SOCIAL PARTNERSHIP talks on a new national recovery agreement are expected to continue over the weekend, but trade unions are unlikely to sign off on any deal until they see the provisions of the budget on Tuesday.
Senior union sources yesterday said the pace of the negotiations had slowed due to the quantity of Government meetings this week and that a number of significant issues remained outstanding.
Unions believe the issue of pension reforms in the light of the significant losses incurred by many schemes over the last year is the biggest difficulty in the current talks. Trade union leaders also believe that any cuts in social welfare payments in the budget would cause serious problems for them.
Another major issue in the talks is employment protection measures, and Danish and Dutch models in this area have been examined.
However, union leaders are heartened by what they believe is the Government’s intention to ease up on its earlier stance that the borrowing levels would be limited to 9.5 per cent of gross domestic product (GDP) this year.
Union leaders believe that such a policy would have “been so rigid as to be so extremely damaging that it would have made it impossible to live with whatever came out of the budget”.
Union leaders believe they may have had some influence on the Government in relation to the “fairness” of measures to be adopted, including the scaling back of tax shelters. However, it is understood the Government has indicated it would not negotiate the tax elements of the budget with the social partners in advance of Tuesday.
Union leaders said that they had really no idea what the Government intended to do in relation to the controversial pension levy for staff in the public sector “other than signal that, in some circumstances, they were willing to do something”.
One senior union figure said that this issue was clearly being held back to the end of the process.
One source said that the Government did recognise privately that there were anomalies in the way the levy currently operated.
Some union leaders believed that it was “possible” that the current talks could extend beyond the budget.
Some sources believe that while part of the agenda could be addressed immediately, other items, possibly including what to do about implementing the recent pay deal in the private sector, could be left for a later date.
One senior union leader said yesterday that they could not sign off on a final deal – even if agreement in outline was reached – until the full provisions of the budget were known.
Union leaders believe that the Government will have to address the issue of pension reform as a priority in future, given the crisis in private sector schemes.
Unions have argued in the talks that defined-benefit schemes – which guarantee a payout on retirement – have lost one-third of their asset values over the past year and that 95 per cent would not comply with official funding standards.
Union leaders believe that employers will resist requests to invest further funds to prop up struggling schemes as each actuarial review will show further deficits.
The Irish Congress of Trade Unions believes that a new pension framework is needed which would not only include the basic old-age benefit but also a second tier which would be income-related.
In a transition to any new framework, the unions have proposed that schemes should have the option of cashing in their assets – believed to be worth €75 billion – to the State in return for an actuarially calculated second-tier pension which would be in addition to the existing flat-rate State pension.