Inflation could reach 6.5 per cent by the end of the year, Ictu general secretary David Begg said today.
On his way into the latest pay talks in Government Buildings this morning, Mr Begg said: "I think the Government should have a word with Mr [Jean Claude] Trichet. Just over night he’s managed to add 0.6 per cent to the cost of living here.
“He seems to plan another two ECB interest rate increases in September and in January next so we could potentially be looking at six and a half per cent inflation rate by January of next year and nobody has a word to say about this," Mr Begg added.
Unions and employers returned to for more talks on a new national wage agreement this morning. Taoiseach Brian Cowen and Tánaiste and Minister for Enterprise and Employment Mary Coughlan gave an overview of the financial difficulties facing the economy at talks earlier this week, indicating that action would be taken within the near future.
They said they would welcome the engagement of the social partners in dealing with the problems. Ms Coughlan warned employers and unions that they may have to “park” some of their wish list due to the straitened financial situation.
Exchequer figures released this week show a projected €3 billion shortfall in tax revenue. As a result, the Government will have to borrow three times more than it had planned and cut spending by €500 million this year.
Ibec stressed the importance of restoring competitiveness and argued that careful management of the public finances was needed.
The general secretary of the Irish Congress of Trade Unions, David Begg, said there were many innovative solutions that could be explored “rather than dumping on the ordinary worker”.
Ms Coughlan today insisted Ireland’s economy was not in meltdown. However, she refused to rule out a pay freeze for public sector workers.