FIVE hours of talks failed last night to break the deadlock over pay between unions and private sector employers in negotiations on a new national agreement. Unless differences are resolved, progress is unlikely on other issues such as taxation, local bargaining or a public sector pay deal.
Both sides are to examine a number of options today for moving the talks forward when they resume formally tomorrow morning. They will also look at potential models for agreements involving different permutations on taxation and pay.
Today's sessions will enable negotiators to adopt more flexible attitudes outside the formal negotiating process. It was through informal discussions last Sunday that the first significant progress was achieved in formal talks earlier this week.
The Irish Business and Employers Confederation has not moved beyond the 7 per cent it offered employees on Tuesday, while the Irish Congress of Trade Unions appears to be holding out for at least 9 per cent. Earlier movement was based on a mutual understanding that concessions were needed to keep the talks alive.
However, employers and union representatives appear to be at, or very near, the point where they would prefer not to reach agreement rather than to concede too much. Union leaders, particularly in the private sector, believe they need to bring back increases in excess of those negotiated in the Programme for Competitiveness and Work - which resulted in rises of 8.5 per cent - to win their members' acceptance.
Employers, including the Government, will argue that tax cuts can provide significant increases in excess of the PCW, but agreement on the scale of tax cuts is also being held up by the conflict about overall pay increases.
Once the parameters for pay increases are set, the local bargaining clause could be used to bridge the gap between the two sides.
But unions and employers seem to have adopted a strategy of seeking agreeing on overall pay rises first, and while it should be possible for both sides to agree a local bargaining element IBEC has been opposed to any local bargaining clause.
It is understood that opposition from public service managers has been even greater. They point out that local bargaining under the PCW has far exceeded 3 per cent, in the public sector and will account for an increase of almost 5 per cent in the public sector pay bill next year.
The larger the pay increases conceded, the more circumscribed the Government will be in granting tax cuts. Not only that, but public service management is very conscious that the PCW has failed to deliver industrial peace, with a serious prospect of further industrial action in the new year by nurses, teachers and other groups.
The stance taken by IBEC and the Government is understood to be causing particular difficulties for SIPTU, which has large numbers of members in the public as well as private sectors. A pay deal that offers less than 9 per cent to, private sector workers and even lower overall increases in the public sector may prove unacceptable - even if accompanied by generous tax cuts.