PAINFUL CORRECTIVE action to deal with the deteriorating economy will be taken promptly to avoid even more painful measures in the future, Taoiseach Brian Cowen said last night.
He also emphasised the need for pay restraint and expressed concern at large pay increases for top executives in the private sector.
Speaking at the Ibec president's dinner at the Mansion House in Dublin, Mr Cowen appealed to people to remember the lessons of our recent history.
"One very stark lesson is the rapid and heavy price to be paid for fiscal irresponsibility. It may be relatively painful to have to apply a corrective course to the public finances, especially across the many desirable headings of current expenditure.
"The practical reality is, however, that unless necessary corrective action is taken promptly and appropriately, more painful adjustments, with less scope for sensible prioritisation, inevitably follow," said the Taoiseach.
Mr Cowen said there were a number of reasons for the slowdown, including the "normalisation" of the new houses market and the cost and availability of credit, as well as global trends. While acknowledging the problems, he stressed the strength of the economy across many sectors.
"Some will seek to make money by betting on an unnecessary deterioration in our economic performance and then acting to make it more likely that they win their bet.
"Others will seek to press advantage in the competition which now applies between countries as well as between corporations. Let us not make it easy for them by talking down our performance."
He added that there was a need for care and common sense to apply to the adjustments that would be made. "That means prioritising those areas of spending which contribute most to our capacity to weather the storm and to respond promptly and strongly to the emergence of more benign international conditions.
"Equally, in setting our priorities, we must prioritise those who are most vulnerable and most dependent on public spending programmes. That means that everything else has to be a lower priority."
Mr Cowen said a new national deal on pay and related issues would convey a sense of confidence. Emphasising that social partnership had served the country well over the last 21 years, he expressed confidence that all the social partners were aware of the important and complex issues that needed to be resolved.
"I have stressed the need for pay restraint in the context of these talks, given current circumstances. But let me also say that this must apply across the board. It is clear that the headline rate of pay increases for top-level executives in the private sector has not been aligned with this general message and this is a source of concern. Commitment from all of the parties and a constructive, problem-solving approach will be critical over the coming weeks," he added.
However, the general secretary of the Irish Congress of Trade Unions, David Begg, signalled yesterday that if there was not an early agreement on a national pay deal, employers would face "open season" in pay claims for private sector workers.
He said a case could not be made for restraint at a time when workers were under financial pressure.
"Whole groups of people in Irish society have had their snouts so deep in the trough for so long and made so much out of it that you cannot sell a message like that to people at large any more," said Mr Begg.
He added that a pay freeze was not possible and that Ibec had "a brass neck" in seeking a pay pause for public servants when it represented companies where senior executives were paid millions.