Employers are to call for pay increases to be kept below the rate of inflation in talks on a new national partnership programme which begin today.
The main employers' body, Ibec, also warned that it would be "very difficult" to reach agreement with unions on their demand for tighter labour market regulation. Unions say that "substantial progress" must be made on measures to tackle exploitation of migrant workers and the displacement of jobs before they will negotiate on other issues, including pay.
However, Ibec director-general Turlough O'Sullivan said yesterday that a flexible labour market was essential if Ireland was to remain an attractive location for foreign investment. Introducing new regulations would undermine that attractiveness and would do nobody, including workers, any favours, he said.
Signalling a hardline stance by employers on pay, Mr O'Sullivan said that wage increases in recent years had been well ahead of those in Ireland's main trading partners. With other business costs also running ahead of inflation, the competitiveness of Irish business had taken a "severe toll" in recent years. It was "imperative" that wage increases be kept in line with those of competitor countries. Asked if this meant that Ibec wanted pay increases kept below the rate of inflation, Mr O'Sullivan said that was not an unreasonable assumption.
Average earnings in Ireland were now 15 per cent above the euro area average, and we could not continue this decline in competitiveness, he said. "There has been a lot of talk about the race to the bottom, but the fact is we have comfortably won the race to the top."
One union, the IBOA, has already announced its intention to press for a 10 per cent pay increase over two years. Inflation is currently below 3 per cent.
Mr O'Sullivan also indicated that employers will strongly oppose a call by the Irish Congress of Trade Unions for the introduction of mandatory pension provision. "Those who speak of such extraneous matters as compulsory pensions and other added costs to business should open their eyes to what is happening in the real Irish economy," he said.
Manufacturing industry was caught in an "intolerable squeeze" and a range of non-pay costs were rising much faster than inflation. "The starting point now, as before, has to be acceptance of the reality we face. Grandstanding with wish lists is just a distraction."
The talks on a successor to Sustaining Progress formally begin at Dublin Castle this afternoon at a plenary session of the social partners. They are expected to continue for six weeks.
Ictu, which had delayed participation because of concerns over exploitation and the displacement of jobs, decided yesterday at a meeting of its executive council to enter negotiations.
Ictu president Peter McLoone said that the existence of a global economy did not mean we must accept Third World pay and conditions.
"It is possible to develop a suite of statutory and other measures that can robustly address the exploitation of workers, and the erosion of pay and conditions, and still protect the competitive position of companies that respect their workers and want to maintain decent working conditions," he said.
The willingness of the Government and Ibec to engage with this issue would be a "measure of their commitment to fairness and protection for the vulnerable".
Mr McLoone rejected criticism that social partnership was unnecessary and that unions were unrepresentative.
"It's easy to criticise the process, but social partnership has helped Ireland to rapidly become a hugely successful economy in which people and communities still matter."
