ICTU warns against plan to increase prices by 6%

Mr Peter Cassells, the general secretary of the Irish Congress of Trade Unions (ICTU), has warned business against pursuing profits at the expense of Irish workers and consumers. He said comments by various trade and industry organisations in recent days that they would have to put up prices by around 6 per cent because of the sharp drop in the value of the pound were "totally wrong and totally unreasonable".

Tonight, the leader of the Labour Party, Mr Ruairi Quinn, will warn that because of the lack of action taken by the Government to date, there are fears that Ireland's inflation rate could increase by 300 per cent by the end of this year.

"A 6 per cent inflation rate does not include the explosion in house prices, which has put affordable accommodation out of the reach of all but high income earners in our society at the present time," he will tell the Literary and Historical Society in UCD.

According to Mr Quinn, the combination of these inflationary pressures will inevitably impact on the terms and conditions of Partnership 2000 but he will say the Government seems to be oblivious to this prospect and ignorant of the likely consequences which such a breakdown could bring about.

Mr Cassells urged the Minister for Finance, Mr McCreevy, to call in the various trade associations and tell them he would not tolerate the erosion of moderate pay rises by prices increases. If the talk of pay increases did not stop, Mr McCreevy should consider withdrawing the £102 million in corporation tax cuts announced in the Budget, Mr Cassells said.

He said retailers and manufacturers had done very well out of the economic boom and their profits were up. They stood to further benefit from the corporation tax cuts announced in the Budget while they would also do well in coming months from reductions in interest rates. "This talk is totally wrong in a situation where they are doing well," he said.

Mr Cassells said business had to take into account the fact that, if they put up prices by 6 per cent, the moderate wage rises of workers would be wiped out as would the increases for pensioners. They also ran the risk of setting off an inflationary spiral.

But the Small Firms' Association (SFA) said Mr Cassells' comments were totally without foundation and called on him to withdraw them.

"It is total nonsense to suggest that business is joining together to increase profits," SFA director, Mr Brendan Butler said.

"The vast majority of businesses, both large and small, are operating on very tight margins anyway. To suggest that business is profit-grabbing flies in the face of reason."

Meanwhile, the leader of Democratic Left and the former Minister for Social Welfare, Mr Proinsias de Rossa said that those on social welfare would have to be compensated if prices increases this year went above the 2 per cent level of inflation expected at Budget time.

"Those dependent on social welfare are not responsible for the current difficulties with the Irish pound and cannot be expected to suffer economic loss as a result," he said.

He plans to table an amendment requiring that social welfare rates automatically increase in line with the consumer price index when the Social Welfare Bill comes before the Dail next month.