Charlie McCreevy has told workers in the public sector they could have benchmarking next year or a general pay increase, but not both, writes Chris Dooley, Industry and Employment Correspondent
After months of shadow-boxing, the serious business is about to begin.
From early next week, the Government and the social partners will attempt to negotiate a new national agreement to succeed the Programme for Prosperity and Fairness (PPF).
Yesterday, all involved gathered at Dublin Castle to set out their stalls.
The message from the Minister for Finance, Mr McCreevy, was that the boom is "over". His words were directed particularly at the trade unions.
Pay restraint, Mr McCreevy insisted, was required in both the public and private sectors.
He found an enthusiastic supporter in IBEC, the business and employers' body, which proposed a six-month pay pause as a first step towards restoring Ireland's competitiveness.
Union leaders, however, say that a "deal" which does not raise living standards will not be worth taking back to their members. Given that income-tax cuts are no longer an option, this means that the unions will be seeking pay increases in excess of the rate of inflation.
Pay was also at the top of the farmers' agenda. Both the IFA and the ICMSA said that a new agreement would have to address their members' declining living standards.
For the remaining social partners, in the community and voluntary sector, pay is not the main issue. They are acutely aware, however, that an agreement which swallows up large amounts of cash in public-sector pay will mean that little is left for social spending.
For organisations such as CORI (Conference of Religious in Ireland) and the Community Platform, which represents 26 community and voluntary groups, the agreement will have to address a range of social-inclusion issues. These include measures to make housing and healthcare affordable to all, as well as progress on the equality and rights agenda.
Father Seán Healy, of CORI's justice commission, said that the agreement should focus on bringing Ireland's infrastructure and social provision up to the EU average.
Mr David Begg, the general secretary of the Irish Congress of Trade Unions, has expressed a similar view in recent days and, like Father Healy, he is urging the Government to increase taxes on the better-off to pay for the necessary measures.
Significantly, Mr McCreevy, on his way into the talks yesterday, ruled out any change to the Government's corporation tax policy, but he did say that other taxes might be looked at.
It was workers who bore the brunt of Mr McCreevy's tough talking at yesterday's meeting. His message to public-sector workers in particular appeared to be that they could have benchmarking next year or a general pay increase, but they could not have both.
Mr McCreevy's comments on benchmarking underlined just how wide the gap is between the two sides. Unions want the full pay increases recommended by the benchmarking body, costing €1.1 billion a year, paid by the end of 2003. That is broken into two parts: 25 per cent to be backdated to December last year, followed by the remaining 75 per cent, which is conditional on the unions signing up to a programme of modernisation and change.
Mr McCreevy did not even address the timetable for full payment yesterday, simply pointing out that the backdated element would cost €525 million by next year.
He immediately went on to suggest that the starting date for any general pay round would have to be contemplated - a comment interpreted by many as pointing to a pay pause.
That, of course, would be unacceptable to the public-service unions, for whom benchmarking would be a sham if it was used to replace an annual pay increase.
For them, the benchmarking exercise was designed to allow them to catch up with workers in equivalent jobs in the private sector, and whatever general increase is paid to the private sector must also apply to their members. Ironically, one way of ensuring that workers in both the public and private sectors maintain parity would be to adopt IBEC's suggestion of a six-month pay pause for all.
Mr Brendan McGinty, IBEC's director of industrial relations, said that such a "breathing space" was necessary to address the deteriorating state of the public finances and the "loss of competitiveness that Ireland has suffered" in recent years.
The ICTU said that IBEC needed to "get real".
All sides will presumably be doing that in the talks, which begin in earnest next week when the Government sits down with each social partner in turn before attempting to identify common ground.
Some of those involved say that a deal will have to be done before the Budget in early December, or else the talking becomes largely academic. Others expect the discussions to drag on into the new year.