In April 2002, Ireland's largest trade union, the Services Industrial Professional and Technical Union (SIPTU) issued a briefing document assessing the principal outcomes of the current national partnership agreement, the Programme for Prosperity and Fairness (PPF). SIPTU has begun an extensive consultative process among its membership to address the challenge of 'how best to pursue the union's priorities post-PPF'. The union is broadly positive in its assessment of the outcomes of the partnership process, albeit with some reservations.
In April 2002, the Services Industrial Professional and Technical Union (SIPTU) - Ireland's largest trade union - issued a briefing document assessing the principal outcomes of the current national partnership agreement, the Programme for Prosperity and Fairness (PPF) (IE0003149F), entitled The PPF reviewed and the emerging environment. The document, compiled by the SIPTU research department, has been distributed to all of the union's branch secretaries as the first part of a major consultative exercise which 'will involve the maximum number of SIPTU members'.
The overall purpose of the study is to review the cumulative living standards outcomes of the 33-month PPF against the benchmarks established by the SIPTU '12-point priority programme' introduced in 1999. The 12 priority areas are as follows: pay increases; tax reform; employee participation; union representation; equality; quality of life; 'atypical' workers; pensions; affordable housing; lifelong learning; health; and social welfare. Here, we primarily concentrate on SIPTU's views on the extent to which its first four priorities are reflected in the PPF outcomes.
In terms of pay increases, a key priority for SIPTU was to secure substantial improvements in both the absolute and relative positions of those on below-average industrial earnings, through substantial flat-rate pay increases and the attainment of a statutory national minimum wage of EUR 6.35 (IEP 5) per hour (IE0107170F).
Substantial pay increases
The PPF pay outcomes are deemed to be positive for workers. According to SIPTU's figures, the minimum increase in basic pay provided for by the PPF is 18.1% (excluding a recent additional 1% lump-sum payment - IE0012161F). For low-paid workers, the PPF pay increases and the introduction of a national minimum wage provides for a guaranteed increase in basic pay of between 19% and 27.1%, depending on whether or not they are organised by unions.
SIPTU argues that the economic boom has allowed it successfully to pursue local bargaining, 'even though this had not been provided for by the PPF'. According to its figures, average industrial earnings are expected to show a cumulative increase of 29.7% between March 2000 and December 2002. Even when adjusting for a cumulative increase of 13.6% in inflation over the same period, SIPTU suggests, the outcome is a 14.2% cumulative increase in the real value of average industrial earnings. Moreover, this is before adding on the gains of the PPF tax reforms.
The PPF, and especially the minimum wage, is claimed to have facilitated a two percentage point reduction in the gender wage gap – 'women's earnings as a percentage of men's increased from 74.5% to 76.7%' (IE0011160F).
In relation to its second priority area, SIPTU's key tax reform agenda was to improve the living standards of lower to middle income earners by removing all workers earning EUR 6.35 (IEP 5) per hour from the tax net altogether, and ensuring that the earnings of 80% of people paying tax through the 'pay as you earn' (PAYE) scheme fall entirely within the standard tax band.
The tax outcomes of the PPF are believed to be generally positive. Over the duration of the PPF, the government's three state budgets have encompassed tax commitments that, when added to the PPF basic pay increases mentioned above, should ensure a minimum increase in net take-home pay of 'up to 25% or more'. This commitment looks likely to be met by the end of the PPF, with workers due to receive a total minimum increase in net take-home pay of 26.6% or more. After taking account of inflation, this amounts to a minimum real-value increase in take-home pay of 11.4%. It is suggested by SIPTU that the average increase in total take-home pay over the course of the PPF will be higher, at 35.5 %, though this falls to 19.3% when inflation is accounted for.
SIPTU claims that it was under the 2001 state budget that most progress was made on removing those on the minimum wage from the tax net, with 80% of the minimum being exempt from income tax (IE0012227N). However, the union has called for this commitment to be completed in the 2003 budget.
Living standard comparisons
Interestingly, the SIPTU documents include a section that places the PPF outcomes in a comparative perspective, in relation to previous trends in living standards in Ireland. It finds that over the past two decades, there has been a cumulative improvement in real living standards.
In the seven years (1980-6) before the Programme for National Recovery (PNR) national agreement , there was a 7% decline in real living standards. During the three years of the PNR (1987-90), there was a 5% increase in living standards. There was a 5.5% increase during the Programme for Economic and Social Progress (PESP) (1991-3), and a 6% increase during the Programme for Competitiveness and Work (PCW) (1994-6). During Partnership 2000 (P2000, 1997-2000) (IE9702103F), there was an 11.5% increase. Finally, the PPF has resulted in a 19% to 20% improvement in living standards.
Participation still limited
In terms of employee participation, a key priority of SIPTU is to overcome 'the refusal by employers to agree to meaningful participation at the level of the individual employment'.
SIPTU's research department collects data on enterprise-level agreements that encompass various 'partnership' issues (IE0001204F). SIPTU concluded 312 separate 'partnership' agreements under the previous national agreement, P2000, covering 67,000 members, and a further 119 agreements to date under the PPF, covering 13,000 members. These agreements encompass a wide range of issues, such as new forms of work organisation, training, and financial involvement.
