National pay deal faces first real test in over a decade

After almost 10 years of stable centralised pay bargaining, in June 1997 social partnership in Ireland is facing its first real test in the private sector, with the country's largest union determined to secure additional rewards in "strong" or "profitable" companies.

The revelation in late June 1997 that Ireland's largest union, the Services, Industrial, Professional and Technical Union (SIPTU), is aiming to secure an additional 2% in either pay or other benefits, on top of the combined basic and "local" increases of 9.25% in the three-year national Partnership 2000 agreement (IE9702103F), has come as a shock to employers. What the union describes as "strong" or "profitable" companies are targeted in a strategy document prepared for officials and shop stewards.

Reacting with hostility to the SIPTU initiative, the main employers' body warned that if the union pursued its claims this would be "a most serious breach of faith and a dishonouring of commitments unparalleled in relationships between employers and trade unions in this country". The Irish Business and Employers Confederation (IBEC) added that it would also raise serious doubts about the wisdom of entering any further agreements with SIPTU.

The SIPTU strategy

The SIPTU document leaves little room for doubt that the union is serious about pursuing its strategy. For example, it notes that: " ... we can use various clauses of the agreement to gain even more concessions for the membership ... Our priority is to improve the local bargaining of 2% to 4% either by way of direct increase or by profitsharing or gainsharing schemes."

Targeting "strong" private sector companies, the union states that its objective is to obtain the agreed 9.25% directly, and at least a further 2% by way of a direct increase or through profitsharing. Union officials are asked to "explore" the following areas: share schemes; sick pay schemes; personal and career development; improved training for shop stewards; and partnership agreements.

The union also addresses what it describes as "weaker" companies. While these firms are not specifically targeted with regard to the additional 2%, union officials are asked to consider: securing the 9.25% without any concessions "where possible"; real partnership at enterprise level; profitsharing; sick pay and pension schemes; and facilities for shop stewards.

Central bargaining under pressure?

The modest pay rises (7.25% basic plus the 2.0% "local" element) in Partnership 2000 must be set against a range of tax commitments. Tax reductions worth around IEP 400 million were delivered by the former left-of-centre "rainbow" Government in the January 1997 Budget, with further tax cuts promised by the new centre-rightFianna Fail/Progressive Democrat Government in the next Budget (IE9706218F). However, the improved economic circumstances which permit these tax concessions were always likely to make it harder to maintain the integrity of the pay agreement in Partnership 2000.

Breaches of the pay terms in the three-year national agreements which have been a central part of economic and social policy in Ireland since 1987 have been limited to small clusters of firms. The key factor is that "above the norm" deals have, until now, had no significant knock-on effects, and in most cases costs arising from local deals have been matched, or compensated for, by efficiency gains - usually in the form of changes in working practices.

SIPTU's current strategy document, however, is a clear indication that the union believes that the era of such relatively "cast-iron" agreements is coming to a close, but it remains to be seen whether individual employers feel they can justify additional rewards.


A number of elements have come together at this point in time to produce SIPTU's strategy. There appears to be a considerable level of disenchantment within the membership of the union regarding the terms of Partnership 2000. This was reflected in the large number of votes cast in favour of a far left-wing Socialist Workers Party (SWP) member standing for the SIPTU presidency in spring 1997 (IE9704211N). Waterford-based SWP activist, Carolann Duggan, secured 38,000 votes, compared with the total of 52,000 achieved by former union vice-president, Jimmy Somers.

Underpinning this creeping dissatisfaction with the terms of Partnership 2000 is the current economic boom and the fact that public sector workers have been seen to benefit from pay "restructuring" deals which, in the main, have been clearly in breach of the formal terms of the local bargaining clause in the previous national agreement, Programme for Competitiveness and Work (1994-6).

The SIPTU initiative will test the boundaries of Partnership 2000, but if pay rises which breach the strict guidelines do not undermine competitiveness, are confined to a small number of firms, and fail to act as "headline" deals for others to follow, the integrity of the national agreement should remain intact. (Brian Sheehan, IRN)

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