Unions, consumers concerned over rise in cost of living

Trade unions and consumer associations have called for measures to combat price rises following today's revelation that the cost of living in the Republic is now the second-highest in the euro zone.

Details of a Forfás report, revealed in this morning's Irish Times,have fuelled fears of union demands for compensatory pay increases.

To get people to roll back on prices will not be easy, but there will be pressure to do so Head of the Consumer's Association of Ireland, Mr Dermot Jewel

The study, commissioned by Forfás, the State’s industrial policy agency, following the changeover to the euro at the start of the year, showed that only Finland was more expensive to live in than Ireland within the euro zone. Prices in the UK, Denmark and Sweden are also more expensive than in the Republic, but these countries are outside the euro zone.

Speaking on the issue in the Dáil today, the Taoiseach said the Government will study the report in detail and take whatever action it can to increase competition for consumers’ benefit. He added report will be considered shortly by the Cabinet.

Mr Ahern singled out in particular a call in the report for increased competition that would benefit consumers.

The Fine Gael leader Mr Enda Kenny accused Mr Ahern of "taking his eye off the ball," and said inflation was now the most serious problem in the economy.

The Labour Party’s Mr Ruairí Quinn argued that the Government should have introduced price control in the run-up to the changeover to the euro.

The Irish Congress of Trade Unions (ICTU) said it was "very concerned" at the news, while SIPTU has said it would seek compensatory pay increases on behalf of its members unless measures are set in place to combat price rises.

"We're very concerned that rising prices have the potential to destabilise the economy," a spokesman for ICTU said today.

"It's not good for the economy to get a reputation as the second most expensive. It is a concern for everything from tourism to investment," he said.

SIPTU's vice president, Mr Jack O'Connor, said he believed workers were entitled to seek compensation and condemned "the degree of profiteering" in some professional services as shown in the report. "While this has long been suspected by workers from their own daily experience, it has now been exposed.

"It is nothing short of national sabotage, which is putting this country’s recent economic success in serious jeopardy," said Mr O’Connor.

The chief executive of the Consumer's Association of Ireland, Mr Dermot Jewel, was not surprised by the revelations. "There is no surprise for us and no surprise for consumers," he said.

Mr Jewel said what might shock people was the amount of the increase in the cost of living in the Republic, rather than the fact that it had increased.

"I don't think anyone realised that we'd be second [most expensive in the euro zone]. Maybe third or fourth, but not second," he said.

The Forfás report, which was carried out by PriceWaterhouseCoopers and economist Mr Joe Durkan of UCD, identifies sectors where prices rose unusually sharply during the euro changeover period. These include doctors, dentists, pharmacists, cinemas, restaurants and pubs.

Mr Jewel said that consumers are affected by price rises on two levels. "Affordability is a problem and lack of choice is the next problem," he said. He said that the public are very concerned about choice when it comes to doctors and dentists.

"To get people to roll back on prices will not be easy, but there will be pressure to do so," he said.

It was understood the report shows that the Republic moved from being the eighth-dearest of the 12 states in 1995 to the fourth-dearest in 1999 and the second-dearest by February of this year.

Strong levels of economic growth and the resulting impact on inflation in recent years are reasons identified for the Republic becoming a more expensive place to live, but the reports authors’ say this does not explain fully the sharper rise in prices here compared to other countries.