PUBLIC and private sector pay negotiations should be synchronised to eliminate "leap frogging" pay claims from national agreements. This is one of the main recommendations of a report prepared by the National Economic and Social Council (NESC) for the Government on the value of such agreements.
The draft report also asks if the extra job security enjoyed by public sector workers, their better pensions and access to work sharing and education leave should not be reflected in "somewhat lower pay" rates than prevail in the private sector.
It also discusses the merits of pay cuts in industries which might experience difficulties if Britain stays out of the EMU. It concludes that these are not feasible. The report suggests that it would make more sense to introduce temporary financial supports to protect Irish firms in difficulties because of their dependence on exports to British markets.
Rejection of the pay cut strategy represents a major setback for employer bodies, which have been calling for any new agreement to succeed the Programme for Competitiveness and Work to contain provision for such cuts.
The report comes out in favour of continuing the strategy of national agreements between the social partners. It argues that winning the co operation of the trade unions in developing the economy can most effectively be pursued through such agreements because these give the unions an input into a wide range of Government policies.
On the issue of wage cuts, the council says that it "does not believe that linking wage rates to sterling exchange is a practical possibility. The labour contract does not lend itself to the type of wage flexibility which is envisaged".
If such an approach was adopted it would have a disruptive effect on national wage agreements and "would lead to a return to the type of inflation based bargaining that proved so destructive in previous decades. In addition, it could give Irish workers an incentive in favour of a low nominal value of the Irish pound against sterling".
Looking at the merits of centralised pay bargaining, vis a vis national agreements, the NESC says that a free for all would probably militate against job creation in the long term. It believes that gaining a co operative approach from the unions is more important for economic growth than the form of wage bargaining adopted. But it concludes that the structure of national agreements is the best strategy for winning that co operation.
It also says that the timing of public sector pay settlements should he more closely synchronised with those of the private sector. "In an unsynchronised process, what one group sees as `catch up', another group sees as a pre emptive advance". The council says a system is badly needed to eliminate the emergence of leap frog claims.