Another collective wage agreement is highly unlikely and a free-for-all on pay deals will occur after the year 2000, a leading economist has warned. Employers will have to resist excessive pay deals, ESRI economist, Mr Terry Baker said yesterday, adding that another Partnership 2000 style wage agreement was unlikely.

He said the fact that there were labour shortages was likely to push wage demands higher. He added that, if the economy's strong performance was to continue, employers would have to resist large pay claims. "The last time we had free-for-all bargaining, we also had devaluation," Mr Baker said. "However, this will no longer be an option post-EMU."

Mr Baker said there was a question as to how much more growth there would be in the economy. "The rate of growth will slow down because of a shortage of labour."

He said companies were coming to Ireland because of the labour force here and it was inevitable that some companies would go elsewhere if Ireland could not supply it.

However, he added that there was no really large scale industry coming to Ireland - such as in Korea, for example, where up to 20,000 jobs might be created at a time.

Mr Baker, who was speaking after the Irish Small and Medium Enterprises Association (ISME) annual conference in Killarney, said it is vital that funds continued to be pumped into third level education.

"When EU funding runs out, the Government will have to replace it in education," he said. "It is vital that we position ourselves at the top end of the skills range."

Responding to fears raised at the conference that huge job losses would occur when multinationals begin to pull out, Mr Baker said this was unlikely to happen. He said industry was more secure than it used to be because IDA Ireland had focused on clustering industries around one another. He also said it had targeted good sectors such as high technology and pharmaceutical industries.

Earlier, Mr Baker told the 300 delegates attending the conference that the current economic growth should continue until at least the year 2000.

"However, the current growth cannot be taken entirely for granted as it depends in large part on a mix of policies which we could be misguided enough to abandon."

He said it had to be remembered, in particular, that the key to sustaining the increase in domestic demand and employment was continued success in encouraging the expansion of the multinational export sector.

Mr Baker said unemployment would fall to around 8 per cent by the year 2000 and the public finances would be more secure with the debt/GDP ratio at about 55 per cent, well below the EU average.

"With the current budget surplus well-established, only a minor proportion of capital spending will need to be met by borrowing," he said.

Mr Baker added that, with EMU in place and the British position becoming clearer, exchange rates and inflation should remain stable.