It would be regrettable if future historians have to look to yesterday's plenary session of the Programme for Prosperity and Fairness as marking the end of social consensus in this State.
That era began in the late 1980s when hard reality forced the social partners to accept that if they did not hang together they would surely hang separately. But there can be no certainty that such consensus will carry over from this point. After a decade and a half of general stability, we may be moving into uncharted waters in regard to pay and related issues.
The economic calculus has altered dramatically in a relatively short time. Healthy budget surpluses have been replaced by spending cuts and increased charges for public services. Ministers will learn details at today's meeting of the Cabinet. Even the modest growth projections of perhaps five per cent for this year and next may not now materialise. The assumption that our infrastructure and public services could be financed to meet EU standards is no longer sustainable.
Mr McCreevy plans to take €300 million out of public spending immediately and perhaps as much as €1 billion in a full year. This alone will have the effect of slowing the economy. But with the slide in business confidence in the United States, and the world-wide drop in the stock markets, worse is yet to come.The economic picture now before us bears very little relationship to the rosy scenario described by the Government parties as we approached the general election less than three months ago.
In this troubled landscape, a pay free-for-all is a grim prospect. Expectations are high among the public service employees under the benchmarking umbrella. Workers generally are feeling the pressure of rising prices. Official figures now support the belief, increasingly expressed by consumers of late, that the cost of living in this State has been rising rapidly. Health care and electricity charges are set to increase further. There is the possibility of interest rates rising if the euro strenghthens later in the year. All of the ingredients which would go to create a pay scramble are present.
But the capacity of the economy to meet pay expectations is very limited. Whatever public sector employees may gain through benchmarking will have to be raised either through taxation or through further cuts in spending. In the private sector, few companies are experiencing sufficient growth to carry heavier payroll costs. The potential for conflict, for industrial disruption and for the inflicting of permanent damage on the economy is enormous.
Yesterday both employer and employee representatives struck somewhat predictable stances. But behind the posturing lies the reality that neither side is convinced, as they have been in the past, that a national consensus is necessarily in their own best interests. If it can be achieved - if there is to be a successor to the Programme for Prosperity and Fairness - it will be hard-won and there will have to be a dampening down of expectations on all sides. But there can be no doubt that in the long term national interest an agreement on terms which are moderate and just is preferable to a free-for-all.