paying too high a price

ei.sdraob

http://www.independent.ie/opinion/editorial/paying-too--high-a-price-1835736.html

THE international diamond company, Element Six, has made no bones about why it has cut its Irish staff numbers by 370 people. It says its Shannon operation is its highest cost manufacturing unit anywhere.

It came just 24 hours after computer chip manufacturerIntel announced it is to lay off 294 people in its Co Kildarepla

* Labour costs are just one element in the competitive deficit.
* We need lower energy costs,
* as well as reductions in public spending,
* commercial rents,
* government red tape,
* taxes and much more

So anyone here still insisting that

* public sector bloat shouldn't cut?
* taxes raised?
* minimum wage not touched?


here we have a company leaving and telling us exactly what went wrong and why the costs are high

are we willing to tackle the issues or do we continue pointing fingers and borrowing ever larger amounts to keep up the illusion thats nothing is wrong?

how many other business have to go under
before we stop the denial and face the reality that the world changed and having some of the highest welfare/public/civil/minimum wage rates in eu is killing this country and destroying business

once all business is dead where will the money to pay our welfare and public sectors come from? how much can we keep borrowing? ?what will happen when the country is refused another loan???

discuss...

thebiglad

I do not think anyone will argue it is expensive to live or trade in Ireland - see the rip off Ireland threads.

However, just to cut everyones salary by say 40% is not going to work, most people have taken out mortgages, car loans etc on basis of their salaries and would be effectively bankrupted.

How will it help the country and businesses if people default on loans and basically have no disposable income.

Many of the companies crying about costs of Ireland and looking for an excuse to leave are multinationals and at one time upped sticks from somewhere else in the same hail of criticism to come to Ireland cos they believed we were a cheaper work force/tax environment to allow them to maximise profits, this point also needs to be kept in mind when discussing these issues.

We cannot compete with the salaries of Eastern Europe or South Africa and surely in 10-20 years these countries will have the same issues and somewhere else will come through as the benchmark cheap location for business.

This is a big project to bring down cost of living in Ireland and along side that bring down the relative salaries and theoretically standard of living remains the same although psychologically you have less as the monthly pay packet is reduced.

ei.sdraob

thebiglad wrote: »

I do not think anyone will argue it is expensive to live or trade in Ireland - see the rip off Ireland threads.

However, just to cut everyones salary by say 40% is not going to work, most people have taken out mortgages, car loans etc on basis of their salaries and would be effectively bankrupted.

How will it help the country and businesses if people default on loans and basically have no disposable income.

Many of the companies crying about costs of Ireland and looking for an excuse to leave are multinationals and at one time upped sticks from somewhere else in the same hail of criticism to come to Ireland cos they believed we were a cheaper work force/tax environment to allow them to maximise profits, this point also needs to be kept in mind when discussing these issues.

We cannot compete with the salaries of Eastern Europe or South Africa and surely in 10-20 years these countries will have the same issues and somewhere else will come through as the benchmark cheap location for business.

This is a big project to bring down cost of living in Ireland and along side that bring down the relative salaries and theoretically standard of living remains the same although psychologically you have less as the monthly pay packet is reduced.

agh but the reason Rip of Ireland came about is inflation (especially wage inflation and benchmarking)

deflation will reverse that

people on mortgages are paying less as rates are low and will stay low for some time

prices for goods are falling across the board (with few exceptions)

ragg

didn't even see this thread - after spending all the time on the otherone - posting here so i can find it later...

eamonnm79

I thought todays Headline in the Independent was a disgrace.
Talk about right wing and misleading.
"12 euro an hour wage gap blamed for job losses"

Further in to the article it reveals that the place where the jobs will be going will be to South africa where the wages are €3 an hour.

Even if we reduced the minwage to €6 an hour and debeers only paid the min wage it would make sense for them to halve their wage bill and head to South Africa.

Ditto to the misleading editorial.
The wages in that factory were €15 an hour. and yet it says
"the Shannon operation is its highest cost manufacturing unit anywhere"
I think it highly unlikely that their sweedish workers are getting less than that.

This disingenious headline only serves to increase the disinformation out there and lead to well meaning idiots calling for a reduction in the minimum wage in order to save jobs such as the ones lost in the above example.

I would suggest reading David Beggs article from the Glentees Seminar. I found it on Irisheconomy and i thought it was good.
Reminded me of Shawshank redemption.
Competitiveness is a Bvll**** word!
And he was backed up by Paul Krugman.

ie.sorab desist in your misguided race to the bottom. They are not giving you all the information.

ei.sdraob

eamonnm79 wrote: »

I thought todays Headline in the Independent was a disgrace.
Talk about right wing and misleading.
"12 euro an hour wage gap blamed for job losses"

Further in to the article it reveals that the place where the jobs will be going will be to South africa where the wages are €3 an hour.

