McCreevy warns of pay freeze as boom ends
Meeting with employers and unions in Dublin Castle yesterday to discuss a successor to the current national pay deal, Mr McCreevy said there was no money to pay 200,000 public sector workers once they were given backdated pay under the benchmarking process.
"If we continue to pay ourselves higher wages than other European countries, that will mean loss of jobs, higher unemployment, greater drain on the public finances. It's in everyone's interest that we don't do anything that will damage the economy into the future," he said.
Employers group IBEC also called for a pay freeze for private sector workers in a bid to make Ireland a more competitive place to do business.
But unions reacted furiously to IBEC's proposals and warned it would scupper any hope of striking a new national pay deal.
Irish Congress of Trade Unions president, Joe O'Toole, said: "We're here to maintain and improve the conditions of workers and their families. A pause won't do it. It's not on. It's unacceptable."
Mr O'Toole was more conciliatory on plans for a pay freeze for the 250,000 public sector workers and welcomed the Mr McCreevy's indication that he will pay backdated pay due to them under benchmarking.
Mr McCreevy said benchmarking equivalent to a 4% pay rise or 565m would put a severe strain on Government coffers and there would have to be a trade-off between levels of pay and the provision of public services. He also said there would be no income tax cuts in the forthcoming budget and that the Government's priority was to rein in spending.
This will put pressure on employers who, in the absence of any tax cuts, face having to pay any increases to workers themselves.
But IBEC yesterday ruled out any increases and its director general Turlough O'Sullivan said a pay freeze for public and private sector workers was needed for between six and 12 months as an emergency measure. When you look at the wage growth in this country, we are way out of line with our EU partners. The only way to address this is the short term is a pay pause," he said.
Unions such as SIPTU, however, are insisting on pay increases that, at a minimum, keep pace with inflation. Their main focus, however, is progress on non-pay issues in the partnership talks, such as affordable housing, childcare, access to first-class health services and improved statutory redundancy terms.
