Dr. Claire Keane:

One of the resistances is that if we index it takes away more discretionary power. If we decide to index, it perhaps takes some fun out of budget day for everybody or whatever way one would want to think about that. If we have automatic indexation to which we commit, the Government's hands might be a little tied each year if, for example, the economy is not performing so well. That has probably been one of the keys to resistance. Also, we do not have a historical pattern of doing this. It is something that has come up recently. Even if we were to commit to doing it, there is nothing to stop us decide to change that. For example in the UK, indexation is used but this year it will not do it, the main reason being given is that wage indexation would be unreliable because of the Covid pandemic. Very odd figures for wage growth have come out during that time because many people were taken out of the labour market. There is nothing stopping us from bringing in indexation and then deciding in a particular year we cannot afford it or can only afford price indexation and not wage indexation. The Government always has discretionary power to decide in that respect.