Report sets out key issues for policy-makers in new national agreement

Suggestions about the most appropriate economic and social strategy for Ireland to adopt during the first three years of the new millennium were made public in June 1999 when a report from the National Economic and Social Council (NESC) - which is comprised of social partner representatives - was leaked in the press.

In mid-June 1999, a report from the National Economic and Social Council (NESC) setting out the strategic choices facing Ireland's social partners in the first few years of the new millennium was leaked to the Dublin-based daily newspaper, the Irish Independent. The report, expected to be formally published in September 1999, sets out the central issues which the NESC believes need to be tackled in any follow-on national programme to replace Ireland's current three-year national agreement, Partnership 2000 (P2000) (IE9702103F). Pay formation, a central element in any new agreement, is highlighted in the draft report, a copy of which has also been seen by EIRO's Irish national centre. The various NESC three-year strategy documents which have been published since its influential 1986 Strategy for development report have been key landmarks in the run up to centralised negotiations. The NESC is made up of representatives of the various social partner organisations.

A central chapter in the soon-to-published report, dealing with pay formation in the private and public sectors, shows that public sector pay rises have been moving ahead of pay in the private sector in general (IE9906280F), with some notable exceptions, such as the building industry.

Using figures from the state-run Central Statistics Office (CSO), the draft NESC report shows that annual public sector earnings averaged IEP 23,020 in 1998, compared with IEP 15,189 for industrial workers and IEP 17,535 for "all" employees in manufacturing. The average in financial services was IEP 21,996, while skilled construction workers were paid on average IEP 22,074 and unskilled workers in the sector received IEP 16,514.

Relative to Ireland's main trading partners, in common currency terms, relative earnings in manufacturing increased sharply in 1996, signifying a loss of cost competitiveness. Since 1987, the NESC says that the tendency has been for this measure of relative earnings to decline, although there have been non-trivial fluctuations in the intervening years. In 1998, earnings in national currency terms increased faster in Ireland than among its main trading partners. Nonetheless, this was offset by exchange rate movements so that relative earnings in common currency terms declined, the report says. In 1999, however, earnings in national currency terms are again expected to grow faster in Ireland than in its main trading partners and this relatively faster increase "is not expected to be offset by exchange rate movements, so that some loss of cost competitiveness is expected".

Living standards - as measured by real take-home pay - have grown consistently in the period since 1987 and under P2000 these have exceeded that of previous programmes: "a married worker earning IEP 15,000 in 1996 would, after receiving the basic increases of P2000, experience an increase in real (ie after inflation) take-home pay of 12.4% over the three-year period."

There has also been an increase in profitability in the economy, although the level and growth of profitability differs significantly between different sectors. OECD data indicate that capital income share in the Irish business sector increased from 25% in 1987 to almost 36% in 1997.