Market reality must dictate how the public service pay increases recommended by the benchmarking body are implemented, IBEC, the employers' body, said last night.
The report presented a major challenge to Government, according to IBEC's director, Mr Brendan McGinty. "It comes at a time when the economy is under severe pressure and the public finances are strained," he said.
Expenditure was already far outstripping revenue. "Surely, nobody can argue that taxes should now be increased to meet the additional annual public sector pay cost of more than €1 billion," he added.
A fall of 10,000 jobs in private industry in the past year represented the reality of competition and the market.
"Public servants, now benchmarked with the private sector, must accept the ability-to-pay factor," Mr McGinty said.
The implementation of benchmarking had to be viewed against the serious scenario for the economy depicted in the Exchequer returns for the first six months of 2002, to be published today.
However, the decision by the public service unions and the Government to try to link pay to the reality of the market was welcome.
"It clearly makes a lot of sense for those providing services in the protected sectors of the economy to measure their remuneration against the pay of people who face competition in the marketplace," he conceded. The old system of relativities, where pay claims leapfrogged each other, had outlived its usefulness.
As provided for under the Programme for Prosperity and Fairness, the implementation of the findings was to be the subject of discussion between the social partners, said the IBEC director.
According to the benchmarking body, this was to be conditional on modernisation and change issues, on the basis that real output would be delivered.
"Critically, IBEC believes that discussions on implementation must first take fully into account the issues of affordability in light of concerns about the state of the public finances and the loss of competitiveness of the economy," Mr McGinty said.
This would create the opportunity to secure agreement on the phased implementation of awards conditional on delivery of key linkages.
The proposed establishment of a validation process to ensure that agreements were honoured on issues such as adaptability, change flexibility and modernisation, would be an essential element to ensure "real outputs" were delivered, Mr McGinty said.