Employer body withdraws from national pay deal

The Irish Business and Employers’ Confederation, which is the main employer organisation in Ireland, has formally withdrawn from the terms of the private sector pay agreement, negotiated by the social partners in September 2008. This move paves the way for a period of company-level bargaining for the first time in 23 years. The employers’ call for an agreement on the orderly conduct of relations suggests that they would prefer some form of national framework.

The Director General of the Irish Business and Employers Confederation (IBEC), Danny McCoy, wrote formally to members of his organisation on 23 December 2010 to announce that IBEC was withdrawing from participation in the country’s private sector pay agreement. This accord was negotiated in 2008 as part of the social partners’ Transitional Agreement (2.8Mb PDF) (IE0812019I, IE0901039I) under the overall framework social partnership agreement, Towards 2016 (2.9Mb PDF). Mr McCoy explained that the consequence of this decision ‘is that we are entering a period of enterprise-level bargaining in unionised employments’.

The IBEC decision came after the collapse of efforts between private sector unions affiliated to the Irish Congress of Trade Unions (ICTU) and IBEC before Christmas in 2009 to agree a proposed set of amendments to the original Transitional Agreement, which were put forward by the government to the social partners on 24 June 2008.

The wider context for the breakdown was the collapse on 4 December 2009 of talks between the government and the public sector trade unions over how to reduce the public service pay bill by between €1 billion and €1.3 billion in 2010 (IE0912019I). The government response was to cut the pay of public servants by an average of almost 7% (IE0912029I), a decision that led to the virtual collapse of the social partnership process in Ireland for the first time since its inception in 1987.

Warning letter

In November 2009, IBEC had notified the social partners and its own member companies that it would withdraw from the private sector pay agreement if a compromise could not be found with the trade unions by the middle of December on an alternative arrangement ‘that was appropriate for the economic and commercial environment of 2010’.

Writing again to members on 23 December, Mr McCoy stated:

Not having agreed such a suspension with Congress, IBEC is today giving effect to its decision to withdraw from participation in the pay terms of the Transitional Agreement, which are wholly unsuited to our economic circumstances.

He continued:

Given the unprecedented scale of job losses in 2009, and the prospect of further losses in 2010, it is clear that we need to restore competitiveness for economic recovery.

However, the IBEC leader also declared that his organisation remained committed to social dialogue at national level and to a stable industrial relations environment in the private sector. In this regard, Mr McCoy explained that IBEC was

inviting Congress to meet as soon as possible in January to agree measures for the orderly conduct of industrial relations in the private sector; a bilateral response to the economic crisis; and measures to preserve and create employment.

Protocol likely

Various Irish media, including the independent weekly magazine, Industrial Relations News (IRN), subsequently reported that the private sector trade unions would be prepared to meet with IBEC to discuss what sort of protocol should govern local pay discussions. In the meantime, IBEC is preparing a detailed set of guidelines for members on how they should conduct company-level bargaining on pay and related issues. The private sector trade unions are expected to do likewise.

Mr McCoy stated that IBEC would also brief the government, the Labour Court (An Chúirt Oibreachais) and the Labour Relations Commission (An Coimisiún um Chaidreamh Oibreachais, LRC) on the implications of its decision to abrogate from the terms of the Transitional Agreement. In March 2009, the Labour Court chairman, Kevin Duffy, said that the Court would take its lead from the social partners when interpreting the status of national agreements. Mr Duffy noted that unless one of the social partners formally abrogated a national agreement, then it would remain in place. He conceded that if one of them formally broke from the accord, then it could no longer be described as an agreement.

Commentary

Irish industry has not faced a so-called ‘free for all’ in the private sector since the 1981–1987 period. Given the current economic downturn, however, trade union and employer negotiators are likely to have time to prepare their negotiating strategies. Apart from a small number of specific fields of economic activity, such as chemicals, pharmaceuticals and healthcare product manufacturing, pay pressures are likely to be extremely weak for the time being.

IBEC and ICTU are uncertain how their respective negotiators might cope in such a scenario, as many have no experience of operating outside the 23-year social partnership framework. Nonetheless, the call by Mr McCoy for an agreement on the orderly conduct of relations suggests that IBEC would prefer the protection of some form of national framework, even if this is just for the processing of pay claims. It remains to be seen whether the trade unions will take a similar view.

Brian Sheehan, IRN Publishing