Ministers set to shoot down push for widespread pay rises
Published 06/02/2014 | 02:30
Widespread wage hikes will threaten job creation unless there is a matching rise in the productivity of workers, the Government is set to warn.
Unions are pushing for pay rises this year, but the Coalition will caution against the damage to the country's competitiveness from increases in wages for doing the same amount of work.
The Cabinet will hold a special meeting this morning on jobs and reducing unemployment. Ministers will discuss policies to be included in this year's jobs plan.
Amid pressure for wage increases, the Coalition still feels the way to increase disposable income is by reducing the tax burden.
There is a belief wage hikes would make it less attractive for domestic employers to take on additional staff and bring in foreign investment.
"A period of further adjustment is necessary to get the economy back to competitiveness," said one Government source.
"Wage increases mean changes to the way we work and do business, as opposed to the old blanket set of wage increases.
"You have to try to avoid the loss of competitiveness that occurred with economic recovery in the past.
"We need to make sure we don't price the 300,000 looking for work out of the labour market.
"That doesn't mean the Government isn't concerned to address the squeeze of living standards."
The Action Plan for Jobs 2014 will focus on a number of areas:
* Providing apprenticeships and trainee places in the manufacturing sector.
* Targeting emerging markets, particularly in Asia.
* Opening up a series of new Local Enterprise Offices across the country.
* Making the country more competitive to create jobs.
The draft of the plan will include a reminder that the economy's need to be competitive is not yet complete.
The plan will say there needs to be a continued focus on the cost base, prices and wage levels.
The unit labour costs, which refers to wages and productivity, still has to be brought down, the Government believes.
But the clamour for wage hikes is growing with the country's largest trade union, SIPTU, engaging in what it described as a major push for pay increases across the private sector.
The Government has indicated it will seek to reduce the tax burden for workers, particularly middle-income families.
Price levels in Ireland are still 14pc above the eurozone average, with unit labour costs rising for the first time since the recession hit six years ago.
Also in the plan, the external trade strategy will be updated with IDA and Enterprise Ireland focusing on new markets to push aggressively into, particularly, Asian countries.
The 34 City and County Enterprise Boards are being closed to be replaced by Local Enterprise Offices (LEOs).
The legislation setting up the LEOs will kick in on March 1 with the new offices to open in April.
A review of the Action Plan for Jobs 2013 will be discussed at the ministers' meeting today and they will also talk through policies for inclusion in this year's plan.