While there is some evidence of pay drift in the Irish economy generally, details of over 1,000 private sector wage settlements recorded by the SIPTU trade union, published in May 1999, indicate that the level of adherence to the basic terms of the current three-year national agreement, Partnership 2000, remains remarkably strong.
The Services, Industrial, Professional and Technical Union (SIPTU), Ireland's largest trade union with some 200,000 members, has recorded 1,122 pay settlements from the commencement of the current Partnership 2000 (P2000) three-year national agreement (IE9702103F) in January 1997 up to mid-April 1999. The agreements cover 135,458 employees in either the private sector or in commercial semi-state companies (these companies - such as Aer Lingus, ESB and Telecom Eireann- are formally part of the P2000 private sector pay deal). An analysis of the agreements, published on 13 May 1999 by the independent weekly, Industrial Relations News (IRN) indicates that the degree of wage drift in Ireland's booming economy remains relatively modest and that most unionised private sector and commercial semi-state companies are maintaining pay increases in line with the level agreed in P2000 (IE9905278N).
Defining what constitutes a breach of P2000 is difficult, however, and can depend on how so-called "fringe benefits" are regarded. These benefits can include items such as annual leave, bonus payments, hours reductions, paternity leave, shift premia and attendance payment schemes. In the majority of these cases, the employer carries any cost which is additional to the cost of the pay deal.
Main findings
The key findings of the analysis include the following:
- of the 1,122 P2000 pay settlements, there were 131 cases (11.6% of the total) where "above the norm" basic pay increases were agreed. This would indicate an overall adherence rate of 88.4% in relation to P2000's basic pay terms;
- in 258 cases (23%), some form of fringe benefit was agreed (excluding sick pay or pensions which are allowed under P2000). If these fringe benefits are all regarded as increasing costs, then the overall adherence rate falls, perhaps to as low as 70%-75%;
- in 189 cases (16.8%), pension or sick pay schemes were either improved or introduced (as is allowable under P2000);
- 23 cases were outside P2000's terms entirely (2%). These included mainly newly-established firms or those which had traditionally ignored centralised agreements;
- "pay pauses" applied in just seven cases (0.6%) while "inability to pay" was pleaded by employers in just five cases (0.4%); and
- what are described as "partnership" agreements (IE9811264N) were negotiated in 129 cases, or 11.5% of the total. These often involved gainsharing agreements, profit-related deals or other performance-related elements.
The overall findings are similar to those of an earlier survey conducted in autumn 1998 (IE9810262N), but one key difference in the more recent survey is the increase in the proportion of firms conceding fringe benefits, which is up from 17% to 23%.
Pay innovation
It may be surprising that P2000 has not come under more pressure, given the continuing boom in Ireland's economy and the tightening labour market in some sectors. There is some evidence, however, of a growing degree of flexibility at enterprise level, which means that rigid national agreements on basic pay need not necessarily hinder pay innovation across the private sector. For example, agreements which are considered under the overall "partnership" label are growing in importance.
Such agreements, often coming under chapter nine of P2000, can involve issues such as: "new forms of financial involvement"; "cooperation with new work practices"; and "flexibility and innovation". Not all of these cases involve pay increases which are above the norm, although some clearly do.
In cases where extra pay increases have been negotiated, these tend to include built-in performance-, profitability- or productivity-related criteria. In only a minority of cases has there been any evidence of "free for all" deals, as in the period before 1987, when "early starter" agreements acted as markers for others to follow.
End to leapfrogging
It should be remembered, in this context, that companies or trade unions breaching national wage agreements do not suffer any legal sanctions, as national programmes like P2000 are rooted in the largely voluntarist industrial relations tradition which pertains in Ireland. In the 1970s, trade unions often used the basic national pay deal as a "floor" on which to construct further increases. By and large, this has not happened since the first of the current sequence of three-year national programmes was negotiated in 1987. Over the course of the Programme for National Recovery (PNR) (1987-90), the Programme for Economic & Social Progress (PESP) (1991-3) and the Programme for Competitiveness & Work (PCW) (1994-6), wage drift of any sort was limited to fewer than 5% of companies.
There is anecdotal evidence that pay rates among certain categories such as those involved in information technology, the building industry and a variety of personal services have risen at a far faster rate than the P2000 wage "limits." However, these groups are often outside the collective bargaining arena and would not be "captured" by the SIPTU researchers. Meanwhile, the impact of external factors such as economic globalisation and competitiveness imperatives have arguably acted as a severe brake on the type of pay "leapfrogging" on an enterprise-by-enterprise basis, which was so clearly evident in earlier decades.
Meanwhile, a "leaked" report by the National Economic and Social Council (NESC) shows that since the PNR commenced in 1987, public sector earnings have increased by an average of 59%, compared with 53% for employees in manufacturing and 46% for employees in financial services. An illustration of the skills shortages and the building boom of recent years is shown in the finding that the pay of skilled workers in the industry rose by 174% over the same period while the pay of unskilled labourers jumped by 109%.
Commentary
In comparison to the first three national programmes - the PNR, PESP and PCW - the level of strict compliance with the basic terms of P2000 has fallen. However, it would be very surprising, given the economic boom and the high expectations which this has engendered, if that were not the case.
The key issue for the private sector is whether there can be another series of rigid pay increases after the current agreement expires, with a fixed element of local bargaining as applied under P2000. There are strong indications from various trade union conferences that employees will be looking for an even greater share in the fruits of economic growth in any new agreement.
One of the main stumbling blocks in the path of any new agreement to replace P2000 - it expires in March 2000 - is the government's handling of a number of pay disputes with various civil servants, such as nurses, police officers and teachers. All of these groups have secured another "round" of increases under the local bargaining provisions of the PCW (1994-6) and have not even entered negotiations on the local bargaining element of P2000 (IE9812266F). A key task facing the government, therefore, is to bring finality to the PCW and secure agreement on P2000 local bargaining issues for its own direct employees. (Brian Sheehan, IRN, John Geary and Tony Dobbins, UCD)