Irish Economy has returned to a strong growth path
The Taoiseach, Mr. Bertie Ahern, T.D., today welcomed the recent positive news on the Irish economy including the continuing fall in the numbers on the Live Register, the positive outlook for the Exchequer position in 2004, recent foreign direct investment announcements, the conclusion of a new Pay Agreement and the ESRIs projections for strong economic growth during 2004 and 2005.
These developments clearly vindicate the Governments approach to managing the economy while the ESRI projections indicate that we can be confident about our future prospects. The recently concluded Pay Agreement, when ratified, will create a stable environment for further investment, job creation and growth.
The Live Register figures released today show nearly 9,000 fewer claimants than in the same month last year, giving an unemployment rate of 4.3%. When viewed alongside a GDP growth rate of 6.1%in the first quarter of 2004, it is clear that the economy has returned to a strong growth path.
Commenting on the recent ESRI Review, he stated that it was unusual for the Benchmarking issue to have been the main focus of public comment on an ESRI Review which makes extremely positive projections on the performance of the economy reflecting credit on the Governments economic policies. In particular, he welcomed the ESRIs endorsement of the recent Pay Agreement and its positive impact on the economy.
The Taoiseach also questioned why the recent agreement to a second Benchmarking exercise starting in 2005 should have taken some economic commentators by surprise. He noted that the Sustaining Progress deal, agreed in early 2003,had stated that the Benchmarking process is an appropriate way of determining public service pay rates in the future and that there would be discussions on the establishment and timescale of a further exercise.
The Taoiseach said benchmarking was never intended as a once-off exercise. The whole point is to move us away, permanently,from relativities. It is not too many years ago that the public sector was characterised by endless industrial action with people striving for better pay and conditions and others seeking to maintain relativities. We needed to escape the cycle of leap-frogging claims; and I am sure that nobody is suggesting we go back to those days.
We needed a better way to determine pay beyond whether the group in question could use their industrial muscle! The benchmarking process offers us a way to compare public service jobs with their counterparts in the private sector to look at the rate of pay determined by the market.
He noted that the spread of awards across sectors and within individual sectors, from 4% to 25%, under the last round shows clearly that there was a real effort by the Benchmarking Body to look at individual jobs and grades.
The Taoiseach said that the Government as employer and trade unions agreed on the need for greater transparency in the next Benchmarking exercise and will review the operation of the first benchmarking exercise and consider ways the process can be improved and streamlined.
It is important that public service pay is in line with the market so that we can continue to attract high calibre people who can provide excellent health, education services etc. and continue to represent Ireland abroad in the professional manner that they always have in the past.
The next Benchmarking exercise will not begin until the second half of 2005 and will take two years. It is not unreasonable that a further comparison of pay between public and private sectors should take place after a gap of five years. The outcome of the next exercise will depend on pay trends over that period and no assumptions should be made about what the results will be.
The Benchmarking approach has been a part of our overall sound and orderly management of the public finances and will underpin continued public service productivity gains which will be essential in promoting continued prosperity across all sectors of the economy.
ENDS