The Government is to keep a monthly watch on inflation after concerns were raised by trade unions at a meeting on the new national agreement yesterday.
The Government and the social partners have agreed to monitor inflation to assess its impact on the pay and social welfare increases provided for under the terms of the Programme for Prosperity and Fairness.
Mr Peter Cassells, general secretary of the Irish Congress of Trade Unions, warned that the unions would have "serious problems" keeping to the PPF if inflation continued to rise.
Senior officials of the Department of Finance maintained at yesterday's plenary session of the PPF in Government Buildings that inflation rates would fall to 3 per cent by the end of the year, and to 2.5 per cent or less in the next two years. But trade union leaders made it clear that any significant increase in the current rate of 4.6 per cent would create serious problems on the pay front.
"We said the social partners would have to bring down inflation or there would be serious problems keeping to the terms of the PPF", Mr Cassells said after the meeting. "The Government and the other social partners have agreed to make a determined effort to ensure inflation goes below 3 per cent."
Forums on housing and public transport, provided for in the PPF, are to be set up immediately to tackle the problems of spiralling accommodation costs and traffic congestion.
Mr Cassells said that the housing forum would be looking at "fairly radical proposals", particularly with regard to making more serviced land available.
He added that negotiations on a childcare package for inclusion in next December's Budget were being expedited.
The director of economic policy for the Irish Business and Employers' Confederation, Mr Brian Geoghegan, said that it was a time for "keeping cool heads". He added: "Obviously, there is concern about inflation, but I don't see it as a crisis with the agreement."
There was no question of returning to the negotiating table on pay, he said, and that had not been a part of the discussions. It was "accepted on all sides that we do not want wages chasing inflation".
He believed that inflationary pressures might worsen in the short term, but refused to accept that "month on month price increases" could trigger a renegotiation of the PPF. "This is a 33-month deal and the benefits will only flow strategically if we keep to the deal."
The president of the Irish Farmers' Association, Mr Tom Parlon, said that his members favoured cuts in VAT and excise duty, which the Government could well afford, given the buoyancy in tax revenues.
Farmers would never accept compulsory purchase orders on farmland as a way of acquiring sites for housing, Mr Parlon said. The solution to the high cost of sites was faster provision of infrastructure and serviced land.
One innovation at yesterday's meeting was a decision to e-mail the social partners with immediate updates on progress at the new housing and public transport forums. This will supplement the normal quarterly progress reports given at plenary sessions of the PPF.