| Turlough O' Sullivan, Director General, IBEC and David Begg, General Secretary, ICTU.
IBEC Director General Turlough O’Sullivan said today said that a pay deal which chases inflation would be bad for Ireland, and put more jobs at risk at a time when the Irish economy is facing its biggest economic challenge in twenty years. Irish pay rates have been growing at twice the pace of those in other euro area countries. This cannot continue he said.
O'Sullivan said: "We now need leadership from Social Partnership. We have to be strategic and do what is right for the country, for enterprise, for jobs and to make sure that we regain our lost competitiveness. The only way to maintain jobs is by controlling costs, moderating pay growth to low single figures, maintaining labour market flexibility, embracing change, driving public sector reform, delivering productivity, improving R&D performance, effective capital investment in infrastructure, training/education and upskilling and adding value to what we produce.
"The increase in inflation in March is a reflection of persistent international price pressures which are outside our control. The harmonised index of inflation at 3.7% is broadly in line with the average across Europe. Record global prices for food commodities and energy are causing inflationary difficulties throughout the world and unfortunately Ireland is not immune to these pressures.
"It is not sustainable to suggest that pay should chase inflation. Inflation is a problem for all of us, consumers and business alike. Business cannot seek an automatic inflation adjustment in the marketplace. No sensible person would suggest that the more difficult it becomes for Irish companies to do business, the more we should push up costs and further damage our ability to trade and to protect jobs.
"We export 85% of everything we produce in goods and services. With consumer spending, construction activity and net export growth slowing in 2008, we cannot further undermine our ability to trade successfully with the outside world. Irish exporters are already suffering the effects of the strength of the Euro against both the Dollar and Sterling. Pay is one of the few economic factors that we have within our own direct control."
O'Sullivan said that all parties need to be conscious of the realities:
"Pay rates have been growing at twice the pace of those in other euro area countries. Over the last 27 months, the current agreement, Towards 2016, provided for cumulative pay rises of 10.4% while pay growth in the euro area has been 6.6% and the harmonised index of consumer prices also rose by 6.6%.