2002 Annual Review for Ireland

This record reviews 2002's main developments in industrial relations in Ireland

Political developments

The current government is a coalition between the majority centristFianna Fail party and the small right-of-centreProgressive Democrats (PDs). This coalition government has been in power since June 1997, and was re-elected at a general election in May 2002. A referendum was held in autumn 2002 on the EU's Nice Treaty, which resulted in a'yes' vote. A previous referendum on the Treaty had resulted in a'no' vote.

Collective bargaining

The two most prominent collective bargaining issues in Ireland in 2002 were the'benchmarking' of public service pay, and whether or not a new national agreement could be negotiated to replace theProgramme for Prosperity and Fairness (IE0003149F) - which was due to expire on 31 December 2002 - in a less benign economic climate and with the positions of employers and trade unions seemingly unbridgeable.

Pay

Pay increases in 2002 were governed by the third-phase (final) payment of 4% for both the private and public sectors under the PPF national agreement, plus a 1% lump sum under revisions agreed to the PPF to compensate workers for high inflation (IE0012161F). The third phase applied up to 31 December 2002 in the private sector and 30 June 2003 in the public sector

Talks on a new national agreement to replace the PPF commenced in early November and were perceived to have been the most difficult negotiations since the process of national-level bargaining began in 1987. As the year progressed, the social partnership model faced mounting criticism, particularly from liberal economists, who argued that it was no longer applicable. On balance, however, the general feeling remained that it was worth persevering with national agreements, but that their format would probably have to change (IE0202201F).

TheNational Economic and Social Council (NESC) has traditionally drawn up the blueprint for talks prior to negotiations between the social partners on national agreements. However, in 2002 its strategy document was released after the actual talks process had commenced. It provided the negotiators with a set of broad parameters in a variety of key areas, such as: wage bargaining (including benchmarking); taxation; investment; inflation, social inclusion; and labour market issues.

Essentially, the private sector pay element was the chief, but not only, stumbling block to a new national agreement. Significantly, the harsher economic and employment conditions, and a recent spate of factory closures, are thought to have acted recently as more of a discipline on pay demands than any institutional controls, such as'inability to pay' clauses. Indeed, during 2002, there was a discernible cooling off in the level of'above the norm' PPF pay deals, and the level of adherence to the basic terms of the PPF remained surprisingly high in the unionised private sector.

Both theIrish Business and Employers Confederation (IBEC) and theIrish Congress of Trade Unions (ICTU) sought government initiatives on tackling inflation, an issue of joint concern given its effect on eroding real pay, living standards and competitiveness. They also knew that the 2003 state budget, while it might have delivered on public sector benchmarking (see below), might have made private sector wage moderation harder to achieve. Given the immediate impact of indirect tax and other rises in the budget, the outlook for inflation - at least in the immediate future - was hardly optimistic. Aside from inflationary pressures, the budget failed to satisfy the unions in terms of a failure to index tax bands, take the minimum wage fully out of the tax net, and cutbacks in public spending, such as in the areas of health, housing and childcare.

Despite all of these difficulties, however, a draft new national agreement,[Sustaining progress](http://www.ictu.ie/html/publications/other/Sustaining Progress.pdf), was concluded in January 2003 (IE0301209F). The pay provisions of the deal provide for an increase of 7% over 18 months, implemented in the private sector as follows: 3% for the first nine months; 2% for the next six months; and 2% for the final three months. The same provisions will apply in the public sector, but after a six-month pay pause. The deal was due to be ratified in March 2003.

July 2002 saw the publication of the report of the Public Service Benchmarking Body (PSBB) (IE0207203N), set up to establish comparisons between the pay of public service workers and similar groups in the private sector. There was considerable secrecy surrounding the methodology and contents of the report, an indication perhaps of the political sensitivity of the issue. The report recommended a wide range of pay increases - from 2.5% to as high as 25% - averaging out at 8.9%. While most teachers are set to obtain a 13% increase under the PSBB recommendations, the basic nursing grade was awarded 8%. Furthermore, while top civil servants were awarded almost 14%, some of their lower-ranking colleagues will receive just over 6%. Representatives of the basic grades in the three main security services expressed disappointment with their awards - the police (awarded 5%), prison officers (4%) and the defence forces (4%).

A key issue for the government has been to spread payment of the terms recommended by the PSBB in such a way as to minimise the impact on public finances. The only negotiable element of the report is precisely when the recommended increases will be paid - not the actual awards. A quarter of each pay recommendation is to be backdated to 1 December 2001. However, actual payment of this 25% element is contingent on a negotiated agreement on the phasing-in of the remaining 75% of the awards.

