Companies will be forced to invoke the "inability to pay" clause of the Programme for Prosperity and Fairness due to ESB and insurance price rises, IBEC claimed yesterday. But the employers' lobby was accused of "vulgar opportunism" by the general secretary of the MSF union, Mr John Tierney, who said the attacks on the US were being used by companies as an excuse to evade their responsibilities.
IBEC's director of enterprise, Mr Brendan Butler, said businesses faced increases of up to 14 per cent in their electricity costs from today.
This came on top of the US attacks and other problems, such as the foot-and-mouth outbreak earlier this year and the collapse of the Independent Insurance Company in the UK.
Mr Butler said about 800 IBEC members had been insured with the UK company and they had had to pay increases of between 50 per cent and 150 per cent to obtain new public liability and employer liability cover.
"We're coming from a position 12 months ago where companies were doing reasonably well to one where four or five factors have hit their operations, including increased payroll and the abolition of the ceiling on PRSI," he said.
Mr Butler predicted that many more companies would have to invoke "clause seven" of the PPF - the inability to pay clause - and said that a meeting already sought by IBEC with the Tβnaiste, Ms Harney, over insurance problems would now have to have a broader agenda. He was responding to moves last Friday by the sectoral regulator, Mr Tom Reeves, to increase the cost of electricity by 8.6 per cent on average. While the price paid by domestic customers rises by 8.9 per cent today, medium and large businesses face increases of up to 14 per cent.
Such firms, however, operate in the liberalised tranche of the market, which means they are free to source electricity from independent suppliers who might charge less than the maximum permitted by Mr Reeves.
The National Grid operator, EirGrid, yesterday said it opposed a determination by Mr Reeves to cut £100 million (127 million) from its funding in the next five years.
Mr Tierney accepted certain firms were suffering due to the economic slowdown, but said many employers were "using" the US attacks to jump on the bandwagon and get out of their commitments.
He accepted that the ESRI medium-term review published last week showed there was a downturn.
"But you have to look at what is really happening on the ground," Mr Tierney said. "A lot of what employers are doing is vulgar opportunism."
He added: "We are a union with a reputation for doing business with companies. If employers want to talk to us they can do so. But we will want to look at the books, look at the future and discuss the problem with them before any decisions are made."
