THE director general of the Irish Business and Employers Confederation, Mr John Dunne, has said pay rises in the order of 10 per cent "are absolutely out of the question" in any agreement to succeed the Programme for Competitiveness and Work.
He was speaking after making a formal submission to the inaugural conference on "Framework for a New Partnership" in Dublin Castle yesterday. The framework talks are being held to devise a basis for a new national agreement.
Mr Dunne proposed the establishment of a competitiveness council to underpin any future national agreement. The council would ensure that implementation of a future agreement would ensure that changes agreed in a new national agreement would not undermine the State's international competitive standing.
Containing the public finances was a priority for IBEC, Mr Dunne said. If public spending had been kept within the bounds of inflation since national agreements were introduced in 1987, tax reductions of £2.5 billion would now be possible.
He blamed much of the increase in public expenditure on the rising number of people in the public service. Between 1988 and 1996, the numbers had grown from 196,000 to 216,000.
He said that Ireland was no longer a low wage economy. It had slipped to 22nd place in the world competitiveness league. "Many positions in this city remain unfilled at present, despite pay rates being on offer that are far from miserly."
He accepted that in the present competitive environment, "the primacy of survival and growth lies at the level of the competitive enterprise". But, in an interview with RTE afterwards, he said pay rises of 10 per cent over the next three years were not compatible with maintaining the competitiveness of the economy.
While accepting a need remained for achieving greater social cohesion, he told the conference this could not deflect the social partners from "the primacy of competitiveness".
Spending on social services would have to be "more targeted" than in the past. Pay policy must be underpinned by tax cuts, which "make it more attractive for people to work".
Potentially serious problems also existed if Ireland joined the EMU and Britain stayed out. These factors underlaid the need for a competitiveness council to underpin any new agreement, Mr Dunne said.