Even if we reduced the minwage to €6 an hour and debeers only paid the min wage it would make sense for them to halve their wage bill and head to South Africa.

Ditto to the misleading editorial.
The wages in that factory were €15 an hour. and yet it says
"the Shannon operation is its highest cost manufacturing unit anywhere"
I think it highly unlikely that their sweedish workers are getting less than that.

This disingenious headline only serves to increase the disinformation out there and lead to well meaning idiots calling for a reduction in the minimum wage in order to save jobs such as the ones lost in the above example.

I would suggest reading David Beggs article from the Glentees Seminar. I found it on Irisheconomy and i thought it was good.
Reminded me of Shawshank redemption.
Competitiveness is a Bvll**** word!
And he was backed up by Paul Krugman.

ie.sorab desist in your misguided race to the bottom. They are not giving you all the information.

do you run a business? well i do

minimum wage is not a problem for me as i pay myself and staff good salaries, but i can see how it can be a problem for business with low margins and high labor requirements

but other costs + poor infrastructure are a problem and then there's the dreaded bureaucracy and red tape

i don't blame them for moving, if taxes go up anymore i'll start scouting other locations

all my business needs is educated engineers, reliable electricity and cheap/fast internet

ive talked to many other SMEs who are in same boat and ask themselves daily why bother anymore


btw like it or not it is a race to the bottom, 4million irish are competing against 6.5billion people since we are an open market and that's what allowed us to become so competitive in the 90s

\

MysticalRain

ei.sdraob wrote: »

do you run a business? well i do

minimum wage is not a problem for me as i pay myself and staff good salaries, but i can see how it can be a problem for business with low margins and high labor requirements

but other costs + poor infrastructure are a problem and then there's the dreaded bureaucracy and red tape

i don't blame them for moving, if taxes go up anymore i'll start scouting other locations

all my business needs is educated engineers, reliable electricity and cheap/fast internet

ive talked to many other SMEs who are in same boat and ask themselves daily why bother anymore


btw like it or not it is a race to the bottom, 4million irish are competing against 6.5billion people since we are an open market and that's what allowed us to become so competitive in the 90s

\

You know I've never been a fan of the "love it or leave it" school of patriotism. But I can't help but wonder after reading your post that perhaps if you have such a problem with Irish workers refusing to work for third world wages, then maybe you should pack your bags, move to China, and run your business over there. At least then you'll be exploiting foreign workers and not your fellow countrymen.

BostonB

ei.sdraob wrote: »

agh but the reason Rip of Ireland came about is inflation (especially wage inflation and benchmarking)...

Unregulated easy credit, greedy banks, and an uncontrolled building boom had nothing to do it then. Wages costs and operating costs haven't jumped overnight. Have we not always been more expensive in wages and operating cost than these other places, even before the Celtic Tiger.

Jobs that once flowed naturally to Ireland have turned to cheaper and more competitive economies.

These companies are going because their market has collapsed. If cost of labour was the sole issue they'd have been gone long ago.

ei.sdraob

MysticalRain wrote: »

You know I've never been a fan of the "love it or leave it" school of patriotism. But I can't help but wonder after reading your post that perhaps if you have such a problem with Irish workers refusing to work for third world wages, then maybe you should pack your bags, move to China, and run your business over there. At least then you'll be exploiting foreign workers and not your fellow countrymen.

:rolleyes: did you even bother reading my post

MysticalRain

Plus we had an influx of foreign nationals coming into the country for the last 10 years which would have moderated wages. And not every sector of the economy had wages that were out of control.

irish_bob

MysticalRain wrote: »

Plus we had an influx of foreign nationals coming into the country for the last 10 years which would have moderated wages. And not every sector of the economy had wages that were out of control.

are you talking about agriculture or tourism , ???

MysticalRain

irish_bob wrote: »

are you talking about agriculture or tourism , ???

I'm talking about a whole range of industries. Not just niche areas like agriculture or tourism.

Spudmonkey

thebiglad wrote: »

However, just to cut everyones salary by say 40% is not going to work, most people have taken out mortgages, car loans etc on basis of their salaries and would be effectively bankrupted.

They will have to formulate an agreement with their bank, maybe their mortgages can be spread out over a longer term... They have effectively straddled their kids with their debt. This is surely the only way around this as the cost of living, wages etc must come down.

I also heard of a number of lads working in element6 who had been their since their leaving cert. What ever kind of training they received on the job, it was not the kind of work that required third level education. Why not move jobs like this to a cheaper country, even if they don't have highly educated graduates.

spank_inferno

Im in agreement with the 1st replier to the thread.

I dont think it matters what the wages were really, they were going to move and that was that.

Yes of course costs are high, too high in certain areas.

