Minister warns of lower benchmarking pay increase, writes Arthur Beesley in Killarney

Minister for Finance Brian Cowen has called for wage moderation in the social partnership talks beginning in the autumn, stating that any pay increases must be linked to better work practices in the public sector.

In a speech last night in which he stressed economic competitiveness, Mr Cowen also suggested that a benchmarking exercise due in 2007 was unlikely to lead to the same level of increases seen in the previous cycle.

At a dinner in Druid's Glen, Co Wicklow, to mark the Irish Management Institute national conference, he also urged business people to support draft EU constitutional treaty as the debate develops.

Stating that he wanted to ensure that the social partnership model remained in place, Mr Cowen said the next national agreement would be crucial for the future of the State. "We must ensure that wage increases are moderate. For public service pay, we must continue the process of modernisation and any pay increases must be linked to the achievement of specific objectives that will help build a better public service and ultimately better the country."

Mr Cowen said benchmarking was a marked improvement on the system of pay relativities that preceded it. But, while the exercise would be broadly similar to the previous one in 2000-2002, he would not claim the process was perfect or could not be improved.

He said the actual level of any pay increases was for the independent benchmarking body to assess, but indicated that a repeat of the average pay increase of 8.9 per cent in the last benchmarking round was unlikely.

"I do not know what will emerge but insofar as pay increases in the private sector would seem to be close to national pay agreement levels, I would not expect that there are huge divergences out there," he said.

"If pay increases in the private sector continue to be held at the nationally agreed norms, there is no reason to think the next benchmarking exercise will find the need for significant, if any, increases."

With the final pay rise under the 2002 benchmarking round due later this year, Mr Cowen said people should acknowledge that specific objectives had been set in different areas of the public service in return for the payment.

"While some of the objectives are not attention-grabbing, they all are playing a part in helping to develop the public service as a more efficient service."

On the looming debate on the draft EU constitution, Mr Cowen said anything that would endanger Ireland's effective participation in the international economy would endanger prosperity.

Stating that such considerations were critical to the consideration of the treaty, he said that Ireland needed to be an active player in the international economy to support current income levels.

He said the treaty was the legal framework that would facilitate Ireland's participation in the EU while meeting the aspiration to continue economic prosperity.