Considerable progress has been made in advancing the prospects for a new National Pay Agreement. Negotiators representing the employers' body, IBEC, and the Irish Congress of Trade Unions clearly feel the recommendations advanced by the Coalition Government represent the best chance of industrial peace.
But a distance remains to be travelled in fleshing out precise details of what is on offer and in providing reassurances to the membership of their organisations. Private sector employees and small-scale companies, in particular, are likely to be unhappy about the terms put forward. But, in the difficult circumstances arising from Government mismanagement and external economic pressures, they offer hope for a continuation of 15 years of successful partnership between government, trade unions and employers.
The chief sticking point between the parties is likely to be pay. Inflationary pressures and economic uncertainty are reflected by the proposal that a private sector deal should run for only 18 months, rather than double that period as was the case with previous arrangements.
The offer of a phased seven per cent increase - with companies in financial difficulty allowed to plead inability to pay - might just compensate for inflationary increases if the Government follows through on its undertaking to introduce greater competition into certain sectors of the economy.
The public sector arrangement also allows for a seven per cent increase, but with an initial six months pay pause to reflect the introduction of benchmarking, which will add an extra 8.9 per cent to public pay costs in the period to June, 2005. Other elements provide for an increase in the minimum wage from February of next year, an increase in statutory redundancy payments, changes to procedures involving trade union representation and a new initiative on affordable housing.
It is very different from previous agreements. But that was to be expected given the broad acceptance that the old, social partnership formula had to change to reflect altered economic circumstances. The chief difference is the absence of income tax concessions that would increase the take-home pay of all workers. The new formula will see public sector workers do considerably better than their private sector counterparts because of the benchmarking awards. The payment of these special awards, at a time of considerable fiscal difficulties for the Government, will make no sense unless the promised reform and modernisation of the public service is delivered.
Knock-on pay increases, based on a system of relativities, can no longer be tolerated. The benchmarking report was adamant that the implementation of its recommendations should sever all previous pay links and establish new absolute levels of pay. The Government must deliver on this crucial element.