Employers have been accused by the general secretary of the Irish Congress of Trade Unions of adopting a "most incredible" position in pay talks with the social partners.
Mr David Begg said the "essential proposition" of the business sector was that if workers did not moderate their expectations, employers would have to "up stocks" and move to eastern Europe and China where wage rates were lower.
This was a most incredible stance because it was quite clear that the future of the Irish economy was not going to be based on trying to compete with wage rates which were 30 or 40 per cent of the level in Ireland, he said.
IBEC, the business and employers' body, has sought a six-month pay freeze, followed by pay rises in low single figures, as part of a new national partnership agreement. Direct talks between the Government, employers and unions on the pay issue opened on Friday.
In a position paper submitted as part of the talks, IBEC said competitiveness in the Irish economy had been damaged by an "explosion" in wage costs. If recent trends continued, it said, Irish labour costs would be the highest in the EU by 2004, having risen from 13th in the 1990s to sixth at present. Many jobs, it said, had already gone to eastern Europe and elsewhere, and many others were at risk.
With inflation in Ireland running at more than twice the EU average, IBEC said, a target of 2 per cent should be set in any agreement. To help achieve this, wage settlements should not be ahead of those in other euro-zone countries. "Wage growth chasing inflation is ultimately self-defeating, and IBEC strongly believes that the cycle must be broken now," the paper said.
Outlining its call for a pay pause, it said the economy needed a breathing space to recover the competitiveness lost and to facilitate a correction of the public finances. Payment to public servants of the increases recommended by the benchmarking body should be deferred until after 2003, it said.
Mr Begg, speaking at a conference of the Technical, Engineering and Electrical Union (TEEU) in Galway on Saturday, said it was not credible to argue that lower inflation could only be secured by keeping wage increases below EU average levels of 2 per cent.
"It is true that competitiveness has slipped somewhat in the Irish economy, through inflation and movements in the euro. We have a high level of inflation in Ireland, just over twice the level of the European Union average, but I will tell you why it's there.
"It's there because of the greed of an awful lot of people providing goods and services in the Irish economy," he said. In the manufacturing sector, inflation was no different than in the rest of the EU, and it was in this sector that unions were strongly organised.
"But for services, where we are less strongly organised, the inflation figure is 9 per cent. We can't be blamed for that. The fact of the matter is that people are profiteering on a substantial basis and have been for quite some time."
Mr Begg said the employers had given a very impressive performance at Friday's meeting. "One had the impression that membership of Actors' Equity wouldn't have been out of place in the case of a number of them."
Mr Owen Mills, the TEEU general secretary, said it was now more likely than previously thought that the social partners would be unable to reach agreement on a successor to the Programme for Prosperity and Fairness.
He asked delegates to support an emergency motion, which was subsequently unanimously passed, calling on the union's executive to prepare immediately for free collective bargaining and to consider serving a claim on employers in relation to pay, pensions and other issues.
The motion accused employers of adopting a "belligerent attitude" in their demand for a pay freeze.