Taoiseach Bertie Ahern said that he will warn against wage inflation when he addresses the Irish Congress of Trade Unions (Ictu) today.
"It is the Government's view that a wage inflationary spiral is in no one's interest. It takes the view that wage increases to chase the inflation figure never work and never have," said Mr Ahern.
"This happened two or three times in the past decade. It always has been better for us to devote all our efforts to trying to deal with the inflation issue and we managed to do so a number of times." Mr Ahern said he was referring, in particular, to "dealing with those factors that we can bring under control to effect a reduction, rather than trying to change it with pay rounds".
"If one simply spirals pay increases after rising inflation, everyone loses out," said Mr Ahern.
"The low paid and the vulnerable workers, in particular, will definitely lose out. As all members are aware, wage moderation is a powerful counter-inflationary tool, while excessive wage growth can be a strong driver of rising prices."
Mr Ahern was replying to Fine Gael leader Enda Kenny who asked why the Government had failed to keep down inflation. "The rate is now 5 per cent, more than twice the European average and the highest in the euro zone. This is the cause of considerable concern among a broad range of people working in the economy," he added.
"Government spending in the past seven years has been increasing way above the growth in nominal income. This is causing inflationary pressures in its own way." Mr Kenny said unions had been warning that they would seek further pay increases if inflation was not controlled and Government policies continued to fuel inflation.
Earlier, Caoimhghín Ó Caoláin (SF, Cavan-Monaghan) asked Mr Ahern about a meeting he had with representatives of Ibec and Ictu last week. Mr Ó Caoláin said there was a powerful influence in Irish society, "namely our friends in the fourth estate". He was referring, he said, to "media magnates and Independent News and Media supremo Tony O'Reilly". He asked Mr Ahern if any members of the Government had attended the pre-election meeting with Sir Antony O'Reilly.
"Nobody here could disagree that the newspapers in the Independent group clearly swung behind the Government in the latter days of the campaign," said Mr Ó Caoláin. "Was that a by-product of any such engagement?"
Mr Ahern said had had not seen any of the leaders of the newspaper world at last week's meeting. " The Independentgroup was not represented; neither was An Phoblacht."
