The issue of a special cost-of-living allowance for workers employed in Dublin, to reflect the capital's higher costs, has been mooted on several occasions in recent years. However, 2003 research by the independent Dublin-based weekly, /Industrial Relations News/ (IRN), concludes that the matter does not figure prominently on the list of negotiating priorities for Irish trade unions, at least at present (IRN issue 9/2003). There is also some concern within the trade union movement that the issue could prove to be divisive. There have been instances when unions in both the public and private sectors have lodged claims for a Dublin allowance but they have so far enjoyed little success. These claims were lodged at a time when the economic boom was at its zenith, and the labour market at its tightest. However, now that the boom has subsided and the labour market is looser, the issue appears to have been placed 'on the backburner'. In any event, claims for such an allowance are officially precluded under Ireland's national pay agreements, as they constitute a cost-increasing claim.
Research published in Ireland in early 2003 indicates that there are currently few signs of a move towards the widespread introduction of special cost-of-living allowances for workers employed in Dublin. There are few examples of such allowances in practice and considerable employer opposition to them. While some trade unions have demanded Dublin allowances in recent years, the issue no longer features prominently on their agendas.
The issue of a special cost-of-living allowance for workers employed in Dublin, to reflect the capital's higher costs, has been mooted on several occasions in recent years. However, 2003 research by the independent Dublin-based weekly, Industrial Relations News (IRN), concludes that the matter does not figure prominently on the list of negotiating priorities for Irish trade unions, at least at present (IRN issue 9/2003). There is also some concern within the trade union movement that the issue could prove to be divisive. There have been instances when unions in both the public and private sectors have lodged claims for a Dublin allowance but they have so far enjoyed little success. These claims were lodged at a time when the economic boom was at its zenith, and the labour market at its tightest. However, now that the boom has subsided and the labour market is looser, the issue appears to have been placed 'on the backburner'. In any event, claims for such an allowance are officially precluded under Ireland's national pay agreements, as they constitute a cost-increasing claim.
Little progress
The most prominent - indeed one of the only - examples of a Dublin allowance deal is one negotiated in June 2000 between Ulster Bank and the Irish Bank Officials Association (IBOA), at the height of the Irish economic boom. Under this deal, 1,500 staff received an EUR 2,540 annual Dublin cost-of-living allowance. The deal applies to staff working within a 15-mile radius of Dublin. The deal was concluded after the bank had experienced difficulties in attracting and retaining staff.
There was some speculation that the Ulster Bank deal would establish some kind of precedent in Ireland. However, in practice this has not happened, even in the banking sector.
Some public sector unions have attempted to secure Dublin allowances, but without success. In 2000, the Irish Nurses Organisation (INO) lodged a claim for an EUR 3,809 annual Dublin allowance, in a bid to alleviate the extra costs incurred by nurses living in Dublin, as well as to tackle recruitment and retention problems. The INO claimed that the lack of a Dublin allowance had resulted in up to 1,500 nurse vacancies in the Dublin area.
The INO included a Dublin weighting allowance as part of its claim to the Benchmarking Body (IE0207203N), which was set up to make comparisons between public service pay with private sector comparators. In this claim, the INO pointed out that the UK already operates a London weighting allowance - in 2001, the value for nurses in London was GBP 2,356 (EUR 3,181) per year. The INO suggested that the UK government is also assisting nurses, and other public sector workers who are in high demand, with accommodation and house purchase costs. Despite this, in its final recommendations, issued in July 2002, the Benchmarking Body did not award nurses in the capital a Dublin weighting element. Rather, all basic-grade nurses will receive an 8% pay increase.
The Irish Municipal Public and Civil Trade Union (IMPACT) held direct talks with public service management in 2001 on a claim to introduce a Dublin allowance, but made little progress in negotiations. IMPACT had assessed the possibility of industrial action to advance the claim, but this did not materialise.
In the last two years or so, however, public sector unions have been preoccupied by the benchmarking process, and the Dublin allowance, though still on the agenda for some unions, has largely been placed to one side.
The position of the Department of Finance is that it is a matter for individual employers and trade unions/employee representatives as to whether they want to negotiate a Dublin allowance locally. It is clear that the government is unwilling to countenance the idea of a Dublin allowance for all workers in the capital, not least because of the significant number of public sector workers residing in the Dublin area, and the expense that this would entail.
Employer scepticism
Employers are sceptical about the idea of a Dublin allowance. Also, recent job losses have eased pressure on the labour market and, as such, employers are unlikely to view a Dublin allowance as a priority recruitment/retention tool.
An employer spokesperson told IRN that he did not believe there was a case for such an allowance, describing the issue as 'potentially divisive'. He added that claims under this heading are precluded under national pay agreements as a cost-increasing measure. The employer spokesperson identified a number of difficulties with the idea of a Dublin allowance, centred round the possibility of knock-on claims, and he raised the question of 'where does it begin and end?' First, he asked whether there had been a rigorous analysis of cost-of-living factors in Dublin, relative to other Irish cities such as Cork and Galway – alluding to the fact that workers in these cities may also demand an urban allowance if one is applied to Dublin. Furthermore, as the Dublin commuter belt has gradually expanded outwards in recent years, he asked whether workers who commute to the capital from locations such as Navan, Drogheda, Kildare and Wicklow, should also be entitled to a cost of living allowance.
Comparative study
The UK-based independent pay analysts Incomes Data Services (IDS) recently conducted a study of cost-of-living allowances in various capital and large cities across Europe (IDS European HR Briefings 494, February 2003). The study concludes that, apart from London, special cost-of-living allowances applicable to large cities are rare in Europe, and that local flexibility in pay setting to address specific labour market issues is a much more common way of dealing with any problems.
In London, public sector workers are entitled to different levels of special compensation for the higher cost of living in the English capital, relative to the rest of the UK (UK0103120F). According to IDS, this differentiation has sharpened recently as staffing problems have worsened. London weighting allowances for the police force are currently the highest, while teachers recently took strike action to claim the same level (UK0302105F). New market and cost-of-living supplements have also been paid to nurses and midwives, as part of a targeted approach to recruitment in hard-to-fill posts. IDS states that the UK public sector union Unison is to launch a cost-of-living campaign in favour of local weighting claims elsewhere in the south-east of England on behalf of council, hospital and utility workers.
Turning to the private sector in the UK, IDS states that, although the majority of large private sector organisations in the capital maintain London allowances, these have not increased significantly over the last decade. The median inner London allowance is currently GBP 3,290 (EUR 4,441) a year, with the level decreasing in bands, in line with the distance from central London.
Apart from London and parts of the south-east of England, regional variations in pay in the UK are relatively small. In the UK, earnings may vary more within a single region than between regions. The average weekly wage in London is GBP 624 (EUR 842), which is 34% higher than the national average, but differences can reflect diverse job and industrial structures, with the presence of the financial services sector in the City of London accounting for much of the difference. In most jobs, pay is 15%-25% higher, but for some it is lower (eg in retail and transport).
According to IDS, the figures for Ireland indicate a spread of income of 28% between what it says is the poorest region, the south-east, and the richest, Dublin. In France, meanwhile, the rate of pay divergence between Paris and the rest of France is estimated to be between 13% and 20%.
Commentary
In sum, it would appear that a broad-based Dublin weighting allowance is not on the cards at the current juncture, with the government, employers and unions displaying little appetite for such a measure. Moreover, given looser labour market conditions and a rise in unemployment, the issue has slipped down the pecking order of priorities. (Tony Dobbins, IRN)
Eurofound recommends citing this publication in the following way.
Eurofound (2003), Few signs of special cost-of-living allowance for Dublin, article.
