As we approach the end of the holiday season, people will begin to return to their jobs. For the Government, trade unions and employers, the break-up in the pay talks will be a key issue.
In the past Bertie Ahern came along like the galloping lone ranger, found some extra money somewhere, agreed some tax changes and kept the unions and employers happy. The difference now is that the Government finances are just getting worse.
The trade unions find it hard to accept that this is the case and that things can change so dramatically in the Government finances. The falls in tax revenues have been very sudden and unexpected from a year ago. A budget deficit looms and the big challenge is keeping it within European guidelines.
The lack of property transactions is a key matter, the market overheated and is now cooling off.
As people contemplate change, the rise in jobless in the manufacturing and construction industries will weigh on minds in the near term. The hotel industry is also facing difficulties as people spend less. Probably too many new hotels were built with the various tax incentives available.
Could Bertie Ahern be called in to ask the lads to agree another deal or will some other power broker be brought in?
No pay deal and resultant chaos would be bad for the country, the consequences have not been thought through enough probably.
Some vociferous language can be heard but perhaps a more temperate, logical approach is needed, rather than ratcheting up emotions.
Foreign investment would leave the country as Ireland would be deemed unstable and we would all lose out hugely.
This is a huge test for Brian Cowen’s leadership, is he a man that inspires trust and can lead us to a better future? Does he have the problem solving abilities needed to convince everyone that some sacrifices are needed?
A drop in the oil prices could be a dampener on inflation and save the day in terms of agreeing figures. In the past the Government could afford to pay more but now it cannot, but communicating this will be difficult. The Government Ministers will have to work harder at selling their message as they are not succeeding as of yet.
We understand the Tanaiste Mary Coughlan is going to get involved in talks, her portfolio covers Labour, Enterprise and Employment and it is essential that the Government are not seen to abandon matters.
The six monthly figures of billions less in tax revenue must create a new shudder over the Finance Ministry. A deficit of €4 billion plus is being predicted, well ahead of earlier year estimates. This is the new reality that the negotiators must face after the holidays.