Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

If we were to have an economic debate on this matter, there would be validity in the Deputy's points, but we must first distinguish between the private and public sectors. Whatever the economic benefits of increased pay levels in the public sector, the Exchequer cannot afford them at present. Pay reductions have been negotiated as late as last year through the Haddington Road agreement, not pay increases. On the other hand, parts of the private sector can afford pay increases. From the statistics I have seen, I understand that approximately 40% of private sector firms gave small pay increases last year. The test is whether the amount they pay is consistent with not disimproving their competitiveness, the measure of which is decreasing market share. If they can increase pay without losing market share, particularly on the export side, it is good for the economy for them to pay their workers extra.

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