Cowen warns conference on wage increases

Taoiseach-designate Brian Cowen told an Irish Congress of Trade Unions conference this morning that the pursuit of “unsustainable” wage increases that cannot be justified by productivity will have long term costs.

Speaking on the topic “Is Globalisation Good for Ireland and for Irish Workers?” Mr Cowen said Irish workers have benefited greatly from globalisation.

“We are now among the best paid in the world and . . . our significant improvement in living standards and employment growth as well as the historical achievement of ending involuntary emigration, are real concrete evidence of these benefits,” he said.

“Nothing stands still, however, and the same force that gave us these wonderful benefits can easily take them away if we do not act as we should,” the Minister warned.

Referring to talks on a new pay agreement that are set to begin tomorrow, Mr Cowen said: “Having regard to the current economic and budgetary outlook and the need to sustain our competitive position, we must not undermine this position relative to our main trading partners.”

The Minister declared that future pay increases should therefore be linked to a number of factors, noting that productivity growth improvements are forecast to be “significantly lower” than those attained in the second half of the 1990s, and that inflation is expected to be lower in the coming years.”

He said the public service pay bill remains the biggest single element in public expenditure, accounting for over a third of all current expenditure. “The development of public service pay costs must be such as to ensure that resources allocated to public service pay do not cause a shortfall of resources for other key priorities.

“It is essential that all those who work in the public service also improve their productivity and continue to deliver the best possible quality services to the public,” the Minister for Finance added.

He also expressed reservations over "the very significant payments being made to senior business people and the signal these payments send out to the majority of workers in relation to two key principles of social partnership; fairness and equity".

The new round of national pay talks between the Government, unions and employers start tomorrow. Ictu delegates voted overwhelmingly last week to enter the talks. They voted to go into the process seeking pay increases which would protect against inflation.

They will also seek the introduction of a new comprehensive pensions policy, investment in public services and legislation to provide for equal treatment for agency workers and for trade union representation rights.

The former Danish Prime Minister Poul Nyrup Rasmussen is also addressing today's conference on the theme of "Global Governance after the Financial Crisis".

Mr Rasmussen, current President of the Party of European Socialists, will later meet Labour Party leader Eamon Gilmore at Leinster House.