Ibec calls on Government to show leadership

EMPLOYERS' BODY Ibec last night called on the Government to show leadership amid a worsening outlook for the Irish economy.

Director general Turlough O'Sullivan said the economic situation had worsened significantly in the past month and that the Government needed to do more to curb public spending.

His comments come ahead of a meeting with the Taoiseach Brian Cowen next week to discuss the prospects for resuming pay talks that broke down on August 2nd.

The economy and the pay talks were the main items on the agenda yesterday as Ibec's executive council met for the first time since the summer break.

"There has been quite a deterioration in the economy even over the last month, in the retail sector, in construction and in financial services," said Mr O'Sullivan. "The mood is very negative and very depressed, with employers very worried about the outlook, about our loss of competitiveness and our ability to compete in export markets." He said it was now evident that a number of previously insulated sectors were facing significant pressure.

"We said seven or eight years ago that the economy was becoming overdependent on construction and retail sectors. There is now clear evidence of a decline in both that is quite dramatic," he said. "This year is going to be a disaster for construction and 2009 looks like it will be no better. There is also a significant problem in the retail sector.

"This is a time for the Government to show leadership and to cut their own cloth to fit."

Mr O'Sullivan said the public services had become bloated over recent years with a large number of new statutory bodies hiring new staff "at a time when most people would feel there was a fair bit of slack to be taken up".

Speaking in Galway yesterday, the Taoiseach said that it had not been possible to finalise the social partnership talks at the beginning of the month. "I indicated that time and space for further reflection were required and that I would be available to meet the parties later if they wished and I intend to do that."

However, with the mood at yesterday's meeting pointing to increased concern among employers at the outlook for the economy, Mr O'Sullivan was holding out little prospect of a softening of Ibec's negotiating position. And he said that Ibec was concerned at recent moves by the Government to take over pension funds of a large number of semi-State bodies in an initiative that will allow it to loosen control of public spending next year, while storing away financial obligations that will have to be met by the taxpayer in years to come.

Sources in the pensions sector say the move will bring over €4 billion into the exchequer at a time when the Government is looking to ease pressure on its finances.

Mr O'Sullivan said the announcement would make it much more difficult to strike a pay deal. "The economy is in a pretty serious state and what we really need is some kind of shared consensus about how serious things are, not measures that will make it worse," he added.