In the 2003 state budget, issued in December 2002, the minister of finance, as expected, made provision of EUR 565 million for the first-phase payment of 25% of the benchmarking award, which the government had already agreed to pay from December 2001, without any attached productivity concessions. The minister made no provision for payment of the balancing 75% from benchmarking, payment of which is still subject to final agreement on a modernisation/productivity package. However, a more market-related approach to public service pay modernisation - a key aim of benchmarking - could prove as elusive as ever. Public sector unions are sticking to their demand that benchmarking must be fully paid out by end of 2003. This leaves open the possibility that the government will pay the balance in one instalment in December 2003.

Meanwhile, some private sector trade union leaders have expressed unease about the impact of the benchmarking awards, in terms of possible membership perceptions that their public sector counterparts appear to be faring somewhat better than themselves, which could feed expectations. Nonetheless, private sector workers are aware that the level of job losses that have been announced recently are indicative of the cost pressures facing many businesses.

Turning to local-level collective agreements, there are no figures on the number of local pay deals reached in 2002. Agreements at thePfizer andAbbott pharmaceuticals companies were two of the key local pay deals above the terms of the national agreement in 2002. A pay increase worth up to 16% over and above the PPF was agreed in July for about 180 general operatives at Pfizer Pharmaceuticals, County Cork - a plant which has been known for some time as the highest payer in the Irish pharmaceutical industry and among the top payers in Irish manufacturing. When the deal is fully applied, the operatives - members of theServices, Industrial, Professional and Technical Union (SIPTU) - will have a basic pay rate of EUR 679.31 per week. Meanwhile, separate pay deals were agreed for general operatives and craft workers at the Abbott Ireland plant, Donegal, providing for two 6.5% increases and a flat-rate EUR 6 per week increase over 24 months. Abbott is of interest as it negotiates outside national wage agreements, and for this reason can give some indication of what free collective bargaining could produce.

Working time

Working time did not feature prominently in bargaining during 2002. However, some individual company agreements touched on this issue. For example, in April 2002,Waterford Crystal, the glassware manufacturing division ofWaterford-Wedgwood, concluded a new agreement on a'plan for renewal and future growth' with representatives of its 1,400 employees. The deal aims to'provide a platform' for future prosperity in the two Waterford Crystal factories in County Waterford in the south-east of Ireland and includes provisions on new working time patterns (IE0208202N).

Job security

Job security issues arose during the year in the context of plans to close down facilities. One example was the plan of the state-owned electricity company,ESB, to close one of its six uneconomic peat-fired power stations after workers there rescinded in August 2002 an earlier decision not to engage in talks over redundancy terms. Thus, in early autumn 2002, workers at ESB’s power generating station at Rhode, County Offaly, entered into a talks process aimed at resolving their claim for enhanced redundancy terms (IE0209202N).

The level of statutory redundancy entitlement, and the refusal of some employers to accept Labour Court recommendations relating to severance pay, proved to be an increasingly contentious issue in 2002, as job losses rose, with bitter disputes atIrish Glass Bottle (IGB) andPeerless Rugs attracting much attention. Such was the depth of feeling on this issue that the unions engaged in a national day of protest on 4 October. While fears of widespread disruption during the protest proved unfounded, it ensured that the issue was firmly on the national agenda. The protest attracted about 5,000 marchers in Dublin, with a further several thousand around the country. The unions were looking for an increase in statutory redundancy pay entitlement to three weeks’ pay per year of service. At the moment, statutory entitlement is half a week’s pay per year of service until age 41, with people who are aged 41 or over entitled to one week’s pay per year of service. (Improvements in statutory redundancy pay entitlement were subsequently included in the draft new national agreement reached in early 2003.)

Equal opportunities and diversity issues

The government increased the national minimum wage from EUR 5.97 to EUR 6.35 per hour on 1 October 2002. This was the second increase to be implemented under the PPF and should help to help to close the gender wage gap, albeit to a small degree. It would appear, however, that the minimum wage, introduced in 2000, has so far had little impact on overall trends in income and wealth distribution. This is because relative income inequality, and the gap between rich and poor, has increased in Ireland. Indeed, there was considerable controversy during 2002 over the issue of pay inequality (IE0201262F).

In March 2002, a report published by IBEC concluded that the presence of a'glass ceiling' means that there is a low level of female representation in senior management positions in Ireland. This glass ceiling, it is argued, is created by a number of structural and attitudinal barriers (IE0204204F).

