IT IS difficult to plan for recovery when the economy is contracting at a furious pace and Government revenues are in free fall. But such action is essential to give hope to industry and reassure workers there is light at the end of the tunnel. Like everything else, this recession will pass. When it does, we must be ready to take advantage of re-opening world markets and the introduction of new technologies. Supporting infrastructure should be developed as a matter of urgency. And lost competitiveness must be regained through innovation and altered work practices.
The Taoiseach called the social partners to Dublin Castle yesterday and sought their understanding and support in the preparation of a National Recovery Plan. It was the right thing to do. Co-operation, agreement and social solidarity will form vital elements in the restructuring and development of our economic base, the establishment of new technologies and the provision of essential services. Had Mr Cowen presented the social partners with a fait accompli, by way of a finished document, the prospects for harmony would have been slim. But, by treating all the representatives as being critical to the success of the enterprise, he secured their goodwill. Even allowing for that, the representatives are likely to come under tremendous pressure from their members to concede as little as possible.
Before the meeting, Ibec representatives spoke of deferring an increase in the national minimum wage, rather than engage in a shouting match over the cost of wages and pensions within the public service. Siptu protested that the lowest paid should not carry the burden of recession. It was all relatively low-key and provided space for engagement. Within the next few weeks, Government officials will consult with the various partners on elements of the plan and a document should be ready early in the New Year. At its core will be Government proposals to create employment through incentives for research and development in high-tech industries, such as biotechnology and energy systems. The building industry will be supported through transport works, a schools construction programme and housing insulation. And, of course, the banks will be recapitalised so that they can lend more freely to small enterprises. We have the dubious distinction of living in the fourth most expensive country in the world. Rising unemployment levels and lost competitiveness means that too must change.
When the first Programme for National Recovery was agreed with the social partners some 21 years ago, the economy was in much poorer shape than it is today. The national debt stood at 115 per cent of GNP, inflation was in double figures and unemployment was touching 16 per cent. But the necessary discipline required to hold down wages and create jobs was forthcoming. And, with the help of hard work, an educated workforce, creativity and investment, the economy took off. Different problems and challenges existed on that occasion. But with goodwill, leadership and imagination, the exercise can be repeated successfully.