Economics for Dummies

Now that the dispute has been resolved, it might be worth thinking about the underlying issue that never really got discussed during the heat of the Irish Ferries dispute.

I’ve a very simplistic view of economics.  I believe that left to its own devices economies find their natural equilibrium.  The influx of migrant workers from EU accession states and beyond has the potential to bid down wages beyond the point where Irish people would be willing to work.  So as a society, we have decided to establish a minimum wage to protect workers in Ireland from such circumstances.  By forcing a minimum wage, we pay the price that some jobs disappear because employers are unwilling to employ or find it uneconomical to pay staff at this “going rate”.  We are happy because at least those who do work have some semblance of a safety net.  We presume our social welfare policy will protect those who are unable to gain employment.  This simple view of economics works for a market where there is free movement of human and investment capital as there is supposed to be across Europe.

Despite minimum wage protections in both Ireland and France, we (or at least Irish Ferries) somehow believe that international maritime law should apply to crews on boats ferrying between both countries.  I don’t buy the argument that minimum wage protections shouldn’t apply on the waters that connect both EU countries.  Or that Philippine workers should be allowed to bid wages down to below the point that we believe to be socially acceptable.  Don’t get me wrong, I’m happy enough for Philippine workers to crew Irish Ferry boats.  I just happen to believe that they should also be afforded minimum wage protections.

Irish Ferries compete with low cost airlines in the carriage of passengers between Ireland, UK and France.  It is self evident that all things being equal most people will prefer a 55 minute flight to an airport 45 minutes from the capital city of their choice rather than a protracted rail/bus and ferry epic journey.  The travel economics of container freight is less stacked in favour of budget airlines.  Container freight doesn’t really value time & convenience over cost.  Hence Irish Ferries should face up to the economic realities that it has long since lost the foot passenger market.

As a small island economy that exports 95% of what it produces, too many Irish people’s jobs depend on the efficient dispatch of software, pharmaceuticals, beef, ceramics, etc to rely on the incompetent managers within Irish Ferries.  There is a strong case to be made for Ireland building, buying or leasing container ships and creating a strategically important nationalised shipping service.

(Don’t get me started on the Unions who are not entirely blameless in this whole debacle.)