EMU could cost Ireland tens of thousands of jobs or it could be the best opportunity we have for jobs and growth, according to different speakers at the Oireachtas Select Committee on Finance and General Affairs hearing into monetary union.
Deputies and senators heard "the Minister for Finance, Mr Quinn, come down definitively on the side of EMU, supported by the former Taoiseach, Dr Garret FitzGerald. But economic consultant Mr David Grafton, who has advised the Labour Party in the past, warned that legislators would be blamed for putting thousands on the dole.
Mr Donal de Buitleir, general manager at AIB, caused a stir by suggesting pay should be linked to the sterling exchange rate.
But perhaps it was Dr FitzGerald's suggestion that worries about 20,000 jobs in exporting industries exposed to sterling should not hold up progress on monetary union which caused most surprise.
Dr FitzGerald said an inability to cater for the needs of workers in the event of a sterling devaluation should not "prevent the rest of the Irish people from benefiting" from EMU.
He also suggested that all exporters should hedge their currency exposure for a year ahead. He proposed that legislation could be used to drive home this message. Exporters who had not hedged could be refused any government assistance he said.
EMU would mean a greater potential for growth as well as lower "interest rates. The alternative, he said, was a return to the old dependency on Britain, and stagnation. "Do we really want to be tied to a country which has been, arguably, in decline since the end of the 19th century?" he said.
According to Dr FitzGerald EMU would mean a better system but with less room for reacting to economic downturns by devaluing. "I certainly would opt for a better system which has less help for things going wrong than a system which makes it more likely that things will, go wrong," he said. A Mr Buitleir that a way of linking pay deals to sterling moves should be examined also found favour with Dr FitzGerald.
To increase competitiveness, Mr de Buitleir suggested increasing profit related pay and making many bonus related pay contingent on the sterling exchange rate.
"Tax relief could be given on the bonus to make it more attractive to the unions," he said. If sterling did not devalue, everyone in free bonus and if it did nobody would he said.
The system would be much same as the continental method of 13 "monthly" payments, according to Dr FitzGerald.
Mr Grafton warned that cuts in wages of 10 per cent would be needed if the pound to 105p-110p post ERM.
"The £16 billion in Irish pension funds is also likely to be reinvested in a European portfolio once pensions are no longer paid in pounds," he warned.
Mr Grafton said EMU would be the equivalent of the old gold standard, but with no place to migrate to. "This is the new euro Titanic," according to Mr Grafton.
