Irish competitiveness is being undermined by recent pay claims, particularly in the public service, according to the director general of IBEC, Mr John Dunne.
However, SIPTU's general secretary Mr John McDonnell rejected Mr Dunne's claim yesterday and said that workers were "perfectly entitled to their share in the wealth being created".
The sharp differences between the two sides is further evidence that a new national wage agreement, as part of a successor to Partnership 2000, is becoming less likely.
Mr McDonnell went as far as defending workers who "understandably pursue traditional wage demand methods" when employers denied them access to increases through new systems of gain sharing.
Speaking at the IBEC economic conference in Dublin Castle, Mr Dunne said: "Partnership is a two-way street and some industrial relations problems, and the way in which they have been processed, suggests there is still a lot of work to be done if attitudes are to be in tune with modern requirements."
He warned: "Our competitiveness is threatened by the drift in earnings over the past year - some of which is due to shortages of specific skills. In the public service the main inflationary factors have been the old chestnuts of relativities and special increases."
While Mr Dunne said that he had no problems with pay increases arising from "well-based competitive partnership strategies at the level of the enterprise", wage drift "will eat away at our ability to compete".
Looking beyond Partnership 2000, he said: "We must be absolutely clear in going forward that any new arrangement contains the certainty of past agreements."
Mr Dunne saw upskilling the existing workforce and using measures such as improved childcare facilities, greater flexibility in working arrangements and more dispersed location of industry as the main means of easing the labour shortage.
He said employers "should reject initiatives which act in the opposite direction".
Among these he listed "the artificial regulation of working time", works councils for small enterprises and unrestricted access to emergency parental leave.
Mr McDonnell challenged Mr Dunne's analysis sharply. He said that the 1999 Annual Economic Report of the European Commission showed Irish workers only earned 94 per cent of the EU average, but that their productivity was 6 per cent above average EU output.
"Consequently, Ireland emerges as the most competitive economy of all the member-states of the single currency area," he said.
Workers were "perfectly entitled to their share of the wealth being created and in pursuing their legitimate claims to share in the economic boom".
He said that employers were often to blame from wage claims being lodged because they refused to offer the type of gain sharing deals proposed in Partnership 2000.
