Adherence to national pay deal high but falling

In April 2001, it was estimated that around 70%-75% of private sector pay deals were adhering to the terms of Ireland's current national agreement, the Programme for Prosperity and Fairness (PPF). This represents a fall from adherence levels recorded under previous national accords. A survey of agreements providing for wage rises above the basic increases provided for in the PPF has found that over 50% contain no significant cost off-setting measures.

Ireland's current national agreement, the Programme for Prosperity and Fairness (PPF) (IE0003149F), concluded in March 2000, contained a 33-month pay agreement, providing for a minimum 15% pay increase, or 15.8% on a cumulative basis, made up of: 5.5% in the first year; 5.5% in the second year; and 4.0% for the final nine months. The deal was "revised" in December 2000 (IE0012161F), in the light of rising inflation, providing for an additional 2% wage rise from April 2001 and a 1% lump-sum award in April 2002. However, these limits are voluntary, and some pay agreements have exceeded them. According to an April 2001 survey of 100 such "above the norm" private sector pay settlements, monitored by the independent weekly, Industrial Relations News (IRN), over half of these agreements include only minor concessions to offset the additional costs.

Of the settlements examined in the survey, over 50% included few or no cost-offsetting measures. The remainder provided for either "significant" concessions, self-financing productivity or gainsharing/profit-sharing, or a combination of these.

However, the overall "adherence rate" to the terms of the PPF among private sector unionised firms remains quite impressive. The Services Industrial Professional and Technical Union (SIPTU) reported in April 2001 that only 25% of private sector companies paid above the terms of the PPF. In other words, the adherence rate among companies where SIPTU has members is currently running at between 70% and 75%.

There is some evidence, however, that this estimate of the level of adherence to the PPF is conservative in the context of the wider economy, where labour and skill shortages (IE0006152F) have forced employers to increase wages to attract and retain staff. For example, almost all of the large retail chains have had to pay increases above the level of the national agreement. That said, in the context of Ireland's high-growth economy and very tight labour market - unemployment in April 2001 stood at 3.7% - the level of adherence in unionised private sector firms remains surprisingly high.

Adherence to the previous national agreement, Partnership 2000 (IE9702103F), was estimated at around 85% by IRN. Over the course of first three "social partnership" agreements between 1987 to 1997, however, IRN estimated that adherence to the strict terms of these agreements averaged well above 90%. IRN commented that the factors which helped to enforce pay discipline in the earlier three-year agreements, such as high unemployment and "downsizing", no longer help to underpin wage discipline. The wage drift of recent years has been largely "market driven", IRN states.