Wage talks on unsure footing

It is early days yet, but the Government and the Irish Congress of Trade Unions have indicated that the achievement of another national pay agreement will involve tough talking and tough decisions if one is to be reached.

Taoiseach Bertie Ahern indicated yesterday that he wants to start negotiations for a successor to the PPF in the autumn. Today, the Cabinet meets to agree what they euphemistically call “adjustments” in public spending and what most other people would describe as cuts in public spending.

It is understood that the Minister for Finance, Charlie McCreevy, is demanding cuts amounting to 300 million across all Government departments. However, some economists are sceptical that such a level of saving will be inadequate enough to meet the economic constraints that the Government is inevitably going to face.

Spending in the first half of this year ran at an unacceptably high level and, if the same pattern is allowed to continue for the second half, there could be an overrun of considerably more than 1 billion.

For the past 15 years, the concept of the social partners engaging in a national pay structure brought the country to a unique state of robust economic health. Now it is quite clear to the ordinary person that such health is in decline. The severity of the situation remains to be seen.

What does not remain to be seen is that the cost of living in this country is heading through the roof. According to a Forfas survey, Ireland is the most expensive country in the EU. According to David Begg, general secretary of the ICTU, we are 14th in the wage league.

The Taoiseach has dampened expectations as to when benchmarking increases will be paid out to public sector workers, which will be a contentious issue when talks about a national pay agreement open in the autumn.