Exporters will have to cut wage rates, IEA warns

A significant number of Irish exporters will have to reduce the wages they pay staff in order to survive, according to the Irish Exporters Association (IEA).

Exporters faced a combination of pressures including exchange rate losses, falling consumer demand, cash flow problems and high labour costs, the association said this morning in a statement.

As a consequence not only will many exporters have to use the "inability to pay" clause of the new national wage agreement but they will have to seek reductions in current wage levels.

Liam Shanahan IEA president said other measures were needed to shore up the export sector including cost reductions for Government services, materials imports and business services.

He said the social partnership deal was "incapable of responding to major economic crises, such as the one we are now facing. The Irish cost base must be brought down to ensure export industry can continue to sell its products and services in these more recessionary times. This must start with our labour cost base."

According to Mr Shanahan the increase of 8,600 in the number of public sector employees over the last 12 months and the 5 per cent benchmarking pay increase implemented in September have already increased the burden on the private sector.

"The cost of the Public sector is unsustainable, and must be urgently reduced as part of the return to a more cost competitive economy," he said.