Congress Rules out Pay Freeze, Publishes Plan to tackle High Prices
25 Jun 2008
Congress today (June 25) has published 10 key recommendations aimed at tackling the prices and inflation crisis.
The recommendations include measures that would help offset, or mitigate the worst impact of recent price and inflation rises. They include a cut in VAT, a freeze in public transport fares and increased powers for consumer bodies.
According to Congress General Secretary, David Begg: "Wages in Ireland are not driving up inflation - that is being done externally by higher commodity prices and interest rates. As such, opportunistic calls for a wage free are a non-starter. Indeed, the effect of another pay freeze would further erode consumer confidence and reduce domestic demand. That will simply worsen the situation.
"We need to tackle the inflation and prices crisis and ensure living standards do not fall. This will require a more robust, determined and coherent response from government, than we have seen to date," Mr Begg said.
Key Recommendations
1. As food price rises impact disproportionately on the lower paid and families dependent on social welfare, food and fuel poverty programmes must be immediately enhanced.
2. The massive price rises to be sought for electricity and gas must be mitigated action by government and public transport fares and user charges frozen for 2009.
3. The Orwellian attempt by the Irish government to try to underplay inflation by ordering all state agencies not to use the Consumer Price Index (CPI) but the HICP, should cease forthwith.
4. As average incomes have fallen in the past year and half, workers have had less to spend. Combined with slowing employment growth, this, in turn, has hit retailers and other businesses, underlining the case for real wage increases.
5. There has to be official, open recognition by government that Irish consumer price levels are far too high. For consumer goods, Irish prices are 14 percent higher than the average in the 27 states, but for consumer services, they are a staggering 31.2 percent above the average. This must be addressed.
6. An immediate reduction in VAT by 2 percentage points. This would reduce inflation by almost 1 percent i.e. from 4.7 percent today to 3.7 percent. It could be paid for by a rise in income taxes for those earning over say €120,000 a year and ending all the many property and other tax breaks, especially those for private hospitals and clinics.
7. The remit of the National Consumer Agency should be immediately strengthened to enable it to police the passing on of the reduction to all consumers. It needs to a) investigate price fixing and, b) take vigorous action against excess profit-making by wholesalers or retailers, especially for food including groceries and petrol and diesel.
8. The government should not continue to make major gains from soaring fuel costs. It should eschew any further rise in taxes on fuel while oil remains at over say, $125 a barrel, for a specified period of time.
9. There must be publication of the accounts of all Irish supermarkets and other 'public interest companies' to assist transparency in assessing their prices and profits.
10. Move to address the growing pay gap, in both the private and public sectors.