The Government has warned public servants for the second time in two days that they must deliver productivity improvements before receiving the benchmarking pay awards.
A day after the Taoiseach, Mr Ahern, said the payments were not automatic, the Minister for Finance, Mr McCreevy, told a conference that full compliance with the agreement was required to trigger the pay increases.
Mr McCreevy's speech came after Mr Ahern told Fianna Fáil activists the Government planned new legislation to enable it to fine, demote or cut the pay of under-performing civil servants.
With Fine Gael calling for the awards to be scrapped, the latest Government demands for "real" productivity improvements in return for benchmarking awards come after the publication of Budget estimates which show that more than half the €1.9 billion increase in public expenditure next year will be spent on pay. This includes €305 million in benchmarking, €504 million in a general pay round under the Sustaining Progress partnership deal and €265 million in incremental and other increases.
Addressing business students at University College Dublin yesterday, Mr McCreevy said the Government was committed to honouring the benchmarking deal.
But he added: "I would like to stress that the payments are dependent on compliance with the terms of the agreement. If the conditions are not met in any sector, grade or organisation then the payments will not be made in that area." Mr McCreevy said that fostering competitiveness was an essential element of the Government's economic policy.
Stating that the imminent enlargement of the EU posed a real challenge to the Irish economy, he said that wage rate developments must be moderate and predictable. "We cannot price ourselves out of markets with unrealistic wage increases," he said. "Unless we get our price and cost increases down to EU levels with the least possible delay, we will continue to lose competitiveness and ultimately jobs will be lost."
He said the annual inflation rate - 2.3 per cent last month - was still noticeably above the euro zone average. "The gap is closing but the priority must be to eliminate that gap and establish our inflation rate at the euro zone average.
