Taoiseach Micheál Martin has warned of a “difficult” winter, as high energy prices continue to put pressure on consumers.
“The winter will be difficult, particularly on the energy front,” he said this morning, again ruling out a summer inflation package and confirming that the Government would not act until the budget in October.
He said that Ireland is “not yet” living in an era of stagflation “and that’s what we have to try to avoid”.
Mr Martin was speaking to reporters on the way into the first day of an EU summit in Brussels that heard discussion on the surge of inflation in the Eurozone and the wider EU on Friday.
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“I’ve been very clear — we cannot chase inflation from month to month,” Mr Martin said. “It’s a very challenging and serious situation. It’s happening globally and in Europe and that impacts on Ireland.
“We have economic growth, the forecast is we will have economic growth till the end of the year, so we have to protect that side of the economy that’s creating jobs, creating inward investment in particular, while being very alert to the inflationary pressures,” he said.
Mr Martin went on to warn: “We know from the 1970s what happens if you try to chase inflation — you get second and third rounds of inflation which last for a much longer period.”
Mr Martin reiterated that the best opportunity to help people with inflation pressures would be the budget in October, once again saying that there were no plans in Government for a package of measures next month.
He sidestepped a question about contrary signals in recent days and weeks from the Tánaiste Leo Varadkar.
He said the leaders of the Government had a “very good discussion last Monday evening” and added that the “optimal moment to deal with the cost of living” was in the budget.
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He said the Government needed to “do a lot of work on this” to ensure that any measures did not contribute to further inflationary pressures.
Asked if there would be anything before the budget, he replied: “we don’t see that”.
In a radio interview on Wednesday, the Tánaiste said although the Government does not plan interventions on the rising costs of living before budget day, he could not “definitively rule out” any action.
If there was a “dramatic escalation” in fuel prices then the Government would have to intervene, Mr Varadkar said.
Meanwhile, Mr Varadkar and People Before Profit TD Paul Murphy disagreed over whether rises in pay for public servants such as doctors and judges are a pay increase or pay restoration.
It came after People Before Profit TD Paul Murphy criticised the pay rises arguing that there were “two Irelands”.
One is the “highly paid and the rich” with pay increases for top civil servants of between €15,000 and almost €40,000, he said, adding the other is low- and middle-income workers who had a “very different message” from the Government, that they had to wait until October’s budget for help with the rising cost of living.
Mr Murphy also criticised the Government’s offer to public sector unions of a 5 per cent increase over two years, saying it was “insulting” and amounted to a pay cut when inflation is at 8 per cent.
He said: “instead of massive pay increases for the top 1 per cent, the Government needs to take action now to protect low- and middle-income workers from the cost of living and housing crisis.”
Mr Varadkar accused Mr Murphy of “a misrepresentation of the facts”. Referring to the changes of pay for the best-paid public servants, he said: “this is not a pay increase. It’s a pay restoration.
“It’s the reversal of pay cuts that happened over 10 years ago.”
He said “Those on the highest salaries had the deepest pay cuts for the longest period of time, and this is the last group are seeing their pay restored.”
Mr Varadkar said 90 per cent are doctors and he told Mr Murphy if they went into a maternity hospital, “the only person who hasn’t had their pay restored is the person who did the C-section at 4am last night.”
He also said: “these are people who are hard to recruit and hard to retain and are well sought after around the world, and they’re the last people to have their pay restored.”
Mr Varadkar added “all public servants deserve a pay increase.”
He said pay rises of between 2 per cent and 3 per cent this year are “not enough given the cost of living and that’s why we’re engaging with public sector unions on an agreement for a better pay increase than that not just this year, but also next year”.
He said the unions “rightly point out” there are three elements to the issue — not just how much is paid, but how much the worker takes home and how far it goes, the so-called social wage.
“I believe the space is there for an agreement if we take into account those three aspects of it,” Mr Varadkar said.
Mr Murphy responded: “when is a pay increase not a pay increase? When you’re on over €150,000?”
He said secretaries general of Government departments were taking home €210,000 per year and will get €250,000 over the next 12 months adding: “in anybody’s money that’s a pretty significant pay increase year on year.”
Mr Varadkar said a “pay increase is not a pay increase when in 2022, you end up the same as you did in 2012. It’s the reversal of a pay cut. It’s pay restoration. Those are the facts. You may choose to misrepresent them, but those are the facts.”
