Economist says 15pc chance of country going bankrupt...
CUTTING the Irish minimum wage is an "economic no-brainer" while social welfare rates must also be tackled to kick the economy back into gear, a senior official at the Economist Intelligence Unit said yesterday.
Economist Dan O'Brien also gave the Irish state a 15pc change of "going bankrupt" in the next year, a bleak outlook that comes just a month after ratings agency Fitch gave the country a 1.5pc chance of defaulting over the next decade.
Mr O'Brien was addressing the AGM lunch of small business lobby group ISME, which had just voted in Kildare accountant Eilis Quinlan as their next chairman.
Asked by Friends First economist Jim Power for his views on the lowering of the minimum wage, Mr O'Brien described the move as an "open and shut case from an economic point of view". Ireland's minimum wage, at €8.65, is the second highest in Europe.
"You only have to look at the competitiveness with other countries [to see that]," he added.
"I'm a strong advocator of the minimum wage as long as it doesn't prevent job creation. If the minimum wage is too high, you're not helping people, you're locking them out of work."
The Economic Social and Reseach Institute (ESRI) expects unemployment to grow rapidly to a peak of approximately 17pc by 2010.
If the world economy begins to grow in 2011, then unemployment could drop to 6-7pc by 2015. A longer global recession would delay the domestic process.
Mr O'Brien's comments were widely welcomed by the assembled owners and managers, who have repeatedly called for the minimum wage to be scaled back.
Speaking after the event, Mr O'Brien declined to say by how much the minimum wage should be cut, but he said it was hard to see how the Government could get its affairs in order without decreasing social welfare rates as well.
Mr O'Brien said there was "a 15pc risk of Ireland going bankrupt by next year". That position makes us the riskiest country in Europe, save only Greece whose position is "slightly worse" than Ireland's, Mr O'Brien added.
Unprecedented
Addressing the conference earlier, Mr O'Brien listed the "unprecedented" property market bubble and Ireland's banking system as two of the main challenges facing the economy.
Mr O'Brien added the US government's moves to clamp down on multinationals sheltering earnings overseas were "certainly bad" for Ireland.
And he was critical of the Irish Government's recent mini-budget, pointing out that it flies in the face of traditional economic wisdom, which advises spending cuts rather than tax hikes as the route out of recession.
"People are certainly taking a lot of pain, lets hope its not in vain," he said ominously.
When rounded on by an ISME member for not delivering the "positivity" businesses need, the seasoned economist replied: "I'm sorry not to have better news but that's just the way it is."
However, in his speech he did note a number of positives in the Irish economy.
"The quality of the labour force is a plus and in the event of an upturn, Ireland would be well-positioned to create jobs," he said.
He added the we also have had "unique" success in attracting foreign direct investment and even with the threat of the US tax code changes, there is no reason why we couldn't continue to attract multinationals.
Mr O'Brien's comments came the day after the ESRI think-tank said that Ireland could return to rapid economic growth by 2011.
Report by Laura Noonan - Irish Independent.
CUTTING the Irish minimum wage is an "economic no-brainer" while social welfare rates must also be tackled to kick the economy back into gear, a senior official at the Economist Intelligence Unit said yesterday.
Economist Dan O'Brien also gave the Irish state a 15pc change of "going bankrupt" in the next year, a bleak outlook that comes just a month after ratings agency Fitch gave the country a 1.5pc chance of defaulting over the next decade.
Mr O'Brien was addressing the AGM lunch of small business lobby group ISME, which had just voted in Kildare accountant Eilis Quinlan as their next chairman.
Asked by Friends First economist Jim Power for his views on the lowering of the minimum wage, Mr O'Brien described the move as an "open and shut case from an economic point of view". Ireland's minimum wage, at €8.65, is the second highest in Europe.
"You only have to look at the competitiveness with other countries [to see that]," he added.
"I'm a strong advocator of the minimum wage as long as it doesn't prevent job creation. If the minimum wage is too high, you're not helping people, you're locking them out of work."
The Economic Social and Reseach Institute (ESRI) expects unemployment to grow rapidly to a peak of approximately 17pc by 2010.
If the world economy begins to grow in 2011, then unemployment could drop to 6-7pc by 2015. A longer global recession would delay the domestic process.
Mr O'Brien's comments were widely welcomed by the assembled owners and managers, who have repeatedly called for the minimum wage to be scaled back.
Speaking after the event, Mr O'Brien declined to say by how much the minimum wage should be cut, but he said it was hard to see how the Government could get its affairs in order without decreasing social welfare rates as well.
Mr O'Brien said there was "a 15pc risk of Ireland going bankrupt by next year". That position makes us the riskiest country in Europe, save only Greece whose position is "slightly worse" than Ireland's, Mr O'Brien added.
Unprecedented
Addressing the conference earlier, Mr O'Brien listed the "unprecedented" property market bubble and Ireland's banking system as two of the main challenges facing the economy.
Mr O'Brien added the US government's moves to clamp down on multinationals sheltering earnings overseas were "certainly bad" for Ireland.
And he was critical of the Irish Government's recent mini-budget, pointing out that it flies in the face of traditional economic wisdom, which advises spending cuts rather than tax hikes as the route out of recession.
"People are certainly taking a lot of pain, lets hope its not in vain," he said ominously.
When rounded on by an ISME member for not delivering the "positivity" businesses need, the seasoned economist replied: "I'm sorry not to have better news but that's just the way it is."
However, in his speech he did note a number of positives in the Irish economy.
"The quality of the labour force is a plus and in the event of an upturn, Ireland would be well-positioned to create jobs," he said.
He added the we also have had "unique" success in attracting foreign direct investment and even with the threat of the US tax code changes, there is no reason why we couldn't continue to attract multinationals.
Mr O'Brien's comments came the day after the ESRI think-tank said that Ireland could return to rapid economic growth by 2011.
Report by Laura Noonan - Irish Independent.