Average earnings should increase by almost 30 per cent as a result of the Programme for Prosperity and Fairness, and average take-home pay by 35.5 per cent, according to a detailed internal review prepared by SIPTU for its shop stewards.
Even after inflation is taken into account, the real value of take-home pay will rise by 19.3 per cent. These are the biggest increases in real pay negotiated by Irish unions with their employers and are unlikely ever to be matched again.
Tax cuts were a big element in the boost to pay. In its review, SIPTU predicts the negotiating climate for any successor to the PPF, on both the tax and pay fronts, will be much tougher. "One way or another, the post-PPF scenario is that the growth in take-home pay, for the first time since the PNR [Programme for National Recovery] process began at the end of 1986, will be almost exclusively driven by wage settlements themselves, with the tax contribution being limited to carry-over commitments such as the clearance of the minimum wage out of the tax net, and subsequent indexation of tax credits and bands."
It detects a hardening attitude amongst employers characterised by "the hysterical outpourings from IBEC about workers getting too much". SIPTU says: "What is particularly upsetting IBEC about this year is that workers have at last arrested their declining share [of national income]." But it also cites a recent IBEC survey of members, details of which were published in Industrial Relations News, which suggest most employers would prefer a new national agreement to a free-for-all.
The report tacitly concedes that the bargaining power of members will depend very much on whether growth is at the higher or lower end of the spectrum in the coming year.
If real GNP maintains an average rise of 4.8 per cent a year for the period 2000-2005, the economy will need 33,000 extra jobs annually, compared with only 20,000 a year if real GNP only grows by 3.7 per cent a year.
The difference would have startling effects on sectoral employment. For instance, the manufacturing workforce could increase by 14 per cent or fall by 12 per cent. Similarly, the construction workforce could either increase by 20 per cent over the period or decline by 14 per cent.
Looking back over the life of the PPF, SIPTU is particularly critical of the Government's failure to control house prices and the decision of the Minister for Finance, Mr McCreevy, to allocate tax breaks on share options to "key employees" such as senior management. It is inevitably self-congratulatory over its success in converting the basic terms of the PPF, with a cumulative value of only 18.1 per cent over 33 months, into much more.
A number of factors have boosted the massive increase in average earnings. One was the introduction of the national minimum wage which, because it mainly benefited low-paid women workers, also helped close the gender pay gap from 74.5 per cent in March 2000 to 76.7 per cent by December 2001.
Another is the provision in the PPF, sought by SIPTU, that workers earning up to 5 per cent more than the minimum wage should be guaranteed increases in basic pay of at least 20.2 per cent. SIPTU then successfully negotiated the PPF increases on top of these minimum wage increases, thus ensuring its lowest paid members increases in basic pay of 27.1 per cent.
The biggest single factor was the Government guarantee of tax cuts that would boost PAYE take-home pay by "up to 25 per cent or more". SIPTU estimates the minimum increase for workers on the average industrial wage has been 24.3 per cent so far and the introduction of tax credits has boosted take-home pay for the lower-paid by at least 26.6 per cent.
When local negotiations by SIPTU and other unions are added to the equation, a worker on average earnings will have received take-home pay increases worth 33.2 per cent. When the rises in the PAYE tax threshold promised in next December's budget are delivered, this will increase take-home pay over the life of the PPF to 35.5 per cent.
