Ibec chief seeks return to social partnership-style deals on pay and taxes

The head of the Republic’s biggest business lobby group wants Government, trade unions and employers to agree on tax cuts, limited payrises and industrial peace in an echo of the social partnership deals that are partly credited with creating the conditions for the Celtic Tiger.

Danny McCoy, chief executive of the Irish Business and Employers’ Confederation (Ibec), said that business, Government and unions needed to come together in “some forum” to discuss issues such as pay, tax, industrial disputes and pensions.

However, he said he was not seeking a complete revival of the successive social partnership deals, where workers were promised tax cuts and moderate pay rises in return for industrial peace, agreed between 1987 and 2007.

The first versions of such centrally negotiated deals, struck in 1987 and 1992, were credited with creating the conditions for the rapid growth of the Republic’s economy in the mid-1990s and early years of this century.

Mr McCoy argued that the Republic is now in a parallel position to the one it found itself in 1992, several years before the economy began growing sharply, and must decide how it gets to 1999, when it had full employment.

“We need to establish some wage norms,” he said. “There are about 50 per cent of companies that are able to pay wage increases, but what most of those are talking about is in the order of 2 per cent, not 6 per cent or 5 per cent.”

The Ibec head had earlier called on the Government to cut income tax in budget 2015 to help stimulate economic growth and to ease pressure on employers who cannot afford to increase workers’ pay.

A poll of the audience at Ibec’s CEO Conference in Dublin on Wednesday showed that 93.6 per cent of them agreed that tax cuts would stimulate growth.

The organisation's president, John Kennedy, head of drinks group Diageo's western Europe division, pointed out that growth of one percentage point in the Republic's economy would cover the cost of the proposed tax cuts.

These include a reduction in income tax rates and bands, as well as reversing recent excise increases and dropping the pensions levy.

Addressing the conference, Taoiseach Enda Kenny said that the Government was willing to consider income tax cuts, but warned that it could only deliver them if they could be paid for. He appeared to rule out any immediate return to social partnership.