The Minister for Public Expenditure said any agreement to increase public sector pay needs to be fair to public servants and to taxpayers, saying it will be “difficult to strike a balance”.
Michael McGrath said the Government needs to be careful to avoid “wages chasing inflation”, warning it will make the current economic climate worse.
Mr McGrath told RTÉ radio’s Morning Ireland there will be “meaningful discussions” over the coming weeks with unions about the public sector pay agreement. The Government had honoured in full the existing pay agreements and had acted in good faith, he said.
“I have acknowledged that the current level of inflation is having a real impact on private sector workers, public sector workers and people who are not in employment.
“It is having an impact on people’s living standards.
“We’re all seeing that in terms of the day-to-day costs that are being incurred.
“From my perspective it is important that whatever arrangements are agreed are fair to both public servants, who’ve worked really hard over the last number of years, but also to taxpayers generally, because I do have that dual responsibility.
He said the current period of difficulty needed to be managed carefully. The Government had to get the country and its people through this period without damaging the economy. The difficulties at present were unprecedented in recent history, he said.
“It is going to be a difficult one to strike given the current environment.
“We just need to be careful not to have a situation where we have wages chasing inflation, and we end up driving higher and making the situation worse.” He said he would not get into “specific figures” ahead of the negotiations due to take place next week.
“As a government we have other levers at our disposal,” he said. The budget in October would focus on pay, changing tax codes and improving social welfare, he said. Forthcoming reduced childcare costs would also reduce the burden people faced.
“It doesn’t solely fall on the pay bill to address the inflationary pressures.
“But undoubtedly, it can and will play a role if we can reach an agreement over the period ahead.”
The Government will ensure the country’s finances stay on a sustainable path while helping the country through this difficult stage, added Mr McGrath.
While the Government would do everything it could, it could not completely offset the impact of events such as fuel costs and the war in Ukraine. Public finances had improved, but we were now in a period of global economic uncertainty which meant it was very important to handle the public finances prudently to avoid further damage “down the line.”
Mr McGrath also said he believes that the Government is stable and will serve its full term despite the sanctioning of two Green TDs this w“Our economy is doing well.
There were major issues facing the country so the Government needed to focus on what really matters rather than politics, he said. –Additional reporting PA