Employers' body warns against hefty pay hikes

Wage increases should be set in line with Ireland’s key trading partners and below the rate of inflation, employers federation IBEC said today.

Setting out its stall for the seventh round of social partnership talks, the body’s director general Turlough O’Sullivan warned that hefty pay rises would add to the severe toll already being felt by firms due to increased competition.

“These talks will only be useful if all involved accept the simple truth that Ireland must trade successfully,” he said.

“Over the past two decades, the stakeholders in Irish society have come together through national partnership discussions to build the prosperity we now enjoy. The starting point now, as before, has to be acceptance of the reality we face. Grandstanding with wish lists is just a distraction.”

IBEC revealed that it would be pressing all sides to address the following issues,

:: Competitiveness/productivity must continue to be key national objective.

:: Pay increases must be in line with our trading partners.

:: Key business costs such as energy and local authority charges must be addressed.

:: Measures must be introduced to sustain and develop our manufacturing sector.

:: We must improve our ability to introduce change quickly so that firms can respond to the demands of the marketplace.

:: A flexible labour market is essential.

:: Value for money in public services.

:: Maintenance of a low inflation environment.

“Our ability to compete in international markets is the measure of all things in these discussions. Selling successfully overseas is a prerequisite to any social benefits we may seek,” Mr O’Sullivan said.

“It is a matter of grasping the reality that without income from exports, Ireland will not be able to afford the things we take for granted.”

IBEC’s stance was backed by Enterprise Minister Micheal Martin ahead of the talks. Insisting he was hopeful unions, employers, farmers, the voluntary sector and the Government could reach agreement, Mr Martin said the process would be challenging and difficult.

“Competitiveness has to be top of the agenda and that affects everybody in terms of workers and employers alike and we’re all in this together,” he said.

“I would hope that we would have a deal,” he told RTE Radio.

“I think it’s going to be very challenging and very difficult.”

He added: “We’re up for an agreement that actually copper-fastens and protects workers’ rights and conditions.”

IBEC also warned of looming threats to the economy such as high oil prices, stiff overseas competition, and the risk of adjustment in the US economy which could devalue the dollar and affect Irish exports.

And the body noted that factory gate prices had dropped 12% in the last three years while 31,600 manufacturing jobs had been lost since 2001.

“The 37,000 recruited for the public sector over the same period are an added cost, not a source of trading income for Ireland. It is time to wake up and work together to rein in our increasing costs before we further undermine our ability to trade successfully,” Mr O’Sullivan said.