UNIONS HAVE said they will resist pay cuts in the face of a warning from Minister for Finance Brian Lenihan that public sector payroll reductions were imminent. However, Ictu general secretary David Begg has given his strongest signal yet that unions may be willing to move on the deferral of wage increases.
Siptu president Jack O'Connor said yesterday that union members would resist pay cuts.
"I don't think it's feasible to think in terms of cutting agreed pay rates. That has never happened in this country and it would be completely counterproductive . . . It would further undermine consumer confidence and probably exacerbate deflation."
Mr O'Connor was responding to comments made by Mr Lenihan in relation to the estimated €11 billion deficit faced by the Government. Mr Lenihan said the Government would have to make a decision on the State's payroll costs "within a matter of weeks".
Mr O'Connor said the better off in society would have to make a contribution to the economic recovery and suggested increasing higher rates in tax. Unions did "have a responsibility to play our part," he said, but he refused to say whether they were willing to negotiate on the deferral of the national wage agreements.
Mr Begg indicated yesterday that he was willing to discuss a deferral, but not a cut in pay for public sector workers.
When asked on RTÉ radio whether or not he was ruling out deferral of the current pay deal, Mr Begg said: "I'm not ruling out any discussions about that. What I'm making explicitly clear is that I cannot get into the area of wage cuts per se because of the damage that would do, pushing us into a deflationary spiral which would leave us in a much worse situation that any other country in Europe."
There was, he said, need for a "sensible compromise" between the issues of cutbacks in the public service, pay and restructuring of the tax base.
"It seems to me that if we expect to deal with the problem effectively what is required is a sensible compromise between all of those variables," he said.
Minister for Transport Noel Dempsey stressed on Saturday that it was the Government position that tax increases were not a solution to the current difficulties.
"The Minister [for Finance] has made quite clear he doesn't want to visit . . . the whole area of increasing tax and he's indicated that we've increased tax this year by as much as we can without damaging the economy further."
Speaking on RTÉ radio, Mr Dempsey also reiterated the urgency of finding a way of dealing with the deficit.
"We are living in extraordinary times . . . The situation we are in currently as a country is that we need to cut €2 billion from our budget, we need to do it within weeks."
The solution would have to involve cuts in the public sector Mr Dempsey said. "There are only three areas we can get that: pay [and] pensions, cutting services or cutting numbers in the public service or a combination of those."
