Social partners agree draft 18-month national pay deal

In June 2004, the Irish social partners negotiated a draft pay deal under stage two of the current Sustaining Progress national partnership agreement. If ratified, it will provide for an average pay rise of 5.5% over 18 months.

The pay element of Ireland's current national partnership pact, Sustaining Progress (SP), was divided into two 18-month stages, as a result of uncertainty when it was negotiated in early 2003 (IE0301209F and IE0304201N). It was the first of the six such national agreements since 1987 not to include a full three-year pay settlement. Stage one of the pay element of SP expired in June 2004 in the private sector, and is due to expire at the end of December 2004 in the public sector. It provided for a 7% pay increase over 18 months - in three instalments of 3%, 2% and 2%.

A deal on stage two of the SP pay element (IE0405202F) - also lasting for 18 months - was reached on 18 June 2004. If formally ratified by the Irish Congress of Trade Unions (ICTU) and the Irish Business and Employers Confederation (IBEC), the proposed new agreement would be worth an average pay rise of 5.5% over 18 months - bringing the total increase over the 36 months of SP to 12.5%. The 5.5% increase would be paid on a phased basis, spread over the final 18 months of SP, with a further 0.5% for workers who currently earn less than EUR 9 an hour (or a maximum of EUR 351 a week).

The SP increases apply to Ireland’s estimated 500,000 unionised workers. Nonetheless, non-union firms, whether large foreign multinationals or smaller indigenous companies, monitor such nationally agreed rises when making their own pay arrangements

The proposed new deal is the same for both private and public sector workers, but includes a six-month pause in the public sector. Employees in this sector will be compensated for this pause during the final 12 months of the agreement. There is also a commitment to a new public sector pay 'benchmarking' exercise, following that conducted in 2002 (IE0402202N and IE0207203N) in the second half of 2005. Pay awards are expected to follow from this exercise in the second half of 2007.

The employers’ body, IBEC, is aware that if the economy suffers from the impact of any international crisis - sparked, for example, by oil price fears or some major terrorist incident - then employers can fall back on the already agreed 'inability to pay' provisions of the pay deal (IE0312204F). However, should economic growth reach levels associated with Ireland’s 'Celtic Tiger' boom years - as some economists are now forecasting - some employers may even choose to pay above the national terms.

As Ireland has a 'voluntarist' industrial relations system, pay increases that breach the centrally agreed levels cannot be legally barred. That said, the main dispute resolution agencies, the Labour Relations Commission (LRC) and the Labour Court, would never propose a pay increase in breach of terms that have been centrally agreed. 'Peace clause' and 'compliance' measures introduced in SP and overseen by the LRC give employers a mechanism for managing cases where a plea of 'inability to pay' is entered. The system also provides assurances for trade unions, as employers in such cases must 'open the books' to an independent LRC appointed assessor.

Should the 240,000 members of Ireland’s largest union Services Industrial Professional & Technical Union (SIPTU) maintain their tradition of backing centrally negotiated wage agreements, the 18-month pay deal looks certain to be accepted when ICTU meets to decide on the issue formally on 1 September 2004. The Irish Municipal Public and Civil Trade Union (IMPACT), the largest public service union with 52,000 members, believes the new agreement is 'among the best national deals ever negotiated'. Its general secretary, Peter McLoone, said that a public servant who has received the average benchmarking increase of 8.9% 'will be earning over 23% more when Sustaining Progress expires in 2006'.

The first stage of SP was formally approved by ICTU-affiliated unions by 195 to 147 votes in March 2003, although the margin would have been greater but for the fact that some 'yes' delegates were absent when the actual votes were counted.

IBEC’s final decision on the second stage pay deal will not be revealed until ICTU member unions announce their position.