Siptu general president Jack O'Connor has this morning dismissed the Economic and Social Research Institute (ESRI) as an "intellectual mouth piece" for the establishment.
The ESRI said today it now expects the Irish economy to shrink by 8.9 per cent in terms of its gross national product (GNP) this year, which is a slightly more modest contraction than it expected at the time of its previous forecast in April.
The institute is basing its forecasts on the assumption that public sector pay will be cit by 3 per cent. ESRI economist Alan Barrett said he believed it was better to reduce the public sector pay bill through pay cuts rather than a reduction in staff.
However, Mr O'Connor this morning said today's ESRI statement advocating further pay cuts in the public service "coincides remarkably" with the publication with the report of "An Bord Snip Nua".
“This is far too much of a coincidence to be accidental”, he said. “Regrettably the ESRI has unanimously become nothing more than an intellectual mouth piece for the policies of the establishment.
"This is the institution which either failed to foresee the collapse of the credit led property boom or saw it and stayed mute about it, like all the other instruments of the establishment, such as the financial regulatory bodies," Mr O'Connor said.
“One would imagine that a good place to start addressing the economic catastrophe, which has been caused by pandering to speculators and bankers, would be to abandon that policy; but no, while virtually every other country in the developed world has embarked with evidently increasing success on such a path, we are condemned to the same old economics, pandering to the wealthy and imposing the burden of adjustment on working people.
“Pay cuts will solve nothing. They will actually exacerbate the downward trend by further reinforcing the deflationary spiral," Mr O'Connor said.
Commenting on ESRI report, Labour Party finance spokeswoman Joan Burton said: "It is important to remember there are four or five parts to this equation . . . and not to lose sight of any one of them, simply by deciding, for example, to scapegoat public sector workers.
"Reforming public services is at the core of what we need to do," she said, speaking on Morning Ireland.
"We have some exceptional salary levels at the top of the public sector . . .
and the point is if you are asking people on very modest incomes to take further pain, there has to be leadership from people at the top."
She said cutting top-level salaries in the public sector would yield a "significant dividend" because it would show leadership qualities.
Ms Burton said she did not have figures for any savings as the party was waiting for the "An Bord Snip Nua" report, which would set out where there was overspend in the public sector.
The Labour frontbencher also said the ESRI had said it does not have "great confidence" in the Nama process to see the banks resuming lending.
"The cost to the exchequer of the Nama process is enormous; many of the cuts that are being proposed will be absorbed fairly simply in the cost of servicing our national debt," she said.