Workers will have to take further pay cuts -- Cowen
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WORKERS will need to be prepared to make further voluntary cuts in their take-home pay, Taoiseach Brian Cowen signalled last night.
"There is no avoiding the difficult adjustment that needs to take place in the labour market," Mr Cowen told a special Dail debate yesterday. "Costs have to fall.''
"This week's live register figures show the scale of the challenge, and the best pathway to sustained job creation and economic growth is to regain competitive advantage," he said.
This means doing "whatever is necessary" to retain and regain market share in a situation of depleted demand, Mr Cowen added.
The Taoiseach's message comes after the Government this week postponed action on the report from An Bord Snip until next Autumn. The recommendations are not even likely to be published after they are handed to the Finance Minister next week.
Reforms
Mr Cowen said yesterday that a "realistic engagement" at business level, combined with structural reforms across the economy, would place Ireland on a strong footing.
But despite his blunt advice, he refused to spell out what precise steps the Government would be taking to save vital billions for the Exchequer.
"We have taken some difficult decisions on both public spending and taxation, and more difficult choices lie ahead," Mr Cowen told a Dail sitting to discuss last week's bleak prognosis from the International Monetary Fund (IMF).
He said the Government shared the IMF view that a greater focus on reducing State spending was needed.
The FF/Green coalition plans a series of "adjustments" totalling €4bn in the Budget next December. Some €1.75bn is due to be raised through increased taxes -- with €2.25bn coming from cuts to spending.
Mr Cowen earlier this week refused to rule out reductions in benefit payments as the Government struggles to meet the crippling €70m-a-day cost of borrowing to meet its commitments. The Taoiseach has pointed out that public pay, pensions and welfare are now gobbling up two-thirds of day-to-day expenditure.
But the Government is still refusing to state explicitly where the axe will fall next year, although all social welfare recipients have been told that their benefit has been artificially boosted this year.
Increases of up to 3.8pc for this year were approved in the expectation of inflation reaching 2.5pc in 2008, but in fact it would fall by 4pc, the Taoiseach said, hinting at cuts.
Mr Cowen said yesterday that the level of employment in certain sectors -- in particular construction -- was not sustainable when the crisis hit, suggesting that workers had to help themselves to hold onto their jobs.
But he trenchantly defended his record in managing the economy, saying the IMF report had backed coalition measures to address Ireland's problems.
But the opposition parties said he was responsible for the acceleration of the downturn, claiming he had mismanaged the economy during his time as Finance Minister.
Fine Gael leader Enda Kenny said 1,000 people a day had been thrown on to the dole queues in the past six months and accused the Government of dithering in its response. He told the Taoiseach that the IMF report was "a damning indictment of your tenure in office as Minister for Finance".
But Mr Cowen maintained: "The Irish people will not thank us for wasting time and energy wishing things had turned out differently. We owe it to them to concentrate on dealing with the world as we find it."
Mr Kenny claimed that there was a divergence in Cabinet, with Brian Lenihan acting "like a latter-day Pontius Pilate". "He doesn't share your view that loyalty is a political virtue," he told the Taoiseach.
Failed
Ireland was facing a lost decade according to IMF estimates, Mr Kenny said. The Government had failed to repair the public finances in at least four attempts, "and because you didn't do your jobs over there, hundreds of thousands must lose theirs".
The coalition was once more on course to miss its targets after the publication of the mid-year Exchequer returns this week, he added. "The figures produced by the IMF are truly terrifying. We are once again the Sick Man of Europe."
Labour leader Eamon Gilmore called for the Bord Snip report to be published. "Let's get it into the public domain, and see what it says," he said.
- Senan Molony Deputy Political Editor
