Talks on a new social partnership open today but a deal will not be easy, writes Chris Dooley, Industry and Employment Correspondent.
Talks begin today aimed at continuing the social partnership process that began in 1987 and has underpinned Ireland's economic success.
The discussions, however, could be the shortest on record unless unions and employers can somehow find some middle ground on pay.
While few want to contemplate a return to the "free-for-all" wage bargaining of the mid-1980s, both sides insist they are prepared to face that prospect if necessary.
The Taoiseach, Mr Ahern, the Tánaiste, Ms Harney, and the Minister for Finance, Mr McCreevy, will address today's gathering of the social partners in Dublin Castle.
The meeting has been convened to conclude business under the outgoing Programme for Prosperity and Fairness (PPF), which gave workers wage rises of about 20 per cent over the past three years.
Mr McCreevy, it is understood, will spell out what everybody knows - the state of the Exchequer finances severely curtails the Government's room to manoeuvre.
Under previous social partnership deals, income tax cuts were combined with pay increases to keep employers and unions happy.
Workers' take-home pay rose significantly, while employers did not have to bear all the cost. It is already clear that tax cuts will not be a feature of any new agreement, so the previous formula is not available.
IBEC, the employers' body, says the pay increases conceded under the PPF were excessive and this time around some employers will even be seeking a pay pause.
"Whether we enter another national agreement on pay and related matters is really quite secondary," IBEC's director of industrial relations Mr Brendan McGinty has said.
"What matters is that Ireland begins to claw back some of the competitive edge it has lost in recent years."
This type of talk has incited an angry response from union leaders, who insist there will be no pay deal unless it is above the rate of inflation.
The difficulty for both sides is that nobody knows what that rate is going to be from next year.
One possible way out is for the parties to agree a pay deal for one year only, with agreement to come back to the table in a year's time.
IBEC and the other business bodies will not countenance a repeat of the arrangement in the PPF which enabled the unions to return to the table in December 2000 to secure top-up pay increases.
These pay rises were designed to compensate for higher-than-expected inflation.
In the event of a short-term deal on pay, a three-year agreement on the range of other issues central to social partnership could still be worked out between the parties.
The focus on pay is a source of frustration to other social partners, such as those in the "community and voluntary pillar", who will have a range of social inclusion issues at the top of their agenda.
Mr David Begg, the general secretary of the Irish Congress of Trade Unions, has also stressed in recent weeks that social partnership is about far more than pay.
The reality is, however, that a pay deal is crucial to an overall agreement.
As one union source put it yesterday: "There would be no point in going back to the members and saying 'we've lost out on pay but we've made progress on housing, when that might not be an issue for most people in the room'."
The whole exercise is complicated by the issue of benchmarking, which will ultimately form part of the new negotiations.
Full payment of the benchmarking body's recommendations would add €1.1 billion to the public service pay bill.
Three-quarters of that amount is to be linked to modernisation and flexibility.
Talks on how these can be achieved have been continuing for the past several weeks between union leaders and respective Government departments.
Once agreement is reached, the timetable for payment - unions want the full amount by the end of next year - will become part of the negotiations on a new social partnership deal.
As a Department of Finance source put it yesterday, there can be no signing up to a new agreement until the benchmarking matter is resolved.
"We'll be looking at 'what's the bill?' The two have to be taken together."
Private sector workers might well see themselves as disadvantaged by a deal that offers them a moderate wage increase, perhaps for one year only, while those in the public sector cash in on benchmarking.
Which is just one more reason to suspect this particular deal will be the hardest to secure since social partnership began.