Finally, the various equality bodies in Ireland reported an increased workload. For instance, according to its annual report, launched in June 2002, the caseload of theEquality Authority increased by over 800% in 2001 (IE0207201N). There was an increase in caseload across all nine legal discrimination grounds of gender, marital status, family status, disability, sexual orientation, age, religion, race and membership of the traveller community. Discrimination on gender grounds still constitutes the largest category of cases referred to the Authority.

Legislative developments

One main legislative development during 2002 concerned the implementation of the EU fixed-term contracts Directive(1999/70/EC) (EU9901147F). A'reasoned opinion' was sent by theEuropean Commission to the Irish government at the end of the year over the latter's failure to implement the Directive, which prohibits discrimination against fixed-term contract workers (the deadline was July 2002). The government wrote back to the Commission, stating that it intends to pass the legislation soon, and it is likely that it will be in place early in 2003.

In addition, new part-time work legislation took effect in Ireland in late December 2001. The Protection of Employees (Part-Time Work) Act 2001 implements the 1997 EU Directive on part-time work(97/81/EC) (EU9706131F). The new Act provides part-time workers with important employment protection rights encompassing both pay-related issues, such as pension entitlement, and non pay-related issues (IE0202202F).

The organisation and role of the social partners

The thorny issue of trade union recognition and representation rights was a highly contentious issue in in 2002 (IE0209203F). It has been so for some time now, with a bitter dispute at theRyanair airline in 1998 (IE9810261F) lingering in the minds of many on the trade union side. The unions see this as a key area where they have to secure some kind of'win' to present to their members, particularly as, according to some estimates, union density in the private sector has now fallen to approximately 22%-23%.

As the year progressed, unions displayed increased dissatisfaction with existing recognition procedures, and there were a number of ongoing bitter recognition disputes in companies such asCityjet Handling (airport services) andCurrys (retail). In a submission to the government in autumn 2002 (IE0211201N), ICTU demanded statutory union recognition along UK lines (UK0201171F), as well as changes to the'right to bargain' provisions of the Industrial Relations Amendment Act 2001 (IE0209203F) . Significantly, this was the first time that the union movement had explicitly lobbied for statutory recognition, given its traditional suspicion of legal intervention in the industrial relations arena, and its desire to retain a broadly voluntarist system.

Employers, however, are staunchly opposed to mandatory recognition, fearing that it would have a negative impact on attracting and retaining foreign direct investment. Even if the government were keen to legislate for statutory recognition, it would find it problematic, given the requirement to reach some kind of consensus on this issue. (The draft new national agreement reached in early 2003 provided for changes to the existing'right to bargain' provisions but included no movement on recognition.)

In terms of mergers and changes in union structure, in February 2002, ICTU formally expelled the UK-basedAmalgamated Engineering and Electrical Union (AEEU) for not complying with a directive forbidding the recruitment of electricians in the Republic of Ireland, and refusing to'hand back' 39 electricians employed by theCadburys food company who were'poached' from theTechnical Engineering and Electrical Union (TEEU) in 1998 (IE0205202N). The expulsion coincided with a merger between the AEEU and another UK-based union,Manufacturing Science and Finance (MSF) union to formAmicus. In another important structural change that falls short of a merger, two of Ireland's most powerful'indigenous' trade unions, SIPTU and TEEU, established a'federation', which will come into being by February 2003 (IE0211202N).

Industrial action

Strike activity remained at a historically low level in Ireland in 2002 (IE0201262F), despite a number of high-profile disputes, particularly in the health and education sectors. The latest figures, from theCentral Statistics Office (CSO), indicate that 17,902 working days were lost through industrial action in the first nine months of 2002, compared with 113,943 in the first nine months of 2001. Meanwhile, there was in increase in the number of cases referred to'third party' dispute resolution institutions, including theLabour Relations Commission and theLabour Court.

There was widespread conflict in the health sector during the year, with a rash of hospital disputes, which occurred against a backdrop of pressure to control health spending. One of the highest-profile disputes in the health sector was one over new work rosters for junior doctors, involving theIrish Medical Organisation (IMO) and theHealth Service Employers Agency (HSEA), which remained unresolved at the end of the year. The dispute arose in the context of the imminent requirement to reduce working hours to comply with the terms of the EU working time Directive. A three-year pay dispute between theDepartment of Education and theAssociation of Secondary Teachers in Ireland (ASTI) (IE0012226N) seemed to be drawing to a close at the end of the year, after the union’s 17,000 members voted by a margin of almost two to one to accept the Department’s offer on supervision and substitution. However, there were still a number of unresolved issues between the parties, relating to the terms of supervision.

