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ECB policy failing the low paid

22 September, 2008

Sinn Féin MEP Mary Lou McDonald has today sharply criticised European Central Bank (ECB) President Jean Claude Trichet for the recent call by the ECB’s Governing Council to abolish any links between the rate of inflation and pay increases.


Speaking during a parliamentary debate in Brussels the Dublin MEP said:


“Throughout Europe millions of low paid workers are struggling to cope with cost of living increases. But at every turn EU institutions’ refuse to acknowledge the financial day-to-day realities of increased food, fuel and finance costs facing such workers.


“Earlier this month the ECB Governing Body called on employers, trade unions and governments across the EU to abolish any link between the rate of inflation and pay increases. Mr Trichet supported this demand. Of course inflation indexation of wages is a concern, however such calls by the ECB fails to take into account the plight of the union’s lowest paid. It is reckless for any key EU policy maker to ignore this key component of the EU workforce.


“The fact remains that wage increases are needed for low paid workers. My response to Ireland’s recent draft social partnership agreement was one of disappointment and criticism as the proposals see low paid workers getting a minimal increase in comparison to higher paid workers. They are being offered an additional 0.5% at the end of the 21-month term of the agreement. In deliverable terms this is a meagre 5 cents an hour for the one fifth of the Irish work force who earn €10 an hour.


“Curbing inflation across Europe must be tackled on a number of fronts. Member state governments have a responsibility to look at how the policies they implement are fuelling inflation. Stealth taxes and increases in public services introduced into Ireland over the last number of years have contributed to inflation growth. Sinn Féin wants to see the Irish government introduce an anti-inflationary package as part of Budget 2009 that incorporates a freeze or reduction in charges for public services including public transport. Wage restraint is not the only solution to tackling inflation be it domestically


“There is also the reality that Ireland as a small member state is peripheral to ECB policy making considerations, therefore the positions it adopts will not always be best suited to the needs of the Irish economy at any given time.


“Ignoring the needs of the low paid cannot continue. Tackling inflation across Europe cannot be reduced to refusing legitimate wage demands. Those on higher wages can and should exercise wage moderation however the rightful pay demands for the lower paid cannot be ignored.” ENDS


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