The Governor of the Central Bank has said retaining wage competitiveness in order to sustain jobs should be the priority, even if this means wage cuts. Professor Patrick Honohan said the Irish wages trend was 'worrying'.
He was making his first public address at an ESRI conference on the Budget in Dublin. The Governor told the conference the aim of Government policy should be to restore the structure of the economy to where it was at the start of this decade.
Professor Honohan said talks on wages needed to recognise the increased purchasing power of money while prices were falling. He also said there was 'no point in getting distracted' by pointing out inequities in current pay structures.
'Attempts to fix such inequities and anomalies do not need to get in the way of ensuring that the average real wage structure does not move out of line with that of the indirect competitors for workers in Ireland, namely workers abroad,' he said.
Professor Honohan also said that recapitalising the banks would be a costly exercise, and would add to the State's net debt. He said that while a strategy for the banks should minimise the cost to the State in the long term, it would not be wise to 'skimp' on the restructuring, as banks were crucial for sustaining growth.
