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ECB chief hits out at 90pc hike in wages

WE'VE no one to blame for our economic downfall but ourselves, a senior European Central Bank official said.

Jorg Asmussen, one of six members of the ECB's executive board, bluntly told a Dublin think-tank audience that by 2007 the Irish economy had become unfit and overweight.

He pointed out that Government employee wages rose by 90pc in the decade to 2010 and laid much of the blame for Ireland's economic crisis on Irish domestic, political and economic institutions.

And Mr Asmussen has flatly rejected the idea that Irish taxpayers should not have to bear the cost of the bank bailout.

"I frequently hear in the Irish debate the sense that the debt resulting from the bank rescue is not Ireland's debt," German- born Mr Asmussen said.

"I can understand this sentiment and how many people feel about this situation, but what must be understood is that in the run up to the crisis, insufficient domestic policies -- notably on banking supervision -- played a major role in excessive credit growth and risk management failures in the Irish banking sector, the bubble in the housing sector and the loss of competitiveness."

Workforce

Mr Asmussen told the Institute of International and European Affairs that in the decade to 2010, "wages per Government employee rose by 90pc."

This was almost double most of the euro area countries and only Greece's public sector pay rose more over that period.

Mr Asmussen said seeking to reduce our debt would signal that the debt level was not sustainable, thereby undermining confidence in the State's capacity to repay it.

He acknowledged Ireland had done much to restore its position, but said further reforms were necessary.

He described Ireland's well-educated and flexible workforce as the country's key asset.

Responding to Mr Asmussen, the Government said that it was still awaiting a paper being prepared by the Troika on the debt.

"The Government has set out on several occasions what was firstly an Irish request is being converted into a joint troika policy paper. We await a draft of this paper. This is a medium term issue," said a statement.

mlavery@herald.ie


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