Wage demands to challenge recovery, warns LRC chief

Stifled demands for wage rises will pose a significant challenge to economic recovery, the head of the Labour Relations Commission has said.

Kieran Mulvey said that "with recovery comes expectation". And he was already detecting, particularly in the more profitable areas of the private sector, "certain green shoots emerging around the pay issue".

He also warned of disputes over pensions, arguing that too many employers “are in a rush to abandon defined benefit pension schemes, as if one has the view, ‘let’s not waste a good crisis’ ”.

Mr Mulvey said that with economic recovery workers would seek to recover their position, particularly in circumstances where they had a profitable employer and no pay rises for two or three years.

“There is going to be a certain amount of pent-up pressure there to move.”

Some aspects of this had already materialised in the retail sector and in some profitable companies, he noted and added this would present not so much a threat but a challenge to the recovery process.

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The trade union Mandate, which represents staff in the retail sector, has secured increases of about 2.5 per cent on average over the last year for more than 40,000 members of companies such as Dunnes Stores, Argos, Marks & Spencer, Penneys and Brown Thomas.

Mr Mulvey suggested that in companies where staff had experienced reductions in premium payments such as overtime, shift allowances or other add-on earnings and where these enterprises became more profitable, there would be people saying that they wanted rises at least to match inflation if not to make up for lost ground.

“So I expect on the collective bargaining side there to be a lot of activity next year in terms of conciliation [the Labour Relations Commission] or advisory services.”

Mr Mulvey said that while the issue of the pay bill in the public service had been settled with the Haddington road deal, it had not ben resolved in the commercial semi-State sector.

Already there had been developments in the State transport companies “by virtue of both regulatory requirements and internal competition”. And he forecast that, in the case of several commercial semi-State firms, if planned privatisation was not to proceed there would be far more pressure on these organisations internally to address structural competitive costs and regulatory issues.

“I think the Government is very clearly determined that these would be addressed if the alternative to privatisation is being pursued. They will want these competitive, regulatory and cost issues addressed in some way or other.”

On pensions, Mr Mulvey said it would be a major challenge in the medium term.

“That disputes over pensions, sometimes of a highly technical character, could cause stoppages at a major retailer, take the country close to national power cuts, threaten continuity in our aviation sector and present among the most formidable challenges for firms and unions would simply have been inconceivable less than a decade ago.