Taoiseach warns of more cost-of-living ‘challenges’

THE Taoiseach has warned that the country could face further cost-of-living ‘challenges’ later in the year if the war in Ukraine continues.

Micheál Martin said the Government will have to work strategically in what he described as a ‘unique set of circumstances’ brought on by the pandemic and the war.

He also said exploratory talks have begun with the public sector trade unions, which have called for a pay hike for public servants.

‘In my view we have to work strategically as a country in the face of a unique set of circumstances brought about by Covid-19 in the first instance, as the first wave of the inflationary cycle was due to that and the imbalance between demand and supply, and the war on Ukraine,’ Mr Martin said.

‘We must do so in a way that protects jobs, that protects the economy into the future. We are performing very well economically so far. There will be challenges, I suspect, towards the end of the year, if the war continues.’

Mr Martin made the comments in Belfast, where he met with Northern Ireland party leaders.

Ireland’s largest public sector union, Fórsa, held its national conference in Killarney, where delegates passed motions calling for pay increases on Thursday.

Mr Martin said Public Expenditure Minister Michael McGrath has initiated talks with the union about the public sector pay agreement.

‘We have begun exploratory dialogue with the unions in terms of what would be the best approach, not just in terms of pay but in terms of services, and we will see where that takes us,’ Mr Martin added.

Asked if the Government will introduce more measures to help ease the cost-of-living burden on householders, Mr Martin said: ‘We have already brought in fares reductions on public transport... The agenda now is to work towards a budget framework at the time of the budget in respect of any further measures.’

Mr McGrath earlier said any agreement to increase public sector pay needs to be fair to public servants and taxpayers, saying it will be ‘difficult to strike a balance’.

He said the Government needs to be careful to avoid ‘wages chasing inflation’, warning it will make the economic situation worse.

While the head of Fórsa, Kevin Callinan, refused to reveal the pay increase the union will be seeking, many of its members have called for hikes of 9% to 10%.

Mr McGrath said there will be ‘meaningful discussions’ over the coming weeks about the public sector pay agreement.

‘It is important that whatever arrangements are agreed are fair to both public servants, who’ve worked really hard over the last number of years, but also to taxpayers generally, because I do have that dual responsibility.

‘We are the employers, as a

Government, of about 365,000 public sector workers, but we also have an obligation to ensure that we manage the public finances in an affordable and sustainable way into the future so we need to strike that balance. It is going to be a difficult one to strike given the current environment.

‘We just need to be careful not to have a situation where we have wages chasing inflation, and we end up driving it higher and making the situation worse.’

He said he would not get into ‘specific figures’ ahead of the negotiations next week.

Mr McGrath warned that increasing pay cannot solve the inflationary pressures.

‘As a Government we have other levers at our disposal... It doesn’t solely fall on the pay bill to address the inflationary pressures.’

‘It will be difficult to strike a balance’