Demand for wage hikes inevitable - but must be managed carefully, warns Central Bank
Published 02/04/2016 | 02:30
Demand for higher wages could undermine gains in Ireland's competitiveness made since the crash, the Central Bank has warned.
At the launch of the bank's regular overview of the Irish economy, its chief economist Gabriel Fagan said pressure for higher pay was only natural.
He noted that incomes fell by 5pc on average in the period between 2008 and 2013.
Wages were expected to increase by 2.5pc in 2016 and 2017, he said.
"A pick-up in wage growth is a normal phenomenon in a recovery," he said.
Better pay helped distribute the effects of the recovery through the economy, he added.
However, there was a need to avoid "overshooting" when it come to pay demands, he said.
Ireland remained a high-cost country for business, including wage costs, he added.
Meanwhile, it emerged yesterday that more than 12,000 Tesco workers are set to ballot for industrial action after the company refused a 2pc pay rise and announced 16pc pay cuts for long-serving staff.
Mandate said the supermarket chain would not accept a Labour Court recommendation for a 2pc pay increase. It said it was also attempting to force significant wage cuts on over 1,000 staff on older contracts, by moving them onto a contract with lower pay rates.
"Tesco has now told more than 1,000 of their workers they will not be receiving the 2pc pay increase and will instead be forced to take pay cuts of at least 15pc from April 18," said Mandate in a statement.
Tesco employs up to 14,500 workers in 149 stores in the Republic.
And separately, gardaí are to be balloted on proposed roster changes as part of an overall review of garda pay under the Haddington Road process.
More than 10,500 rank-and-file members of the Garda Representative Association (GRA) will receive ballot papers on roster changes over the coming days. If members agree to the proposed changes, it will see a 50pc reduction in the number of shifts gardaí finish at 2am and 3am.
The changes will also see the end of the current roster cycle of four consecutive early, late and night shits - which gardaí say is fatiguing and doesn't allow a work-life balance.
GRA president Dermot O'Brien is advising members to vote for the purposed changes, saying the proposal has significant benefits for members.