Employers body calls for wage rise restraint

EMPLOYERS group IBEC has fired the opening shot in advance of the upcoming national pay talks by calling for pay restraint and ruling out local bargaining arrangements.

IBEC director general Turlough O'Sullivan said this summer's partnership discussions between employers, unions and the Government would be restricted to pay alone and that recent success in bringing down inflation meant employers would not agree to pay rises of the scale seen over the last 18 months.

The current national pay deal, Sustaining Progress, covers the 2003-2005 period but specific aspects dealing with pay increases only covered the first 18 months of the agreement.

Private sector employees have seen pay rises of over 7% under the deal so far, but Mr O'Sullivan said there was now a need to protect jobs by keeping pay increases to a minimum.

He said IBEC was not looking for a pay freeze that would see wages and salaries stay at their current level until the end of 2005, but added that pay rises would need to be much closer to the European average. Average pay in Ireland has grown by over 30% since 2000, far in excess of the 11.6% eurozone average, according to IBEC.

Inflation has fallen from almost 6% to 1.7% since Sustaining Progress was agreed. Mr O'Sullivan said the low-inflation environment provided a different backdrop to wage negotiations from 18 months ago and Irish business could not afford big pay rises.

Mr O'Sullivan also said local bargaining clauses, which were intended to allow unions negotiate extra pay rises in exceptional circumstances, had been invoked too much and would not be part of any new pay deal.

He said the number of jobs being lost in the manufacturing sector was a "grave concern" and the 200,000 jobs in the sector needed to be protected in the face of competition from low-cost countries in central Europe and Asia.

There was no evidence the quality of Irish jobs was improving, but the competitiveness of Irish business had worsened by up to 30% because of higher labour and operating costs, such as insurance and local authority charges, over the past two years.

Ireland's ability to attract foreign investment had also been badly damaged by rising costs, according to Mr O'Sullivan.

SIPTU dismissed Mr O'Sullivan's call for pay restraint as "nonsense". Its president, Jack O'Connor, said Irish workers should get their fair share of extra pay as the economy rebounded from the recent slowdown.

IBEC director of economic affairs Brian Geoghegan said the economy could look forward to a modest recovery but this would be dependent on developments in the US and Europe.

He forecast GNP growth of 3.7% in the current year and 4.2% in 2005. Employment would hold up but would remain under threat from low-cost countries and a possible tendency among US firms to create jobs at home rather than in foreign markets.