McCreevy says conditions attatched to benchmarking

Full payment of the benchmarking awards for the public sector is not unconditional, the Minister for Finance, Mr McCreevy, warned today.

Speaking as CIÉ unions hold a "no-fares" protest at planned reforms at the semi-State company, Mr McCreevy said benchmarking included "no industrial action" and improvements in public services as conditions in return for all pay rises being granted.

The benchmarking body awarded 230,000 State employees an average increase of 8.9 per cent, with an expected cost to the taxpayer of €1.1 billion.

The Minister was addressing the first meeting of the social partners under the new Sustaining Progresspartnership agreement in Dublin Castle this morning.

He said an anticipated economic recovery in the second half of this year has not appeared, leading to a downward revision of economic prospects for 2003 and 2004.

According to Mr McCreevy, "unless we can get our price and cost increases down to EU levels with the least possible delay, we will lose jobs and growth".

A recent fall in inflation to 3.5 per cent was identified as "encouraging", by the Minister. Lowering inflation was necessary to secure jobs, Mr McCreevy said.

Reducing Irish inflation to the euro zone rate of 2 per cent was identified as a crucial challenge by the Taoiseach, Mr Ahern, in his address at the same meeting.

Mr Ahern said he was acutely aware of recent high profile job losses in recent weeks. "We all want to maintain our relatively strong employment performance, unemployment is still low at 4.4 per cent for the first quarter of 2003, compared to a euro zone average of 8.8 per cent".

The Tánaiste, Ms Harney, said Ireland has to face facts: "We have lost some ground. We have lost competitiveness. We are trying to sell good and services internationally at higher prices than our customers need to pay. This won't work".

"No one is obliged to invest in Ireland. No one is obliged to stay here. Our customers can go elsewhere. And they do," she said.