Wage drift and expected earnings
Kelly asked when wage drift became recognised and whether its effects should have been anticipated when the 1977 agreement was set at 5%; the Minister agreed wage drift was generally foreseeable but said this year’s unusually high level was not anticipated. The Minister rejected the suggestion that the Government’s failure to pursue a new agreement caused it, and said carry-over, new increases and wage drift would all be considered when estimating future earnings.
Can I ask another question? The Minister in reply to Question No. 3 said that wage drift was not a new phenomenon. In roughly what year, or in what decade, was wage drift first recognised by economists as a perceptible phenomenon?
Comment on this
May I take it from that that when the Fianna Fáil election manifesto was compiled the phenomenon was well known and that when the figure of 5 per cent was put down on paper as being a wage settlement which the potential Government would have considered acceptable, they knew in their hearts that it would wind up in practice nearer 10 per cent?
Comment on this
I will repeat it. I asked the Minister if he would acknowledge, in the light of his having admitted that wage drift has been recognised as a distinct phenomenon by economists since about 1960, that a programme which speaks in advance of an election about a 5 per cent national wage agreement must have been compiled by people who knew that if they achieved 5 per cent on paper they would wind up in practice with something nearer 10 per cent.
Comment on this
I am not going to answer the question because I fail to see what the question is and I fail to see its relevance to Question No. 3 on the Order Paper. If Deputy Kelly has a question in that area which can be formulated as a question, I will be delighted to reply.
Comment on this
The Minister did say that the phenomenon which I hear people calling "wage drift" has been recognised for 15 years. May I take it that somebody planning a national wage agreement of 5 per cent in the middle of 1977 must have realised that, if he achieved that on paper, what he was going to get in practice, taking a wage drift into account, which was then known about, would be something nearer 10 per cent?
Comment on this
I have already said that the unacceptably high level of wage drift this year was a cause for concern. It was not the fact that a wage drift existed; it was the fact that it was so unacceptably high this year. That was not part of any calculations before, during or since the election campaign.
Comment on this
Does the Minister attribute the unacceptable level of wage drift to the Government's decision not to encourage or partake in a new national pay agreement?
Comment on this
I would not, because the problem has been arising from the early months of the period of the present wage agreement.
Comment on this
Does the Minister consider it likely that the carry-over effect of the current national wage agreement into next year could be of such proportions that it would exceed what the Government might set as a desirable wage increase?
Comment on this
I fail to see the purpose of the question. Obviously, if one is making calculations for expected increases in a future year one normally identifies three components: the carry-over effect of any existing agreement, the impact of any new increase and the estimated effect of any wage drift. Therefore, those factors would be recognised.