THERE is serious danger of a wages explosion, even if a new national wage agreement is reached a confidential report prepared for the Government warns.
The National Economic and Social Council report says any agreement to succeed the Programme for Competitiveness and Work must put in structures to promote social partnership in the workplace. Otherwise it will be difficult to dissuade workers in the most profitable sectors of the economy from pushing for short term pay rises, regardless of the impact on the economy's competitiveness and long term development.
The report also warns that without such structures the system of national agreements, which has underpinned Ireland's record economic growth since 1987, is in danger of collapse.
The report says there is dissatisfaction in many sectors at the low pay rises provided for under national agreements. It says that ways may have to be found to accommodate local wage pressure in the context of a tightening labour market and rising business buoyancy.
"Without some clear expressions of partnership at enterprise and workplace levels, backed by appropriate arrangements to involve unions or employees in joint decision making and to give employees a stake in company performance, it is difficult to see how unions or sections of their membership can be prevailed upon to resist `punching their weight' to the fullest possible extent, to win pay concessions where labour markets are buoyant and firms are enjoying growth in profits."
Wage pressure of this kind would spark second tier pay bargaining across the economy, reinforced by employees and union claims focused around "fair comparison".
"Wage drift could in this way run out of control, undermining a national agreement and damaging the economic and fiscal stability achieved in considerable measure through national tripartite arrangements over the past decade."
The report's findings are likely to have a major bearing on negotiations on a pact to succeed the PCW, which may begin next month. They also reinforce the case made by the Irish Congress of Trade Unions and unions like SIPTU that the problem of social partnership at local level will have to be addressed if there is to be a successor to the PCW.
Implicit in the ICTU case is that social partnership must involve union recognition by employers.
"A number of major unions have challenged the contradiction they perceive to exist between the consensus and partnership approach at national level and the alleged willingness of employers to engage in parallel arrangements at enterprise and workplace levels," say the authors of report, Mr William K. Roche of UCD and Mr Thomas A. Kochan of the Massachusetts Institute of Technology.
In other countries, the report points out, national agreements have broken down because of the "representation gap" which can develop between union leaders and their membership. In Ireland too, the lack of structures to implement agreements at local level and promote partnership "could result in the national agreements being perceived as remote, unrealistic or even having been imposed on the membership".