EMPLOYERS and trade union leaders are understood to have made significant progress during informal discussions on pay over the weekend.
When formal talks resume this morning it is expected that employers will indicate a willingness to concede pay rises that at least match inflation, while the unions will be seeking increases nearer 10 per cent than the 12.3 per cent earlier demanded.
It is also understood progress was made on tax reform, with the Government indicating a willingness to come closer to the trade union position that at least £1 billion must be made available in tax relief to the PAYE sector.
Concessions to employers, on the other hand, are expected to be mainly in the area of PRSI. They have also sought significant cuts in corporation profits tax and taxes on small businesses.
Tax is one issue where employers and unions see serious possibilities of increasing workers' take home pay without undermining competitiveness. However the Government's ability to make tax cuts will depend in part on what happens to public sector pay.
There is also growing concern among trade union leaders that, in the absence of an agreement, the Government will not make the sort of cuts in the 1997 Budget that would be conceded if there is an agreement in place.
There is understood to have been considerable attention paid in yesterday's talks to "frontloading" the tax relief so that the bulk of it comes in 1997, provided a deal is in place.
Sufficient progress had been made when discussions ended at around to p.m. for the Secretary of the Department of the Taoiseach, Mr Paddy Teahon, to decide to proceed with today's formal session. Yesterday's talks did not get under way until the afternoon. Those involved included senior negotiators from the Irish Congress of Trade Unions and the Irish Business and Employers' Confederation.
Formal negotiations were adjourned last Wednesday because of fears that they would break down if each side maintained what were, in effect, opening bargaining positions. Without significant progress in yesterday's informal discussions there was a strong prospect that today's meeting would have seen the end of any prospect of a new agreement.
While details of progress made will only emerge today, or later in the week, the overall shape of a new deal is becoming clearer. It seems that employers are accepting that overall pay rises must take account of inflation and, at least in the private sector, allow for some additional reward.
With inflation likely to be 6.5 to 7 per cent over the life of the new agreement, it is hard to see how the ICTU can settle for much less than 10 per cent, especially as the PCW allowed for increases of up to 8.5 per cent.
Any gains in acres the board increases, however, seem unlikely to be matched by local bargaining clauses. It is understood that IBEC showing considerable resistance to locally negotiated increases and may be willing to concede more at national level to avoid local deals.
However, this will not prevent unions from seeking gains for members through profit sharing, gain sharing and other avenues.
There are still the thorny issues of public sector pay and minimum standards to be addressed. Teaching and nursing unions, which between them account for nearly 70,000 public service workers, have made it clear they will not accept a new deal while their current disputes are unresolved.
On minimum standards, the ICTU has made the winning of good working conditions for low paid workers, and more job security for the growing numbers of part time employees, a priority.
If talks make the progress some negotiators believe possible, it might still be feasible to conclude them by the ICTU deadline of next Friday.