The International Monetary Fund (IMF) has recommended the gradual reduction of social welfare payments and a drop in minimum wage in an IMF staff position note approved by it's lead negotiator in Ireland.
The paper recommends a “gradual decrease of benefits over time of unemployment and stricter job search requirements”.
The have also called for additional resources to be given to Fas, the national training body. The document states that it was been approved by Ajai Chopra , its head of mission in Ireland, who also maintains the position of the IMF's deputy director in Europe.
The paper has advised a review of Ireland's minimum wage “to make it consistent with the general fall in wages”. This measure will be included of the four-year austerity plan which is due to be published tomorrow.
With regard to attracting women into the labor force it suggests changes and better child care. It highlights that “cutting labor income taxes paid by women by 5 percentage points” would increase GDP by 1.75 percentage points.
The Governments four year plan will outline measures to drive down costs in business in order to increase competitiveness according to Alan Ahearne, the Government's economic adviser.
He said the plan includes proposed reductions in costs associated with electricity, waste disposal, broadband and professional services such as legal fees.
The IMF and the EU will have the ultimate power of approval over tomorrow's four-year plan and the December 7th Budget.
Despite this, the current Government remains confident that they can implement the measures proposed in the upcoming budget.
“I am quite satisfied on the basis of the discussions to date that the budget that will be presented to Dáil Éireann on December 7th will be our own budget, nobody else’s budget. There has been no request for any change on that,” Mr Lenihan said.
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