The director-general of IBEC, Mr John Dunne, has warned the Government and public service trade unions that special pay increases must stop or pressure on the Exchequer will be "intolerable". The president of the Irish Farmers' Association, Mr Tom Parlon, also came out against any further pay concessions to public service unions.
At the general review of Partnership 2000 in Dublin Castle yesterday Mr Dunne said IBEC was "fully committed" to the provisions of the agreement and expected all the other parties to be likewise committed. Afterwards he declared himself relatively satisfied with the outcome.
"There was a very clear message from the Government and the business community that public sector pay demands were not in line with the agreement. We have always contended that the evolution of special increases in the public service since 1987 was a cause of concern," he said.
"It has now transpired the rate of increase in the cost of public service pay over the period since then has been higher than the private sector. IBEC cannot and will not accept a new round of special pay increases in the public service.
"In our opinion the operation of special pay increases must come to an end now, otherwise the pressure on the Exchequer will be intolerable and the whole strategy of moderate pay increases, tax reform, containable inflation, strong growth and stability will be put at risk."
He added: "The process of social partnership is a dynamic one, and the extraordinary growth we are experiencing poses a big challenge that has to be addressed. Partnership is a two-way street. It demands all parties work together and honour their commitments. By so doing, the very real achievements and progress made since 1987 can be continued with confidence. Failure to do so could see the fruits of our success in recent times rapidly set at naught. It is not an option we should contemplate."
Mr Parlon said that under Partnership 2000 farm incomes had fallen, but the farming community still accepted the agreement was fundamental to the growth in Ireland's economy. Farmers would continue to support the consensus approach so long as it continued to deliver on low inflation and competitiveness.
"I pointed out to the Taoiseach, Mr Ahern, and the other social partners that the farming sector is the most vulnerable of all sectors to the threat of inflation," he said. "This arises because there is no indexation for inflation built into either the CAP price supports or CAP direct payments. Also, because the Irish pound is now fixed to the other Euro currencies, price increases through currency depreciation are history."
He was optimistic that inflation rates could be reversed, especially once sterling began to weaken. Mr Parlon said the main threat of renewed inflation came from the public service unions. "The Taoiseach must tell the unions that higher productivity must be the basis of future pay increases, and not outdated relativity claims."