THE chairman of the talks on a new national agreement, Mr Paddy Teahon, has expressed "deep concern" at the difficulties which have arisen in pay negotiations.
Union sources echoed his concern last night and one employer source close to the talks said they were "close to a breakdown".
It is unusual for anyone involved in national pay talks to make a public statement so early in the process. The fact that Mr Teahon, who is Secretary of the Department of the Taoiseach, felt it necessary to do so is an indication of how serious the deadlock on pay has become.
In a brief statement last night, he said he had asked both sides "to go away to consider their positions" and resume talks on Monday.
According to sources close to the negotiations, there has been no significant movement by employers and unions away from their opening positions last Friday.
The Irish Business and Employers' Confederation (IBEC) is only willing to concede a 4.5 per cent increase over three years, while the Irish Congress of Trade Unions (ICTU) is looking for 12.5 per cent.
The Government, which is represented as an employer at the talks by Mr John Hurley, Secretary of Public Service, Management and Development, is understood to be looking for a 12 month pay freeze in the public sector and/or a longer agreement reaching into 2001.
One argument being put by the Government is that the carry over of awards from the Programme for Competitiveness and Work means that most public service employees will receive pay rises of about 5 per cent in 1997 anyway.
There is now a distinct possibility that any new agreement might have two separate pay tiers, one for the public and one for the private sector. That is assuming the pay gap can be overcome.
One union source said last night that, with the expectations built up during the PCW, coupled with predicted growth of 14 per cent during the next three years, it will be impossible for private sector union leaders to go back with a pay deal that was worth less than the 8.5 per cent conceded in the PCW.
IBEC, on the other hand, wants a cost neutral pay round to maintain competitiveness. It argues that any increase in real income must come from tax cuts. However its opening offer of 4.5 per cent is at least 2 per cent below the anticipated rate of inflation over the next three years.
Unions and employers have an incentive to conclude a quick deal so that they can have an input into the Budget, and claim some of the credit. That will help sell the final settlement to their respective constituencies. But time is running out.
Between now and Monday there will be intensive informal contacts among the IBEC director general, Mr John Dunne; the ICTU general secretary, Mr Peter Cassells; the Minister for Finance, Mr Quinn; Mr Teahon, and Mr Hurley.
If they cannot establish a basis for continuing the pay negotiations, then serious doubts will be raised about achieving a new national agreement. Those difficulties will be compounded if continuing disputes involving teachers, nurses and low paid civil servants are not resolved.
The second tier of social partners, representing the unemployed, voluntary and community sectors, is worried that its concerns are not being addressed.