ISME calls for lower wages

The falling cost of living needs to be reflected in reduced wages and business costs, the Irish Small & Medium Enterprises Association (ISME) claimed today.

The Central Statistic Office today confirmed that the rate of inflation has increased from -0.1% to -1.7%, resulting in marked deflation.

The association also warned that as we enter a deflationary period the level of business costs continue to undermine competitiveness.

"As the cost of living continues to reduce, it is vital that we use this opportunity to address exchequer funding deficits and the erosion of our competitiveness," said ISME chief executive Mark Fielding.

"With many analysts predicting negative inflation of approximately 5% over the next number of months, it needs to be reflected in lower wages, lower business costs and lower public expenditure.

"The total folly of the IBEC/ICTU negotiated wage agreement is now clearly evident, as all wages need to be reduced as a trade off with lower prices, to help achieve a level of wage competitiveness that has been non-existent for years.

"The overall costs of doing business also need to be reduced, with local charges and energy costs reflecting the new reality."