PUBLIC sector employees have not adapted to the new economic environment and have the capacity to undermine Ireland's future growth, the Economic and Social Research Institute has warned.
The ESRI says the potential exists for steady growth over the rest of the decade, but says that "such groups as teachers, nurses, TDs and campaigners for special interests such as the removal of service charges, could perhaps bear in mind that to undermine future job prospects would inflict far greater social unfairness that their current perceived in justices."
In its latest quarterly economic commentary, the ESBI predicts economic growth will slow from an estimated 9.25 per cent last year to 5.25 per cent this year.
Growth will remain buoyant but will not be at last year's rate because of slow growth in continental Europe and the effects of the beef crisis, it says. The economy can end the year in a position "where balanced low inflation growth of around 5 per cent over the rest of the decade is potentially sustainable", according to the commentary.
But it warns that this can only be realised if a "disciplined approach to monetary management continues to be applied by both government and social partners". Particularly worrying, it says, is the "nature and intensity" of dissatisfaction in parts of the Public Service. "Many workers in these sectors have not yet recognised the changed international environment within which the Irish economy must now operate," it says.
According to the institute, pay in the public sector is as relevant to the country's competitiveness as pay deals in the exposed sector. "Public Service pay is such a large part of current public expenditure, and because fiscal balance is a key element in Ireland's successful economic strategy, pay settlements within the Public Service are as relevant to the country's competitiveness as are pay deals in the exposed sector."
Pay moderation, institutionalised in national agreements, has been a major factor behind Ireland's economic performance over the last few years, it adds. In addition, the acceptance of "realistic flexibility" by work forces has been critical.
It notes that most private sector and semi state workers have negotiated major change in their work practices which have not been fully reflected in pay levels.
"The benefits to workers have come simply through the preservation of jobs which would otherwise have been lost," the report states.
However, the report's authors warn that "the adaption of attitudes to changed circumstances does not appear to have spread to parts of the Public Service.
"Concepts which were general in the 1970s and will contributed to the massive industrial job losses of the early 1980s still seem to be prevalent among Public Service workers," it notes.
The ESKI expects further strong jobs creation this year, although it may not match the record figures for the year to last April when 52,000 new jobs were created. It predicts that _ total employment will rise by 33,000 in the year to April and expects a further increase of close to 30,000 in the following year. However, the authors stress that this would still represent net new job creation of 2.5 per cent an "exceptional economic performance in a European context".
Growth this year is likely to be driven by strong increases in investment and export although these sectors will be less buoyant.
