TRADE UNION leaders have warned that attempts by employers to seek a deferral of the implementation of the national pay deal will hamper the prospect of securing an economic recovery deal with the Government.
Talks between the Government and the social partners on plans to cut €2 billion from exchequer spending this year started yesterday.
However, they were immediately overshadowed by moves from employers’ group Ibec to have the national pay deal – which allows for increases of 6 per cent phased over 21 months – deferred for at least a year.
Ibec said that the serious deterioration in economic conditions had made it impossible for its members to pay the increases. It also said that there should be no increase in the minimum wage.
General secretary of the Irish Congress of Trade Unions (Ictu) David Begg described the Ibec ploy as a hand grenade in the talks process, and said that it would cause difficulties in reaching a recovery deal.
He said that the Ibec move confirmed a view that the overall objective of business interests was not just to reduce the pay bill in the public sector, but to secure “a competitive devaluation of wages in the broader economy as an alternative to currency variation”.
Siptu president Jack O’Connor said that the prospects of reaching an economic recovery agreement would turn on whether the better-off were going to make a contribution. He said that if it was about working people carrying the burden on their own it would not happen.
Ictu is to meet on Monday to consider the Ibec move to seek a deferral of the pay agreement.
At the talks the Government gave no indication of its proposals for achieving the proposed €2 billion reductions in spending, much to the surprise of some of the social partners.
A Government spokesman last night said that its response to the economic crisis would be to ensure that there was “a fair allocation of the burden” in whatever plan was finally agreed.
He said the social partners had been briefed about the Government’s broad approach to the range of issues involved.
Explaining Ibec’s decision, its director general Turlough O’Sullivan said the economic downturn left it with no alternative but to seek to defer the deal.
“The serious deterioration in economic conditions since the agreement was signed, especially the deepening global recession, the sharp increase in the value of the euro, the credit crunch and the prospect of deflation, has now made paying the terms of the agreement impossible for our members,” he said.
Mr O’Sullivan said it was no longer credible to have a deal that most firms could not implement. He said the agreement would be “honoured more in the breach than in the observance”.
He also spoke of the deferral plan as a “preliminary measure” and warned of the need to cut significantly the cost burden that had increased over the past decade and left Ireland out of line with its trading partners.
Mr Begg said it was extraordinary the Ibec proposal had emerged on the morning of the talks with the Government on an economic recovery.
“It suggests there is a great measure of agreement between the Government and the employer bodies about how things should be done, and we do not fit into this.”
Mr O’Connor argued that there was no need for a deferral of the new pay deal as it already contained a sophisticated mechanism to assist firms unable to meet the pay terms.
Unions also say that more than 40 firms are already known to have agreed to pay the increases.
The Construction Industry Federation welcomed Ibec’s decision.
Speaking in Derry yesterday, Taoiseach Brian Cowen said the Government would use the month of January for the talks with the social partners.
However, with the final week to this deadline now fast approaching, the unions said they did not anticipate further significant contacts in advance of their meeting on Monday to consider the Ibec developments.