ANALYSISIbeq will only consider low single digit wage rise in successor to Towards 2016, writes Martin Wall

THE NEW round of national pay talks gets under way today against a backdrop of deteriorating economic conditions and a belief on the part of many of the participants that the forthcoming negotiations will be the most difficult in the 20-year history of social partnership. The immediate issues for discussion by the Government and the social partners will include pay, rights for agency workers, pensions, union representation and workplace change.

Wider issues include investment in public services, particularly health and education, up-skilling of workers and some revised pay determination system to facilitate change and modernisation in the public sector.

The talks today will begin with a review of progress on commitments set out in the current national agreement Towards 2016. The second phase of today's meeting will centre on setting time-tables and preparatory work for talks on pay and the other issues over the coming weeks.

Neither the Taoiseach Bertie Ahern nor the Tánaiste Brian Cowen are expected to be at the talks today where the Government will be represented by senior officials. Mr Cowen, who will take over as taoiseach before the talks get under way in earnest, yesterday set out the Government's economic stall at a conference in Croke Park. He warned that it would be "futile and self-defeating" for the country to chase externally-generated price increases by simply increasing pay costs. He also maintained that the best way to improve living standards was to raise productivity levels and to keep costs down.

However, he supported different aspects of the platforms of trade union movement and employers for the talks. He warned, as have employers, that competitiveness in the Irish economy had been lost over recent years. At the same time he expressed concern at the very significant pay increases awarded to senior business people in recent years, which has been a major issue for trade unions.

When substantive talks commence today, trade unions will be looking for increases in line with prospective inflation levels and productivity growth, together with compensation for the estimated 1.5 per cent loss in real wages sustained during the current deal.

However, employers' group Ibec is expected to argue that the level of pay growth should moderate substantially to low single figures as part of a wide range of measures to restore competitiveness. It is expected to contend that the State cannot continue to afford increases at twice the rate of other euro area states.

Ibec will maintain that the critical issue in the talks is to keep Irish enterprises in business and their employees in sustainable employment.

However, the State's largest union, Siptu yesterday stated that Ireland was currently ranked as the second most competitive country in the EU 27 and that its position has improved and not deteriorated over the last 12 months.

An audio Q&A with Martin Wall about the prospects for agreement at the pay talks is available on www.ireland.com