Siptu has warned that unless the current decline in workers’ living standards is reversed there will be total slump in domestic consumption undermining any chance of an economic upturn next year.
In its latest economic analysis, the country’s largest trade union claimed the fall in real earnings was underpinning the current recession.
The union’s head of research Manus O'Riordan said: “Unless this decline is reversed a total slump in consumption will threaten economic recovery next year”.
Mr O’Riordan criticised the Economic and Social Research Institute’s latest economic forecast for failing to note the decline in living standards during the past year for workers in both the private and public sectors.
If the Government wished to avoid turning a recession into a depression, it needed to acknowledge the importance of domestic consumption in driving economic growth, he said.
He agreed with the ESRI’s assertion that there was a strong case for breaching the 3 per cent EU borrowing guidelines in 2009, claiming that Ireland’s gross debt/GDP ratio would still be only half that of the euro area as a whole.
Mr O’Riordan said despite adverse exchange rate movements and a slow down in demand from foreign markets, Ireland’s export performance remains resilient.
“Our labour costs remain highly competitive, with EU data showing that Ireland ranks as low as 10th out of 12 countries surveyed, and our labour costs were only 80 per cent of those in Germany and the UK,” he said.
The union’s analysis comes in the wake of latest Quarterly Economic Commentary from the ESRI which predicts the economy will experience a recession this year for the first time since 1983, and a return to net emigration next year.
Taoiseach Brian Cowen and Minister for Finance Brian Lenihan have both vowed to take corrective action to tackle the deteriorating economy.
