Finance minister Brian Cowen yesterday warned against raising pay levels excessively, saying this would damage the State's competitiveness and harm its status as a business destination.
Addressing the Irish Insurance Federation's (IIF) annual lunch in Dublin, Mr Cowen said such a move would, in the long run, endanger employment prospects. "It's important we do not simply give ourselves wage rises now that will have repercussions later in terms of job retention and job creation in the future," he told reporters before the lunch.
The Government is struggling to reach an agreement with employers and the unions over a new national pay deal. "Obviously, we want a good deal," he said.
"We want a deal that will ensure we continue to grow this economy at two and a half times the rate of every other country in the euro area and keep the unemployment rate at half the European average."
Also addressing the gathering, John O'Neill, the IIF's new president, said the main issues facing the insurance industry at the moment were regulation, pensions and road safety.
He urged the Government not to become complacent in marketing Ireland as a location for financial services.
He said there was an indication that the country's attractiveness as a base for international financial services was beginning to suffer in comparison with other countries.
One of the concerns, he said, was over-regulation and he urged the Government to maintain proper regulatory standards.
Mr O'Neill, who is chief executive of Axa Ireland, also warned against complacency around the issue of pensions. "As we all know, the so-called pensions time bomb has a longer fuse in Ireland than in many other countries," he said.
"However, there is a real danger that our favourable demographics may provide an excuse for politicians and civil servants to avoid dealing with the problem by putting in place a robust long-term solution to the problem of pension funding.
"We must get to grips with the problem now."
He said that while the situation on Irish roads was getting better, there still remained a great deal to do.
The IIF represents 62 insurance companies, employing more than 15,000.
