The Government is to seek a deal with the country’s employers, trades unions and social organisations to boost economic growth and cut billions off public spending in coming years.
During a private meeting with the social partners yesterday, Mr Cowen asked them to join “detailed and intensive discussions” to “further develop and then implement” a economic renewal plan.
“Social partnership has delivered in the past. However, the test is whether it can deliver when difficult decisions have to be taken,” Mr Cowen said, during a two-hour meeting in Government Buildings.
“We don’t claim to have all the answers. Neither will there be overnight success. Difficult days lie ahead. However, we have reached a crossroads in the country’s development,” he added, according to a note seen by The Irish Times.
The fall in tax revenues means that €3.5 billion will have to be borrowed: “This is not sustainable, or sensible. It risks a return to a debt spiral where interest payments consume ever increasing amounts of taxation.”
Before outlining the stimulus parts of the Government’s proposed “framework for economic renewal”, he added: “I believe that the public – your members – need to understand that the sacrifices, which will be required in the short-term, will not be in vain.”
Last week, Minister for Finance Brian Lenihan said the country’s economy would shrink by 4 per cent next year.
Indicating that any recovery will be slow and painful, Mr Cowen told social partners that it would also shrink in 2010.
“As a consequence there will be a sharp fall in employment and further significant increases in unemployment in 2009 and 2010,” said Mr Cowen, who was accompanied by Mr Lenihan, Tánaiste Mary Coughlan and Green Party Minister Eamon Ryan.
During its Monday meeting in Farmleigh, the Cabinet agreed on the framework document, which will offer tax breaks to spur research and development; encourage green industries and encourage extra training for workers to boost their skills.
The social partners will meet again at Friday’s meeting of the National Economic and Social Council, where more detailed talks on the recovery “framework” are likely to be held.
Speaking after the meeting, Ictu general secretary David Begg said that the discussion centred on whether the Government “could recruit people to the idea of forming a plan which would ultimately be capable of lifting the country out of the difficulties”.
Employers’ group Ibec said that it supported the need for strong and urgent measures from Government to address the very serious economic challenges facing the country. Ibec director general Turlough O’Sullivan said the recovery plan should include putting the public finances on a firm footing by further cutting current spending, accelerating public service reform, freezing increments and cutting jobs.
Welcoming the offer to be involved, Fr Seán Healy of the conference of religious in Ireland (Cori) said any plan that did not address issues such as health, education, social welfare, unemployment, homelessness, housing, and poverty would not really be credible.
Jack O’Connor of Siptu said the Taoiseach had undertaken to invite all the constituencies to subscribe to the development of the plan and that “we are up for that”.
The president of the Irish Farmers Association, Pádraig Walshe, said that the massive sterling devaluation was putting immense pressure on the food industry. He called on the Government to immediately establish a task force of the sectors most affected to see what could be done to prevent irreparable damage to the exporting industries.
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