Minister for Finance Brian Cowen has rejected suggestions that the national pay deal may have to be renegotiated if inflation continues to rise.
David Begg, Ictu
The Minister was responding to comments made by the Irish Congress of Trade Unions (Ictu) general secretary this morning in which he said the leadership of congress would be under pressure to review the pay settlement if the upward inflation trend continued.
Figures released yesterday by the Central Statistics Office showed the annual rate of inflation crept up again last month to 5.1 per cent, coming close to January's six-year record high of 5.2 per cent.
Speaking on RTÉ radio this morning ICTU general secretary David Begg said: "If we don't see a turn by the middle of the year - by July when our annual delegate conference takes place - I know that the people who attend that conference will be putting enormous pressure on us."
Trade unions are expected to seek bigger wage increases in the next round of pay talks, as workers have seen much of the Towards 2016pay increases eaten up by the higher prices due to the higher-than-anticipated rate.
Ibec director general Turlough O'Sullivan said the rise in inflation had been driven by substantial increases in public spending. Ibec said the Government had a key role to play in ensuring it does not add to inflation through public sector wages or excessive growth in general public expenditure.
A number of business groups have called on the Government to hold firm on public sector pay claims, and speaking this afternoon Mr Cowen said increased wages would only make the situation worse.
"I stated at the time of the budget that there would be a temporary spike in inflation in the early part of this year mainly due to the impact of the European Central Bank's interest rate increases and volatile energy prices," said Mr Cowen.
"We did expect a spike and while we have higher average inflation than the European average of 1 per cent at present, the fact of the matter is that we have growth rates which are twice the size of Europe and unemployment which is half the rate, so obviously there's a greater level of activity and domestic demand than in other economies."
"The worse thing to do now would be to respond to the increase in prices by pushing domestic wages higher. That would quickly feed through to domestic prices which would push inflation higher again so that's one upward spiral we don't want occurring," Mr Cowen added.