The Budget must deliver increases of 7 per cent in tax cuts to workers, trade union leaders have warned, to copperfasten last night's pay agreement with employers.
The Irish Congress of Trade Unions (ICTU) executive will meet on Friday to assess if a combination of pay rises and tax cuts is enough to compensate members for inflation this year.
Finance Minister Mr Charlie McCreevy and ICTU vice-president Senator Joe O'Toole flanked the Taoiseach, Mr Ahern, as he read out the terms of the pay review finalised at Government Buildings. It underlined the integrated nature of the pay-tax package.
"The Minister for Finance is well aware that the outcome of the Budget, added to the outcome of today's proceedings will be evaluated by ICTU on Friday," Mr O'Toole said. But it was clear from union leaders' demeanour that they expect no unpleasant surprises in the Budget.
The package announced by Mr Ahern provides for an extra 3 per cent pay award during the lifetime of the Programme for Prosperity and Fairness (PPF). Two per cent of this will be paid to all workers from April 6th, 2001. Another 1 per cent will be paid from April 2002.
The second increase will be a once-off lump sum award. Employers resisted union efforts for it to be ongoing. They also secured a reinforced industrial peace clause, whose implementation will be monitored by a National Implementation Body. This will have Government, ICTU and Irish Business and Employers' Confederation (IBEC) representation, and will meet quarterly.
Companies facing commercial difficulties retain the protection of the "inability to pay" clause of the PPF and all employers can seek concessions from workers to offset the extra pay rises. Companies which have already paid more than the basic terms of the PPF "will not be expected to take a double hit", IBEC director Mr Turlough O'Sullivan said.
"IBEC had thought long and hard about asking employers to agree to additional costs in a difficult environment where business too has been adversely affected by inflation." He emphasised that details of the increases would have to be negotiated at local level.
As expected, there is a major concession to public service workers, who form 40 per cent of ICTU membership, in the bringing forward of the benchmarking process. The benchmarking body, which was due to assess public service pay rates with those in the private sector, is now due to report by June 30th, 2002, instead of June 30th, 2003.
Pay negotiations can then begin and up to 25 per cent of any eventual pay awards can be backdated to December 1st, 2001. The chairman of the public services committee of ICTU, Mr Peter McLoone, said the unions were "pleased with the outcome on pay."