The threat of war with Iraq, rising oil prices, a sluggish international economy and a growing number of redundancies at home provide the backdrop to negotiations between the Coalition Government and the social partners on a new national agreement. In such fraught and uncertain circumstances, a continuation of the partnership arrangement that has served this State well for the past 16 years and facilitated extraordinary economic growth represents the sensible course of action.
In spite of that, considerable difficulties exist between the various parties and the Government. There is no certainty the terms of an agreement, due to be completed later this week, will be adopted. The change in economic climate has had a significant impact on the package being discussed by the social partners. For the first time in many years, the Government cannot offer tax breaks in return for wage moderation to workers in the public and private sectors.
Instead, most of the available finance will be used to pay the terms of a benchmarking agreement with the public service. This will give its members an average pay rise of almost 9 per cent over three years, in addition to the 7 per cent to be paid to private sector workers over an 18-month period. The proposed deal hinges on a programme of modernisation and change within the public service, but much of the detail is to be agreed. It is vital that this is fully implemented.
Farm organisations and community and voluntary groups have been highly critical of the Government's response to their demands for more funding and say a two-tier agreement is emerging. The Irish Farmers' Organisation and the Irish Creamery Milk Suppliers' Association withdrew from talks at the weekend. An intervention by the Taoiseach, Mr Ahern, would be needed to bring them back.
At the same time, groups representing voluntary agencies complain of the Government's refusal to provide specific commitments on social issues. A shortage of cash is the underlying problem, but there is some room for manoeuvre. Later today negotiations will continue with representatives of the ICTU and the employers' body, IBEC, on Government proposals to moderate inflation, so as to protect living standards. It is hoped to complete the remaining terms of an agreement by the end of this week. It will then go to the various bodies before being voted on by their constituent organisations next month.
The proposed terms, especially in relation to pay, have already been criticised by some employer and trade union groups. But now is not the time for either militancy or intransigence. The industrialised world is experiencing a major economic crisis. As an open, trading economy, we must retain our competitiveness and be in a position to capitalise on improved conditions when they occur. A new national agreement, involving all the social partners, offers the best prospect of that happening.