The issue of pay has returned to prominence this week with yesterday's comments by the Taoiseach, Mr Ahern, at the IMI conference and the warning by the IDA chief executive, Mr Sean Dorgan, that excessive wage demands could damage economic growth and jeopardise job creation. Mr Ahern fired a clear warning shot over the social partners, advising them that there will only be a new national agreement if it is in the best interests of the economy. He told the trade unions that "ridiculous" wage demands would not be tolerated and he signalled to employers that they must be more generous about sharing the fruits of the economic boom. It is already clear that the continued good health of the Irish economy could hinge on the success or otherwise of the negotiations on a successor to Partnership 2000. Preliminary discussions are underway between the Department of Finance and the public service trade unions with both sides teasing out the whole issue of performance-related pay. All parties to the discussions - the Government, employers and the public and private sector trade unions - appear to accept the importance of the partnership approach. But, paradoxically, there appears to be little confidence that some kind of new national pay deal can be struck. At this juncture, the omens are not propitious. The unofficial scaffolders dispute is the latest outbreak of industrial unrest and there are other straws in the wind - the still unresolved nurses dispute and the unease among teachers evident at their recent annual conferences. There is a common sense among workers in these sectors that they have still to receive their share of the economic boom. The same theme was evident at the annual conference of the Manufacturing Science Finance (MSF) - a key barometer of opinion among the private sector unions.
For all that, any wage increases must be linked to increases in output or increased skills, as Mr Dorgan pointed out. Doling out substantial wage increases simply because the economy is in the midst of an unprecedented boom would severely damage competitiveness. But any new wage deal must also acknowledge the changing realities of the Irish economy. It must seek to eliminate the severe skills shortages in key sectors by offering appropriate wages; it must eliminate some of the traditional relativities in the public service that have inhibited performance and it must place a new emphasis on the concept of "gainsharing", which SIPTU has so successfully pushed for in the private sector. It already seems likely that any new wage deal will be much less homogenous and sweeping than the traditional-style national agreements. There may be some different elements for the private and public sectors and, all round, there may be a greater level of flexibility. But no fair-minded citizen should baulk if this is what it takes to conclude a new national wage deal. Social partnership, as Mr Ahern said yesterday, has been one of the building blocks of this State's economic progress. It can not be discarded lightly.