The outcome of the pay negotiations at the half-way stage of the three-year national agreement, Sustaining Progress, should be given a cautious welcome. The deal between the Government, trade unions and employers offers the prospect of broad industrial peace and a continuation of economic and social progress.
The terms of the agreement were originally approved against a background of declining world trade, rising unemployment and worsening Exchequer figures. The situation was so uncertain that the pay element covered only 18 months. Now, following intensive discussions, which were complicated by trade union concerns over the break-up of Aer Rianta, a second increase amounting to 5.5 per cent has been offered. This will give private sector workers a total of 12.5 per cent over three years, while public sector workers will receive an extra 9 per cent through benchmarking.
A further 0.5 per cent will go to those on low pay. For a country that has been losing competitiveness in recent years, the pay increases are on the high side. But they must be viewed in the context of the Government's failure to index-link tax bands in the last two budgets along with its decision to raise VAT and stealth taxes. The resulting erosion in the levels of take-home pay has contributed significantly to public dissatisfaction and to growing militancy in the workplace.
The severity of the Government's fiscal policy may have reflected its need to pay benchmark awards. But the benefits of that scheme, which were to have included a more effective planning and administrative system with greater modernisation and flexibility, have been placed in jeopardy by the Government's sudden determination to decentralise more than 10,000 public servants during the next three years. On the face of it, it will be impossible to measure the returns of benchmarking against past performances because of the disruption and dislocation that will arise from the relocation of entire Departments and State agencies outside of Dublin.
The importance of Aer Rianta within the negotiating process is difficult to assess. The trade unions - and SIPTU in particular - were given assurances that business plans would be drawn up for Cork, Shannon and Dublin airports before the company was broken up. In addition, it was promised that the entitlements of workers would be protected. It was a reasonable and pragmatic approach. But it will require the Minister for Transport to show his ideas can work in practice as well as in theory. And the issue broadens the trade union agenda beyond simple pay matters.
Sustaining Progress was negotiated in difficult economic circumstances and social planning and development was given short shrift. But the economy has recovered strongly. The number of people at work rose by 52,000 in the past year. The Government's finances have recovered and inward investment has risen again. In this new situation, matters of social inclusion should be reconsidered.