Things are looking good for the economy, perhaps too good, according to the ESRI. Like the National Economic and Social Council it is predicting annual growth of around 5 per cent between now and 2005. At the same time it warns that recessions due to either internal overheating or external shocks could knock three per cent off that annual figure.
The figures are important because we need 5 per cent growth just to keep on top of the growing public service pay bill. Events of the past few days have done nothing to allay the fears expressed in both reports about the ominous future we face if public sector pay is not brought under control.
Some 28,000 nurses have balloted overwhelmingly this week for a national strike which, if it goes ahead, will be the biggest dispute in the history of the state. It is an open secret that Garda Representative Association members have rejected the latest Government pay offer in order to see how well the nurses do. Groups in the wider public sector from ESB power station workers to CIE train drivers are also biding their time.
Closer to home the teachers have openly proclaimed their intention to lodge a "catch-up claim" for whatever the nurses finally achieve. Irish National Teachers Organisation general secretary Mr Joe O'Toole, who also happens to be the current vice-president of the ICTU, has said he has no objections to nurses pursuing their aspirations. He simply wants to ensure that any terms won by them are applied equally to all participants in the Partnership 2000 restructuring review.
Nurses have already won increases worth 23 per cent, albeit at the top of a 13-year scale, since 1997. The overall increase in public service pay over the same period has been averaging six per cent a year. Both the ESRI and NESC want to see that growth cut back to around four per cent annually.
Some private sector workers have done much worse. At the bottom of the heap are shop workers, whose union Mandate decided this week that there was no point even entering talks on a successor to Partnership 2000 because they are relatively worse off now than in 1987, when centralised collective bargaining resumed.
Most private sector workers have done much better, earning increases worth between 11 per cent and 18 per cent over the past five years, with white collar employees in the construction and manufacturing sectors doing best. Skilled construction workers have done best of all, with pay rises worth 37.8 per cent over the same period.
And yet private sector workers are right to see themselves as generally earning less than those in the public sector, where average increases range from 12 per cent for teachers to 18.5 per cent for semi-state employees and 23 per cent for Garda, since 1994.
And yet a "free for all" is unlikely to change radically the pecking order of these groups. In fact the ESRI report states that, "A renewed social partnership that guaranteed a significant dividend from rapid economic growth to all citizens, while still maintaining the country's competitiveness. Providing that it dealt with the escalating problem of public service pay it could help ensure a stable domestic environment".
Like the NESC report it proposes trading some of the pay increases workers might seek for a better quality of life, through better public transport and affordable housing. Both reports also foresee the possibility of significant tax cuts to reward pay moderation. The ESRI report suggests that a new national agreement, in such circumstances, could yield real take-home pay increases of 3 per cent a year over the next decade, or almost 1 per cent a year more than we enjoyed in the 1990s.
If some groups of public service workers, such as nurses, will not like the overall drift of the ESRI and NESC reports, neither will many private sector employers. Both reports are critical of the lack of innovation by employers when it comes to gain sharing.
The ESRI report accepts that, whether or not there is a successor to Partnership 2000, changes in the labour market will force wages up in the private sector. It says this is already happening in high demand sectors and argues strongly for significant gain-sharing based local bargaining. It makes the point that such agreements allow for "flexibility downwards in remuneration", if initial agreements are too optimistic.
Although the Irish Business and Employers Confederation has so far set its face firmly against a large degree of flexibility in local pay bargaining it knows better than anyone that national pay agreements are being ignored in companies where the labour market is tight. It also knows, as does the leadership of the trade union movement, that workers will demand much higher increases at local and national agreements than at any time since the early 1980s.
The reason is that economic growth has been consistently underestimated in the past and consequently pay rises have been much lower than conditions allowed for. The bonus was record job creation and the best productivity growth in the OECD. Now both the NESC and ESRI accept that some of the benefits must go to the workers.
The other group that both bodies believe should be rewarded are those at the margins. While the single biggest group are the unemployed, lone parents, their children and the low paid are amongst those most at risk in the short term. Social inclusion can only happen in the context of a national agreement.
With NESC and the ESRI urging public sector pay moderation - along with private sector pay innovation - it remains to be seen how widely they will be heeded. The response could tell us a lot about how well social partnership is understood and valued.
