Sutherland attacks Irish wages and calls for tougher Budget cuts
Peter Sutherland, former EU commissioner and chairman of Goldman Sachs International, told the Institute of Directors (IOD) in Dublin yesterday that Irish wages are too high.
His speech was ostensibly aimed at countering what he called the "air of fatalism . . . nurtured by negativity" currently taking place in Ireland. But the speech itself made for gloomy listening.
Addressing international perceptions of Ireland, Mr Sutherland highlighted the positive reception abroad to Ireland's budgetary discipline of recent years. But only before calling for cuts in the upcoming Budget to go further. He said policymakers should look to cut beyond the target of €3bn.
"Ireland's principal fiscal problem is its large primary deficit (rather than a large outstanding debt level)."
Tackling the deficit was, therefore, the key to the current crisis. In addition to calling for further cuts in the upcoming budget, he launched an attack on salaries, saying that costs in the Irish economy remained far too high.
"We have really failed to benchmark our costs -- particularly, but by no means exclusively, wages and salaries -- to other European countries."
Mr Sutherland also took the opportunity of the speech, delivered ahead of the IOD's autumn lunch, to challenge calls by the 'Financial Times' to hand Anglo Irish Bank to its creditors.
He said he agreed in principle that bondholders should not be protected, but said the "collateral damage" of such a decision would be very serious.
He said that the maximum saving of €5.1bn did not justify the risk of embarking on a bank resolution process.