IBEC says forget benchmarking

A REFUSAL by the Government to pay benchmarking awards due to workers may be one of the only realistic ways of keeping State finances on track, business leaders said yesterday.

Brian Geoghegan of the Irish Business and Employers’ Group (IBEC) said the “bullet needs to be bitten” on pay.

IBEC said there was no area where it would concede taxes should be increased.

“We are not looking for a cut in spending. We are looking for an increase in spending which would be generous in other European countries,” said Mr Geoghegan.

“We are not saying, ‘throw the benchmarking thing out the door’,” said Mr Geoghegan.

But, he said, it would be inappropriate to spend funds on benchmarking, only to claw the money back through higher VAT or personal taxes.

“That would be highly irresponsible,” he said.

“That ultimately would mean lost jobs. We are saying, keep the rate of growth in current spending to a reasonable level - 8% or thereabouts. That is a reasonable increase.”

Benchmarking was “not consistent” with what is proposed in IBEC’s submission, he said.

IBEC also said it would have “no problem” with the idea of rates and water charges being spread more equitably so the general public would share the burden with businesses.

However, Mr Geoghegan said he realised such an idea was “a political hot potato”.

IBEC’s budget submission says Irish workers are now the second-best-paid in the euro zone in terms of take-home pay.

The organisation, representing over 7,000 businesses, says an Irish family with two working adults and two children earns a nominal net income of 29,180.

This compares to 33,950 for a similar family in Luxembourg at the high end of the EU scale, and 12,360 in Portugal at the low end. Take-home pay averages 43,520 in Japan and 39,470 in the US.

Labour taxes here have now been reduced to such an extent that the average industrial worker pays the third-lowest proportion of income tax in the industrialised world, after Portugal and Mexico, IBEC contends.

Labour costs in Ireland rose above the EU average in 2000 and this country has moved from being the twelfth most expensive place for labour in 1999 to the eighth dearest this year, the submission adds.

And while it will not countenance any increases in direct or indirect taxes, IBEC still insists it would be a “grave error” to deal with the problem in public finances by cutting back on infrastructure investment.