'Celtic Tiger' economy is dead, says minister

Ireland's economic boom is dead and shows no sign of early resurrection, the Finance Minister said yesterday, as negotiations opened on a national wage-control pact – a pillar of the past decade of unprecedented economic expansion.

Ireland's economic boom is dead and shows no sign of early resurrection, the Finance Minister said yesterday, as negotiations opened on a national wage-control pact – a pillar of the past decade of unprecedented economic expansion.

Leaders of the labour unions demanded pay rises in excess of Ireland's Europe-leading inflation rate, at talks in Dublin Castle. Government and employers' representatives called for a freeze.

The goal was a new three-year collective bargaining agreement. Six previous deals have helped to make Ireland a particularly attractive location for foreign investors looking to keep wage costs under control and workforces strike-free.

The concept of wage restraint is under pressure in a country whose inflation rate is double the European Union average at 4.6 per cent, and where the "Celtic Tiger" economy has fuelled an extended boom in property costs, particularly in Dublin, leaving middle-class earners unable to afford a home.

During previous wage-pact negotiations, the government persuaded unions to accept moderate raises in exchange for cuts in income tax.