The Government has set the tone for the next round of social partnership talks with Taoiseach Bertie Ahern underscoring the need for wage restraint in the forthcoming negotiation.
Mr Ahern said he was proud to say that the Republic was now a "high-wage economy" but said the best way of protecting high income levels was to set wage growth at a "sensible and affordable" level.
"I know of nobody who would want to live in a low-wage economy."
In a wide-ranging address to the Irish Management Institute annual conference yesterday morning, Mr Ahern continued the theme set by Minister for Finance Brian Cowen the previous evening by stressing the importance of the social partnership model to the Irish economy.
He also suggested that the "spirit" of social partnership demanded that the public sector faced up to the changes that were required to modernise it.
"We need national stability in a climate of considerable international uncertainty. We need continuation of the industrial peace of recent years. And above all, we need to be vigilant on national competitiveness, especially in the context of the enlarged EU and increasing competition for mobile investment," he said.
In a further sign that the Government is preparing the ground for the referendum campaign this autumn on the EU draft constitutional treaty, Mr Ahern repeated Mr Cowen's call on the business community to play its part in the debate.
Stating that ratification of the treaty was of crucial national interest, Mr Ahern said a strong and effective EU was of fundamental importance to the Irish economy.
"A weak and divided union, a union incapable of facing up to the challenges of globalisation or an enlarged union unable to maintain its coherence and cohesion would be profoundly bad for Ireland," he said.
Noting that the third anniversary of the Government's re-election in May 2002 was imminent, Mr Ahern cast the State's economic record in positive light and contrasted his position with those of his counterparts in Italy, France and Germany.
"Poor old Silvio is having his problems in Italy because of economic matters. Jacques has gone beyond 10 per cent unemployment, he's having his problems. And Gerhard is well over 10 per cent," he said.
Other EU states were "beginning to learn" from his Government's policy of bringing down income and corporate taxation, he said.
"People say, sure it's good all over. I can tell you it's far from good all over. Those of you who are in international business know that.
"When it gets to the stage that we say Ireland has 1 per cent of the population and we get 40 per cent of the inward investment in the broad ICT area, then I definitely go under the table, because I know if we keep going down that, it's back to tax harmonisation."