There was also a major dispute involving pilots in the semi-state airlineAer Lingus (IE0205201N), who have been coming to terms with a comprehensive restructuring/survival plan, designed to improve the organisation’s competitive position. The pilots dispute was eventually resolved in May following the intervention of the Labour Court. For four days, the company had'locked' the pilots out, leaving aircraft on the ground in response to the pilots’ decision to engage in a 24-hour strike.

Employee participation

The 2002 EU Directive2002/14/EC on national employee information and consultation rules (EU0204207F) must be transposed into Irish law by March 2008. This Directive has received mixed reviews from the social partners and looks set to have major implications for Irish industrial relations. For trade unions, ICTU is strongly in favour of the Directive, which it believes could play a vital part in improving worker information and consultation rights relating to workplace change and restructuring, and provide a boost to enterprise-level partnership arrangements. By contrast, employer groups in Ireland have opposed the Directive because they view it as a potential burden and restriction on business activity. IBEC is opposed to mandatory employee representation structures such as works councils, instead preferring a voluntarist system that reflects the competitive situation of individual companies. The same can be said of employers' opposition to statutory union recognition.

March 2002 witnessed the formal launch of theNational Centre for Partnership and Performance (NCPP), a body that seeks to provide institutional support for the wider diffusion of organisational change based on workplace'partnership' (IE0208203F). The NCPP, established on the basis of the PPF national agreement, replaced the poorly fundedNational Centre for Partnership (NCP), which was set up under a previous national agreement, Partnership 2000. The NCPP has acknowledged that,'while there has been a significant level of innovation and experimentation with partnership-based approaches to decision-making in Irish companies, there is little compelling evidence that partnership has become part of the mainstream approach to change.' However, there are signs of increased activity, with the NCPP playing a key role in driving the process forward. The acid test will be whether voluntary enterprise-level partnership arrangements can survive the test posed by the current slowdown.

Telework

2002 saw no specific response in Ireland to theagreement on telework signed in July 2002 by the EU-level central social partners (EU0207204F), which is to be implemented by the national social partners in the Member States (by July 2005). There were also no other major new developments in relation to teleworking. Company-level collective agreements incorporating telework issues are very rare, although a number of trade unions, including MSF, have developed a set of guidelines to be used for negotiating teleworking arrangements with employers. TheCommunication Workers Union (CWU) has also targeted the needs of teleworkers by compiling a set of guidelines for equitable treatment and establishing a'virtual branch' to recruit teleworkers into the union.

Vocational training

There was no specific response in 2002 by the Irish social partners to the'joint framework of actions for the lifelong development of competencies and qualifications ' agreed by the EU-level social partners in March 2002 (EU0204210F).

In Ireland's 2002 National Action Plan (NAP) for employment (IE0206203T), in response to the EU Employment Guidelines, the minister for enterprise, trade and employment and the social partners express overall satisfaction with the functioning of the labour market, but urge greater progress in relation to lifelong learning and workforce'upskilling', amongst other issues.

Vocational training and lifelong learning is a key issue for employers and unions in Ireland. In May 2002, IBEC launched a new policy document entitled_Social policy in a competitive economy_. The document points to the need to'upskill' those in employment if Ireland is to attract higher value-added employment. A variety of responses are required to promote lifelong learning and employability, IBEC argues, including ongoing public and private investment in training for those at work, and measures to improve adult literacy levels. Nationally-recognised diplomas for skills developed on the job were also recommended.

The state Training and Employment Authority (Foras Áiseanna Saothair, FAS) launched a new strategy for 2002-5. An emphasis on upskilling, and improving the quality of the labour force, will form a key part of this strategy.

New forms of work

There were no significant developments relating to new forms of work during 2002, apart from debate over the introduction of new legislation on part-time work and on fixed-term contracts, implementing EU Directives on these topics (see above under'Legislative developments').

Other relevant developments

Acting as something of a cushion to the deteriorating employment situation in the private sector, public sector employment expanded for much of 2002. However, this changed dramatically in the 2003 state budget, when the finance minister announced,'as a first step', that the number employed in the public service'is to be capped at their present authorised levels with immediate effect'. In addition, he added that the government'has decided that there will be a reduction of 5,000 in those numbers over the next three years'.

Outlook

The economic slowdown continued in 2002, resulting in an increase in the number of factory closures. This provided the backdrop to a rather turbulent year in industrial relations, and, in particular, controversy surrounding pay benchmarking, and uncertainty over the future of national agreements.

Looking forward to 2003, the economic downturn looks set to continue. Perhaps the two most prominent issues in 2003 will be the implementation of the recommendations on the benchmarking of public service pay, and the implementation of a new national agreement in a less benign economic climate. (Tony Dobbins, IRN)