There was growing pessimism in Government and trade union circles last night over the future of the Programme for Prosperity and Fairness (PPF). There is no pay review mechanism within the PPF and, without the agreement of employers to accept one, it is thought industrial unrest will increase.
The Government is to press employers to accelerate the introduction of profit-sharing schemes and to curtail directors' pay as it seeks to prevent inflation-inspired pay claims that could collapse the partnership agreement. However, this is unlikely to deflect the Irish Congress of Trade Unions from its decision to seek a major pay and tax review.
Senior trade union sources said last night they expected the crisis to worsen before the Government and employers realised how serious the situation was. The present "managed free for all", where significant groups of workers in growth areas such as construction, financial services and the IT sector are securing well above the norms set in the PPF, could run out of control.
In a statement after the ICTU executive meeting yesterday, its general secretary, Mr Peter Cassells, was careful not to put a figure on a pay review. But for the first time he explicitly linked pay with tax reforms as part of a "compensation" package Congress sought to offset inflation for those on waged and fixed incomes.
In contrast, the director of economic policy for IBEC, Mr Brian Geoghegan, reiterated his view that "pay cannot be on the agenda" when the social partners met tomorrow to discuss the Budget. He said there had been "a lot of resistance" from IBEC members to the existing terms. Any reopening of pay negotiations would not only spark off a wage-price spiral, but seriously undermine the confidence of overseas investors in the stability of the Irish economy.
However, the IMPACT general secretary, Mr Peter McLoone, said: "No is not an acceptable answer. There are going to be some very tough discussions with the Government and employers to convince them of the legitimacy of the proposals we are making." He said that if the employers continued this stance, "our members are going to say `you did your best, now stand aside and let us cut free for a while'. Then every sector and every company is going to find out how much extra it can afford to pay".
The SIPTU general secretary, Mr John McDonnell, said that not alone did the existing erosion of wages, due to inflation, need to be dealt with through a combination of tax and pay provisions but there was "a need for mechanisms to deal with future inflationary trends". This year, for the first time since national agreements were introduced, wage and salary earners only received 49 per cent of income, compared with 62 per cent in 1992.
When senior Government officials meet the social partners tomorrow it will be the first of a series of meetings to discuss inflation and agree measures in advance of the December Budget. They believe the Congress demand is flexible, and a basis for negotiation. Noting that ICTU had made no specific pay demand, the sources said efforts would centre on agreeing non-pay benefits that could be given to workers in the Budget.
They insist there is no mechanism for a review of pay in the PPF. Any compensation for inflation must be found through other means. There is also growing concern that trade unions may ultimately abandon the agreement.
