Tuesday 25 October 2016

Wanting it both ways on pay and mortgages

Published 07/04/2016 | 02:30

Central Bank chief economist Gabriel Fagan
Central Bank chief economist Gabriel Fagan

Higher wages will undermine gains in the country's competitiveness made since the crash, the Central Bank warns. At the launch of the bank's overview of the economy, its chief economist, Gabriel Fagan, said pressure for higher pay was only natural. However, there was a need to avoid "overshooting" when it comes to pay demands, he said.

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In the next breath, Mr Fagan claimed the Central Bank's mortgage lending rules could be tightened even further.

A review to see how well those rules are meeting their original purpose is due later this year.

"The evidence threshold for changes is high. There may be no changes, there may be tightening of the rules," he said.

Mr Fagan sees no connections between the two statements. On the one hand, he wants wage restraint. On the other hand, he wants the rules, which contribute to workers seeking higher wages, to be kept in place or even be tightened.

The loan limits brought in last year are being repeatedly blamed for locking ordinary families out of the housing market. Imagine the impact if they were tightened further.

Government officials claim the levels of pay on offer to people entering the public service is not hampering the State's ability to recruit high-calibre staff. Yet even the industrial relations troubleshooter, Workplace Relations Commission chief executive Kieran Mulvey, says the Lansdowne Road Agreement on public service pay - which is due to run until 2018 - will have to be "revisited" if the State struggles to recruit teachers, gardaí or nurses because of low entry pay.

The lack of joined-up thinking with the various arms of government means young public sector workers are faced with the prospect of never owning their own home. After being abandoned during the downturn, these young workers need to see there is a future and the prospect of a real career.

The powers that be can't have it both ways.

We don't need any more new lows in our politics

As low points go, the night of Sunday, November 28, 2010, stands alone. It was when a fear-wracked nation watched helplessly as the IMF, EU and ECB settled into the still-warm seats newly surrendered by the then Taoiseach. The Troika had taken over.

Despite being saddled with the biggest private debt in modern history, and also having to contend with the worst recession in history, as a people we pulled together.

Given the unprecedented scale of the crisis, remarkable progress was made. A basket case economy got back on its feet, but only thanks to the sacrifices and hardship absorbed nationally, because people put the country first.

That is why public anger is at boiling point at the farcical scenes we are being forced to witness in Leinster House. After 40 days wandering in the political desert, we watched three meaningless votes for Taoiseach yesterday. It is also why politicians are so poorly regarded at the moment.

Finally, Fianna Fáil leader Micheál Martin and Acting Taoiseach Enda Kenny have sat down together to hold talks. Whether any meaning can be attached to this is still uncertain.

Fianna Fáil has yet to convince that it is actively interested in putting a government together, and is not still fixated on the possibility of out-stripping Fine Gael in another election. It would do well to remember that there is a reason why the two major parties barely account for 50pc of votes. But if they need to be told again - Mr Martin and Mr Kenny, you do not have the luxury of sitting back and waiting for a government to happen, you must make it happen. Unless you are intent, that is, on setting a new low point for politics.

Irish Independent

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