Ms Patricia Callan:

We have to think about business logic as well as real logic. On top of that, every other company would be equally put out on the basis that competitors are getting a better business cost base. Basically, our point is that we view this as an entry rate into employment. Certainly, in terms of the relativities of pay, it has always been a concern for us that wages are seen to move in line with it. We need to see pay increases return across our economy. That makes sense for all of us, but it has to be moderated and justified on the basis of productivity. It was interesting to hear the views when we were discussing the matter with large companies. As with small companies, there is no such thing as a flat-rate increase for employees any more.

Every single business makes an individual decision on a person's productivity level. Outside unionised industries the decision is made purely on the basis of productivity. Unions behave differently but have very little representation in the private sector. I do not see us ever going back to flat rate increases. I hope that the public sector follows suit and rewards productivity.