minimum wage in the EU-15, Ireland is the lowest - some 25 per cent below league leader, Luxembourg. So much for the SFA's junk-mail economics. But there's more to this story. I have written about management quality among small businessesin the past. FAS's commentary on management skillsis devastating. Our SME skills are almost universally graded sub-standard (that's the nice word). Regarding human resources, SME management is graded 'poor'. And Patricia Callan, in her Morning Ireland interview gave an excellent example of that. When asked if she and her colleagues in the SFA would take a similar pay cut, 'to show a bit of an example' she replied:
'This is not the issue'.
'This is not the issue'.
Can you just see it on the shopfloor - SFA spokesperson Patricia Callan addresses the lowest-paid workers in the country: 'You must take a pay cut of 15 per cent, for the sake of our economy'. 'Okay, will you be taking a pay cut, Ms. Callan?' asks a worker. 'That is not the issue,' she replies and storms out of the meeting. And the SFA wonders why they can't increase productivity, can't limit costs associated with high turnover.
And they wonder why retail sales are collapsing. If you go around slashing people's wages by 15 per cent, don't be surprised to see shops closing up - shops that are members of the SFA. I have one word of advice to those shop-owners: cancel your subscription to the SFA. You'll save money and hopefully you'll bankrupt an organisation whose policies are bankrupting you.