Employers may refuse to take part in another wage agreement and could be better off returning to local bargaining, IBEC's director general Mr Turlough O'Sullivan warned yesterday.

Describing the Programme for Prosperity and Fairness (PPF) as "a woeful experience for employers", Mr O'Sullivan said IBEC's members would only contemplate another agreement if low single-figure pay increases in line with trends in other EU and competitor countries could be agreed, and if they could be confident that new and effective compliance measures can be put in place.

"The view is that the PPF has been a very bad experience and it's very difficult to see how local enterprise bargaining could be any worse," said Mr O'Sullivan. "My view of the national agreement is that, while the partnership was wonderful while it worked, maybe it has come to the end. Maybe it has run out of gas and, if it has, maybe we will have to revert to enterprise bargaining."

He said he was pessimistic about the possibility of reaching a new agreement, adding that IBEC would run courses in negotiating skills for managers in coming months to prepare them for local bargaining and that the services of IBEC's 40 negotiators would be put at the disposal of its members.

Mr O'Sullivan accused trade unions of failing to adhere to what was agreed in the PPF and regularly breaking the terms of the agreement. "We could give chapter and verse of hundreds of cases around the country where companies have been confronted by claims in excess of the terms, where they have been threatened with industrial action if they don't pay up, where unions have been effectively stopping employers in some cases from agreeing to change and in other cases trying to force employers to pay for what we would regard as normal, ongoing change, the sort of change that any enterprises need on an ongoing basis to be able to survive and compete," he said.

Procedures for resolving disputes about interpretation were ignored, he said, adding that in many cases no communication of the agreement was conveyed by the unions to local level. Mr O'Sullivan also said there were "echoes of the late 1970s and early 1980s" with inter-union disputes.

Any new agreement would require two non-negotiable terms, he said.

"One is a pay agreement that is not three times more expensive than what has been done in the UK and the rest of Europe and, secondly, a pay agreement that actually sticks," he said.

However, SIPTU vice-president Mr Jack O'Connor said the union was ready to face whatever bargaining arena that might follow PPF.

"We have always suspected that the commitment of many employers to social partnership was only wafer thin and this is reflected in the fact that in only 3 per cent of our settlements were employers willing to agree to any form of financial participation in their own enterprises," he said.

"Now that employers can no longer have wage increases subsidised by the scale of tax reductions that were hitherto possible, they are threatening to walk away from social partnership."

Mr O'Connor added that average earnings in Ireland still compared unfavourably with those in other EU countries. Mr O'Sullivan said this was offset by Irish income tax rates which were lower than those of many other EU countries.