Taoiseach Bertie Ahern has warned union leaders against a return to the "wage/price inflationary spiral" of the mid 1980s and has said the Government is taking steps to deal with inflationary pressure on workers and their families.
Addressing Irish Congress of Trade Union (Ictu) delegates at the body's biennial conference in Bundoran, Co Donegal today, Mr Ahern said the Government would respond "effectively" to the challenge created by current inflationary pressures.
Mr Ahern said the Government does not want a return to the situation that saw real living standards drop by 7 per cent, despite a 77 per cent increase in pay, in the 1981 to 1987 period.
He again urged the unions to "embrace change" and "the realities of the international market environment", while affirming his belief in the continued relevance and effectiveness of the social partnership process.
"I think most of us realise that it is long past time to throw away the comfort blanket of insisting on the old ways of doing things. The reality behind the competition we face is that it is driven by people who take their comfort from the promise of the new, and not from holding on to the past," Mr Ahern said.
Mr Ahern said his message to the unions was one of confidence for the future, in the economy and in the value of social progress which our economic strength had made possible.
"There are those who believe that our recent successes are an illusion. That they will disappear and we will be back to the natural order, an Ireland of unemployment and underachievement. Some of these voices were telling us, not so long ago, that our approach was all wrong, that social partnership was a mistake, that centralised pay bargaining could not deliver. They were wrong then, and they are still wrong," Mr Ahern said.
"We have every reason to be confident but we have no grounds for complacency. In a world with higher interest rates, higher energy costs and increasing competition from emerging economies, success cannot be taken for granted and prosperity must be protected."
Citing last week's ESRI report on the social impact of Ireland's economic development, Mr Ahern noted its conclusions that living standards have risen for "more or less everyone" and that levels of deprivation had significantly declined for all social groups.
"These achievements are not an accident. They are the outcome of good policy decisions by stakeholders in Irish society, mediated in many cases through social partnership."
Mr Ahern said he, the Tánaiste Brian Cowen and Minister for Enterprise, Trade and Employment Micheal Martin last week had a "frank" discussion with Ictu and the business body Ibec about the pressures of living standards for workers and their families and about the cost pressures faced by companies trying to sell into global markets.
"As always, there are no easy answers. But there seemed to me to be a clear consensus at our meeting that whatever we do, do not let us go back to the wage/price inflationary spiral that saw real living standards drop by 7 per cent, despite a 77 per cent increase in nominal pay, between 1981 and 1987. We will not reinvent the problem that social partnership was created to solve," he added.
The Taoiseach noted Ictu's proposals to address the problems and said the Government had agreed to "engage intensively" on that agenda.
Mr Cowen, he said, has already announced a further increase in mortgage interest relief to benefit those most exposed to the impact of higher interest rates, while the Government has also agreed to frame policy so as to avoid, to the greatest extent possible, adding to inflationary pressures.
On employment standards, Mr Ahern said the lowering of employment standards had no part in the Government's "vision for the future" of the country.
He said real progress was being made to enhance employment standards and legislation had been enacted to address so-called "Irish Ferries on land" situations. Mr Ahern said that agreement had been reached in the social partnership document Towards 2016 on a framework to regulate employment agencies.
"If it is the case that increasing levels of activity by employment agencies are having a harmful impact on accepted terms and conditions or, again, if we find that non-national workers are being exploited in the way agencies operate, then employers and unions and the Government will need to look again at what is the right balance in regulating employment agencies and agency workers," Mr Ahern said.
The Taoiseach also announced a new initiative aimed at "improving our understanding of the scale and impact of employment agencies and agency workers on the labour market".
It will involve a new survey on employment conditions, with particular emphasis on agency workers. New questions about agency employment will also be added to the quarterly national household survey and employers will be asked about the number of agency workers they employ in the National Employment Survey.
The Taoiseach acknowledged certain problems with the public service and said the future of the public service, the quality of its employment and the "continued flow of its funding" can be assured only when the quality, efficiency, productivity and responsiveness to the citizen are "transparently beyond challenge".