McCreevy says 'boom is over' as partnership talks begin

Talks have got under way between the Government and the social partners at Dublin Castle today in a bid to agree a successor to the outgoing Programme for Prosperity and Fairness.

The Taoiseach, Mr Ahern; the Tánaiste, Ms Harney; and the Minister for Finance, Mr McCreevy all arrived this morning with warnings that the public finances are no longer as healthy as they were when the PPF was signed in the Spring of 2000.

The Taoiseach, Mr Ahern, speaks to reporters outside the talks in Dublin Castle this morning Photos: Kilian Doyle

The social partners were told bluntly that they would have to be "realistic" in their demands. "The boom is over," Mr McCreevy said.

Mr Ahern warned that economic outlook was "to say the least, uncertain", and said the recent serious job losses in Ireland showed that competitiveness had now become a serious issue. With the impact of this on the State's finances, it is "vitally important that realism guides us all" in the talks, the Taoiseach said.

It was a stark warning to the unions that the 20 per cent pay increases enjoyed by workers during the lifetime of the PPF look unlikely to be repeated.

The message was echoed by the Minister for Finance. "Economic growth this year has slowed markedly. The outlook for 2003 is not much different," he said.

Mr McCreevy also warned public sector workers that they may face a pay freeze to implement the full cost of benchmarking - which he estimated at €1.1 billion.

With the bill for public sector pay for next year to be around €12 billion, he said there would simply not be enough money in Government coffers to both raise pay and fully implement benchmarking.

"As I have said on more than one occasion, we can only spend what we have, when we have it. We cannot spend what's not there, no matter how desirable the objective.

"We need to accept that there is a trade-off between increases in pay and the provision of services if we are to keep the public finances on an even keel." But, he said, all options would be explored.

Mr Ahern said this morning's session was designed to outline the different positions of the various parties, and that talks would begin in earnest in the coming days and weeks.

"The whole process is about consensus," he told reporters, adding that those involved should be reminded of the progress made out of social partnership in the past. "It [partnership] is intended to keep this country going".