The trade union movement is to urge the Government to increase the level of mortgage tax relief to homeowners or to reduce the rate of Vat as part of an urgent action plan to tackle inflation.
Official figures released yesterday showed that inflation is running at 5 per cent.
In a statement the Taoiseach,Bertie Ahern, said that the country was entering a period of "more challenging economic conditions".
He said it was essential that inflationary pressures were curbed and that he and the Minister for Finance would be seeking an early meeting on this issue with union and employer representatives.
The Minister for Enterprise,Micheál Martin, said the Government accepted that the inflation issue was "serious".
The Irish Congress of Trade Unions (Ictu) said that unless a way was found to ease the cost of living, it would seek to have talks on a new national pay agreement brought forward. The general president of the trade union Siptu, Jack O'Connor, also called for negotiations on a successor to the current deal to be advanced considerably.
However, employers' group Ibec signalled that it would oppose such a move. Ibec director general Turlough O'Sullivan said the rate of inflation was likely to fall further later in the year. He said that talks on subsequent pay increases should only take place when the current deal expired next March.
"We need to assess the first phase over its full duration. The pay increases under the current agreement combined with Government tax changes - on average 3 per cent - in the last Budget mean that workers will be better off, despite inflation," he said.
Ictu general secretary David Begg said that with the current upward trend in interest rates projected to continue into next year, Irish inflation would remain high, contrary to earlier forecasts.
"Therefore the cost of living is likely to exceed the pay terms of the social partnership agreement and that is a very serious problem indeed," he said. The current agreement provides for pay increases of 10 per cent over 27 months. Talks on a subsequent deal were expected to commence after Christmas.
Mr Begg said that workers could not be expected to passively absorb increased costs. "The cost of the average mortgage has risen by €320 a month in less than two years and that is unsustainable for people on average incomes," he stated.
He said that among the options congress would be proposing to the Government would be increasing tax relief on mortgages to a higher threshold and to the higher marginal rate as well as reducing the rate of VAT from its current level of 21 per cent.
Mr O'Connor said the current agreement had been negotiated on the basis that inflation would be about 3 per cent for this year.
He said any fast-tracked talks should focus on mechanisms for dealing with the causes and consequences of inflation. He added that if these issues could not be addressed the parties would have to face up to the fact that workers in the most successful economy in Europe could not accept a reduction in their living standards.
