Phil Hogan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context

Question 93: To ask the Minister for Finance his views on the latest quarterly economic commentary from the ESRI, in particular its remarks on the partnership process; and if he will make a statement on the matter. [4075/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The ESRI published its most recent Quarterly Economic Commentary in January 2006. The ESRI is forecasting economic growth this year of 4.7% in GDP terms, and 4.8% in GNP terms. It is forecasting employment growth of 3.2% and an unemployment rate of 4.2%. These forecasts are broadly in line with my own Department's forecasts for 2006, which were published at budget time.

On budget day, my Department forecast CPI inflation of 2.7% in 2006, again in line with the ESRI forecast of at 2.6%. I am pleased to see, and obviously agree with, the ESRI assessment that the budget was strongly progressive in terms of the direction of tax and social welfare measures in favour of those on lower incomes.

In relation to the research on the partnership process, the ESRI commentary calls for wage restraint in the public sector under any new partnership deal and for flexibility in relation to private sector wages. The Government position on public service pay is very clear. The public service must be able to attract and retain a reasonable proportion of good quality staff at all levels. In this respect, it should neither lead the field, nor trail behind. The independent benchmarking process affords a means whereby sustainable comparisons between public service jobs and their counterparts in the private sector can be made and appropriate pay rates for the public service determined.

A new benchmarking body has been established recently and is to report in the second half of 2007. I expect that, among the many tasks undertaken by the body, will be consideration of the relevance of studies such as those quoted by the ESRI, which were fairly broad in their scope and were not based on actual job comparisons. Nonetheless, the ESRI commentary makes a useful contribution to the ongoing debate on public sector pay.