SIPTU argues that, while these figures look impressive at first sight, 'we must be careful not to overstate the true extent of enterprise-level partnership ... It does not follow that all of these agreements were necessarily arrived at in a true partnership mode'. For instance, many of these so-called 'partnership' agreements may be 'little more than extensions of existing collective agreements which were negotiated through traditional adversarial bargaining'. Moreover, some agreements 'only cover a single issue or a narrow set of issues'.
Therefore, SIPTU suggests, it is clear that many of these deals constitute a less advanced form of partnership than wider-ranging agreements, which meet all of the following criteria: employee input into strategic decision-making; employee input into operational decision-making; and an agreed method of sharing the benefits of the partnership with employees.
On a more positive note, SIPTU suggests that the very existence of a partnership agreement is a good start, because 'even agreements which currently have quite a narrow orientation have the potential to develop into more powerful and far reaching partnerships.'
A key SIPTU criticism of the partnership process is 'the lack of sufficient momentum in securing financial involvement by workers in their enterprises through profit-sharing, gain-sharing etc' (IE0007153F). Significantly, SIPTU states that the largest barrier to the wider diffusion of employee financial involvement is the voluntary nature of the process – 'no employer was obliged to come to any actual agreement in this area. Accordingly, the number of agreements on financial involvement, instead of accelerating, actually slowed down from 83 under P2000 to 34 under the PPF ... In fact, in less than 3% of PPF settlements negotiated by SIPTU were employers willing to introduce any new form of financial participation for their general and clerical workforce.'
According to SIPTU, the failure to achieve a wider diffusion of financial involvement has been compounded by a lack of government support, in the form of tax incentives promoting profit-sharing and gain-sharing: 'Despite its potential to encourage enterprise-level partnership, and despite strong pressure from SIPTU, the Minister for Finance declined to provide any tax relief for payments to employees arising from gainsharing schemes.'
Union recognition
The key SIPTU priority in the area of union representation (IE0201260F) was to 'guarantee the rights of workers to be professionally represented by a union'. In the event, the recommendations of the High Level Group on Trade Union Recognition and the Right to Bargain (IE9903135F) were given effect in 2000 by the Code of Practice on Voluntary Dispute Resolution, the Code of Practice on Grievance and Disciplinary Procedures and, most notably, by the Industrial Relations (Amendment) Act 2001 (IE0112226N).
However, SIPTU remains dissatisfied with the effectiveness of the new Act in facilitating the right of workers to trade union representation and recognition. The union is thus lobbying all political parties to secure the enactment of specific trade union recognition legislation, which would provide for the issuing of Employment Regulation Orders by the Labour Court in respect of non-compliance with any of its recommendations on this issue.
Local bargaining
In response to recent criticism from the Irish Business and Employers Confederation (IBEC) that the PPF has resulted in substantial wage drift (IE0204202N), SIPTU argues that pay settlements above the PPF have been secured 'through the successful pursuit of local bargaining with employers who have themselves recognised that their higher than anticipated profitability was the basis for accepting union arguments for above-the-norm increases'.
SIPTU states that there were 211 'above-the-norm' pay settlements during P2000, covering 33,000 workers. As of April 2002, there were a further 1,299 above-the-norm settlements, covering 165,000 workers, under the PPF.
In a further attempted refutation of IBEC's claim that wages have risen too much, SIPTU argues that while workers share of non-agricultural national income has fallen from 62% in 1992 to 48.5% in 2001, there has been a corresponding increase in the share taken by company profit.
SIPTU also suggests that IBEC has 'set its face against any progress being made in implementing the enterprise partnership provisions of the PPF which were designed to encourage a break-through in profit-sharing, gain-sharing and other forms of financial participation', and which constitute an alternative means of 'sharing out above-average profitability'.
There is a reference in the SIPTU document to a recent IBEC internal report on the views of its members on the PPF. SIPTU observes that the report states that 'in spite of their experience with the PPF', the majority of IBEC members would like to see 'the concept of partnership continue, subject to improvements' and still 'prefer the predictability and order associated with national agreements' (as they applied prior to the PPF). The implication, SIPTU suggest, is that 'IBEC members want to have their cake and eat it.'
Post-PPF scenario
Significantly, SIPTU makes the point that the situation after the PPF expires will be that 'the growth in take-home pay, for the first time since the PNR process began at the end of 1986, will be almost exclusively driven by wage settlements themselves.' This is because there is limited scope for a continuation of income tax cuts in exchange for pay moderation.
This, SIPTU claims, is a major reason behind 'IBEC's propaganda onslaught on the partnership process ... Employers realise that we have reached the end of the era of using income tax cuts and moderate wage increases to subsidise profits.'
Commentary
It is clear from the document that Ireland's largest trade union believes that, overall, the benefits of the current national partnership agreement have outweighed any disadvantages. In particular, SIPTU claims that the living standards of its members have improved, primarily because of the substantial cumulative increase in the real value of average take-home earnings. However, SIPTU still has a number of reservations about the outcomes of the partnership process, especially in relation to what it perceives as a lack of progress on employee participation/workplace partnership and trade union recognition. (Tony Dobbins, IRN)