Article from the Sept. 2006 issue of the Socialist
newspaper of the Socialist Party, Irish section of the CWI

Electricity & gas prices soar…interest payments up

Price rises hit hard

By Kevin McLoughlin

INFLATION IS Officially 4.5%. This means that even if workers get the new wage increases agreed through "social partnership" they will face a real decline in living standards.

But things are getting even worse! Essentials, electricity and gas, will swallow up more and more of peoples pay packet as from 1 October gas prices will go up be 34% - sanctioned by the Government, with domestic electricity prices to go up by 19.4% on 1 January. In winter months such increases alone could add more that €100 to household energy costs. This is a huge concern for working class people.

On top of that, if you are paying back a mortgage, then your living standards are facing a sharp decline. Interest rates rises are expected to continue later this year and into next. Repayments on a mortgage of €225,000 over 25 years could be €200 a month more this December than last year. Up to 130,000 households with mortgages will face serious financial readjustments and problems. 30% of people surveyed said that they were not in a position to deal with any new rates increases based on their current income!

The cost of living is a key issue for workers and the partnership deal that the trade union leadership has signed off on, if stuck to, will be a disaster. It is designed to prevent workers taking action on the issue of pay. On the other hand the bosses are laughing all the way to the bank with givebacks in productivity, conditions and handsome profits.

Who is responsible for the rising prices? The government point to world oil and gas prices increases and that interest rates set by the European Central Bank. The reality is that if ECB weren’t increasing interest rates, Irish economists would be demanding that they were, to protect the Irish housing market from speculation. Globally the price of oil and gas are affected by capacity problems linked to the war in Iraq etc, which the Irish government fully supported. The lack of serious planning by governments, including again the Irish, to find environmentally friendly alternatives for producing energy is also an important aspect.

However an important part of the cost of living increases is simple mark ups and profiteering by Irish bosses. The government has a control on the price of electricity and gas and are consistently sanctioning above cost increases for these companies. The government are doing this in the hope that big profits will make the energy market attractive to big business as part of their drive to impose full privatisation in the sector. Other bosses, particularly those in the service sector are giving themselves large margins for profits through high prices. The contrast between bosses and workers was clearly shown recently by the trade union MANDATE whose members are generally low paid. They showed that profits in the retail sector between 1995 – 2004 increased by a massive 338%.

MANDATE is not part of this new "social partnership" agreement and has lodged wage claims for a €1 per hour increase for 25,000 of its members. Given the position of the bosses and the rotten role of the other trade union leaders, MANDATE must be prepared to take serious industrial action if it is to defend and improve the pay of its members. All workers should support such a stand. If MANDATE seriously fights, it could show a way forward for other workers. Given that some economists expect general inflation to hit 5.5% in the New Year, the desperate need for real pay increases can ignite opposition to partnership in the unions and put the possibility of workers’ action on the agenda.