But as another poster rightly said, where their wage costs higher than their operation in Sweden?
I dont know but I dare say the social taxes are higher there (whatever they call their employer PRSI) & corporation tax is certainly higher.

So its one thing for them to blame Irish wages (like €15 per hour is high)
But I think business is down and they consolidated, it happens.
There will always be swings and round abouts with multi-nationals like this.

I dont think its got anything to do with the minimum wage!

However other costs all do seem to stem from the government whic can and should be tackled.

eamonnm79

ei.sdraob wrote: »

btw like it or not it is a race to the bottom, 4million irish are competing against 6.5billion people since we are an open market and that's what allowed us to become so competitive in the 90s

\

You say that like you believe that people have no right, what so ever, to have any type of self worth.
The fact that many workers are treated like slaves on this Planet does not make it right and does not mean we should even try to compete with them.

Re competitveness, on a nationals level, I agree with Paul Krugman. It is meaningless.

You are also makin some presumptions that are only correct in so far as you believe the conventional wisdom that we are an open economy.
America and europe like to speak in platitudes about having a open Economy. In reality protectionism, corporate interest and market manipulation of those outside these two bastions of civilisation are rife.
In other words conventional wisdom is wrong.

Industrialisation is only around for about 160 years. Since then many workers grouped together and fought for their rights.
Their right to form collective Unions was granted legally in civilised jurisdictions due to the imbalance of power that exists between workers and their employers.

If we were to follow your race to the bottom we would only end up enslaving everyone except the employers.
Now since you are an employer I can see why this may not seem too bad but for the rest of us it would result in an age of barbaric inslavement.

ei.sdraob

eamonnm79 wrote: »

You say that like you believe that people have no right, what so ever, to have any type of self worth.
The fact that many workers are treated like slaves on this Planet does not make it right and does not mean we should even try to compete with them.

Re competitveness, on a nationals level, I agree with Paul Krugman. It is meaningless.

You are also makin some presumptions that are only correct in so far as you believe the conventional wisdom that we are an open economy.
America and europe like to speak in platitudes about having a open Economy. In reality protectionism, corporate interest and market manipulation of those outside these two bastions of civilisation are rife.
In other words conventional wisdom is wrong.

Industrialisation is only around for about 160 years. Since then many workers grouped together and fought for their rights.
Their right to form collective Unions was granted legally in civilised jurisdictions due to the imbalance of power that exists between workers and their employers.

If we were to follow your race to the bottom we would only end up enslaving everyone except the employers.
Now since you are an employer I can see why this may not seem too bad but for the rest of us it would result in an age of barbaric inslavement.

How is dropping welfare and minimum wage to the level of our UK neighbours or the EU average "enslavement"? are our neigbours across the border "enslaved" :cool:

Nowhere did I say mimnimum wage should be scrapped, but it can surely do with being lowered
I can see why society needs welfare (never been on it) and minimum wage (i scrubbed pots in restaurants and stacked shelves for many years when i was younger)

Mystic Rain also went off on a tangent at me earlier and made a personal attack on me,
as I said i am an employer and employee paying 35K+ to myself and others is not minimum wage, the problems in the sector that I am in is the lack of people with engineering degrees (everyone decided to become a builder or lawyer it seems in last decade) not the wages

As I said I can see how minimum wage would be an issue for industries where the wage costs is the main cost

I underlined the main issue with doing business in this country which affects most business to one degree or another, see first post


Anyways its pointless arguing, yee keep building your socialist utopia on borrowed money, in meantime business will continue to pull of this country and no one will listen to their reasons for leaving and learning from the mistakes

Spudmonkey

Why bother with the minimum wage at all? Why does the state have to get involved and effectively become a union. Can an employer and an employee not come to an agreement between themselves as to what is an acceptable rate of pay??

Riskymove

Spudmonkey wrote: »

Why bother with the minimum wage at all? Why does the state have to get involved and effectively become a union. Can an employer and an employee not come to an agreement between themselves as to what is an acceptable rate of pay??

the only real reason i can see is to avoid exploitation

Spudmonkey

Riskymove wrote: »

the only real reason i can see is to avoid exploitation

Which is a pretty valid reason, but if the terms of the contract are agreed between both the employer and the employee. It seems pretty stupid to me if an employer wants to employ and an employee wants to work, that they are limited by an over-inflated hourly-rate.

Like some lad on the radio said yesterday, all the so-called meaningless jobs which gave people a few pounds (like filling petrol, which I did when I started out) are all but gone...

ejmaztec

Riskymove wrote: »

the only real reason i can see is to avoid exploitation

I wonder how much effort is put into enforcing the minimum wage, and how many employers have been prosecuted for non-compliance, since it was first introduced?

I assume that it's open to abuse where there is no union involvement.