Dear members,

We are now little more than two weeks away from Budget Day 2024. While the Government will be keen to unveil a financial package that improves its standing with the electorate, the Budget must respond to the continuing challenge of inflation.

Fórsa’s priority is to make sure that the Budget, and upcoming public pay talks, bridge the gap between wages and accumulated inflation.

As every Fórsa member will know, inflation has continued to erode our household spending power in 2023. Every household feels it. In back-to-school costs, groceries, fuel and other basics.

While the rate of inflation has recently shown signs of easing, the cost of living keeps going up, and the value of the money in our pockets can’t keep up.

The most recently published inflationary figures further reveal that, despite being introduced to curb inflation, rising mortgage interest rates are helping to fuel inflation. This means that rising mortgage interest rates have combined with continuing corporate profiteering to erode wages.

Union-negotiated pay deals - including the 2022 review of the Building Momentum public service pay deal - have played a vital role in meeting this challenge, but there remains a gap of close to 10% between wages and accumulated inflation over the past three years.

While the parties of Government have been keen to publicly dangle the prospect of tax cuts in recent weeks, it’s highly unlikely that any such measures will make much of an impression on household incomes, while inflation would quickly wipe out their value.

If the warnings about a possible fall in corporation tax receipts were to be realised, any cuts in income tax or USC may turn out to be temporary.

In any case we can see the need for more spending on services like housing, health and education. Our growing population requires more investment in most public services including childcare and social protection. Improvements that reduce the need to pay or to obtain services privately can help with the cost of living.

At the Labour Employer Economic Forum I have made it clear to the Taoiseach and other senior members of Government that the withdrawal of supports, such as the household energy credit, will place even more pressure on wage bargaining to make good the losses.

It is clear that new pay deals that address the impact of inflation on workers in the public and private sectors will be required to prevent a long-term decline in living standards.

Fórsa expects pay talks, on a successor to the Building Momentum public service pay agreement, to commence in the coming weeks, and we will continue to update you on that process as it develops.

Fórsa’s commitment is to continue to win positive results on behalf of its members. We’ve delivered our message to Government on what Budget 2024 must include to address the gap between inflation and current wages. In entering national pay talks, we are determined to ensure any remaining gap is closed.

Thank you for your continued support.

Yours,

Kevin Callinan

General Secretary.

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