Few sectors likely to implement national pay deal

The pharmaceutical, healthcare and chemical sectors are among those most likely to meet the terms of the current national pay agreement. However, the Irish Business and Employers’ Confederation argues that the agreement should be severely curtailed, if not completely abandoned given the current economic climate. The trade unions are resisting any changes to the terms, unless they can secure some other concessions in the national talks.

The pharmaceutical, healthcare and chemical sectors are among those most likely to pay the terms of the private sector pay agreement, negotiated under the [Transitional Agreement (2.8Mb PDF)](http://www.taoiseach.gov.ie/attached_files/Pdf files/Taoiseach Report_web.pdf). The latter agreement was reached between the social partners in September 2008, and formally ratified on 17 November of the same year. Consensus was reached within the framework of the [Towards 2016 (2.86Mb PDF)](http://www.taoiseach.gov.ie/attached_files/Pdf files/Towards2016PartnershipAgreement.pdf) national social partnership agreement of 2006 – the latest in a series of social partnership agreements dating back to 1987.

Curtailing of agreement terms sought

The private sector pay agreement under the Transitional Agreement provides for pay increases in two phases – amounting to 3.5% and 2.5% respectively, or to 6% over 21 months. However, since the onset of the economic recession in Ireland, it was expected that the agreement would only be implemented in a minority of unionised companies. Just two months after the accord was ratified, the Irish Business and Employers’ Confederation (IBEC) argued that the terms were inappropriate in an economy entering such a severe downturn. Nonetheless, the trade unions sought to defend the pay agreement, arguing that companies which claimed they could not afford to honour it could avail of agreed procedures to make their case.

By mid May 2009, the specialist weekly publication Industrial Relations News (IRN) had recorded almost 100 companies where the terms of the agreement had been applied. In the course of seven previous national agreements, however, a majority of unionised companies would have applied the terms of the deals by this stage.

National talks resume

National talks resumed between the government and social partners on the current crisis in January 2009, in a bid to forge a social partner response to a series of problems, including: the job crisis; an emerging pension crisis in the private sector; public sector reform; and help for homeowners facing mortgage arrears. Talks between IBEC and the Irish Congress of Trade Unions (ICTU) on the terms of the Transitional Agreement in the private sector were anticipated, as part of some new agreement or accommodation.

Entering the talks, IBEC’s Director General, Turlough O’Sullivan, initially referred to the national pay deal in the private sector as being ‘dead in the water’. Mr O’Sullivan argued that the agreement was no longer appropriate due to the scale of the economic crisis. On the other hand, the trade unions insisted that the agreement had to be honoured, arguing that a strict set of tried and trusted ‘inability to pay’ provisions, which have formed part of successive agreements, can be used by companies to make a case for a formal pay freeze.

The January talks failed to result in any substantial agreement, but they resumed again in late March. In the latter talks, IBEC acknowledged that a limited number of companies had paid the agreement and that some others might wish to do so. However, the employers’ body also confirmed that it still wanted a formal agreement to alter the terms of the Transition Agreement, which would include a freeze on the second phase of the agreement.

Unions seek trade-off

The trade unions, through ICTU, have been reluctant to accede to any agreement that would alter the terms of the Transition Agreement, unless they can secure some other concessions in the national talks. For example, they are seeking a commitment from the government on private sector pensions, which would involve a universal pensions system in the future. However, the government, which has been sympathetic to the trade unions’ concerns on this pressing social issue, has indicated that it would be a hugely expensive commitment given the financial constraints it is now experiencing.

If the talks are successful, then the way might be open for a formal renegotiation of the terms of the private sector Transition Agreement between IBEC and ICTU. This could involve the following provisions: an agreement to defer the second phase of the accord; the continued use of the ‘inability to pay’ process where appropriate; and perhaps some new way of managing disputes by using the offices of the social partners’ own dispute resolution ‘arm’, the National Implementation Body (NIB). In turn, the NIB would be likely to refer such cases to the formal state-run dispute resolution agencies, the Labour Relations Commission (LRC) and the Labour Court.

Brian Sheehan, IRN Publishing