Trade unions and employers are moving tentatively towards a continuation of the social partnership model that has operated successfully in this State for the past 15 years. Preliminary negotiations have not been easy. And they could still founder on issues of private sector pay, a possible pay pause and other matters.
Both sides have, however, indicated a desire to secure an agreement to replace the Partnership for Prosperity and Fairness (PPF) deal that runs out for some workers at the end of this month. With that objective in view, negotiations continued at Government Buildings last night. And the ICTU executive will be briefed on developments today.
Continuing economic uncertainty abroad, the threat of war with Iraq, rising oil prices and a growing number of redundancies at home provide a threatening backdrop to these discussions. The United States economy remains under severe pressure, while growth in Europe has stuttered and failed to accelerate. As an open, trading economy, Ireland must remain competitive and pay close attention to its cost base. In that regard, the Government's budgetary policy and current spending profligacy has been particularly damaging. Some economists have estimated that cost increases generated directly or indirectly by the Minister for Finance, Mr McCreevy, could add 2 per cent to the consumer price index next year. At the same time, income tax bands were not adjusted in the Budget to take account of inflation.
Last evening, a member of the employers' group, IBEC, estimated the prospect of securing agreement with the Irish Congress of Trade Unions at 50/50. Agreement, he said, would hinge on the extent to which trade unions were prepared to modify their position on pay. The general secretary of Congress, Mr David Begg, has made the protection of workers' living standards his priority in these negotiations, while employers' representatives have spoken of the need for a pay pause, followed by moderate pay increases, in order to remain competitive. They have also objected to a statutory recognition of trade unions.
All parties are agreed on the need to modify the original social partnership formula so as to take account of changed economic circumstances. The Government is not in a position to offer further tax reductions as an incentive. Employers are wary of signing a three-year agreement because of "top-up" payments secured by trade unions during the PPF to compensate for inflation. As a result of this and other concessions, IBEC has suggested an 18-month framework on this occasion. Its director general, Mr Turlough O'Sullivan, has proposed a change from a one-size-fits-all pay agreement so as to take account of varying conditions in different economic sectors and companies. Negotiations are delicately balanced and it will require goodwill and commitment, as well as hard work, to bring them to a successful conclusion.