Social partners agree national deal on pay and industrial relations

The government and social partners recently concluded a draft ‘transitional agreement’ under the overall framework of the country’s national social partnership agreement. If the accord is passed, it will allow for pay rises of 6% over 21 months in both the public and private sectors. The agreement has been largely supported by the social partners, although the private sector trade union Unite is advising its members to reject the agreement.

A draft ‘transitional agreement’ has been concluded between the government and social partners, under the framework of the Towards 2016 (2.86Mb PDF) national social partnership agreement. Ireland’s Prime Minister (Taoiseach), Brian Cowen, outlined that the proposed new national pay deal ‘will give a sense of confidence and stability in the challenging period ahead’. The deal was reached after months of talks and a final five-hour marathon session between key employer and trade union leaders, as well as government officials.

Deal is largely supported

In the negotiations, each side had to compromise in order to achieve a final package. The latter must now be formally ratified by the trade unions affiliated to the Irish Congress of Trade Unions (ICTU) and by two employer bodies – the Irish Business and Employers’ Confederation (IBEC) and the Construction Industry Federation (CIF).

While the private sector trade union Unite has indicated that it will be advising its members to reject the proposed agreement, the key union remains the Services, Industrial, Professional and Technical Union (SIPTU) – the country’s largest union with over 250,000 members. It is expected that SIPTU will back the deal after a series of consultation meetings, followed by a union-wide ballot. SIPTU members have backed all seven of the current series of national deals since they commenced in 1987.

Meanwhile, the executive of the main public service trade union, the Irish Municipal Public and Civil Trade Union (IMPACT), is advising its members to accept the agreement. All ICTU trade unions are to meet on 17 November 2008 at a special delegate conference, when delegates based on the relative strength of each union will vote in accordance with how their members voted.

After the ICTU decision is announced, it is expected that IBEC and CIF will then formally announce what they intend to do. While there is no reason to doubt that IBEC will back the agreement, there is some uncertainty over the position of CIF, which has expressed disappointment over the fact that the deal fell so far short of its demand for a 12-month pay pause.

Pay terms

The national deal includes different pay pauses, along with payment dates, for public and private sector workers, as follows.

In the private sector, the deal provides for a:

  • pay pause of three months, including for the construction sector;
  • pay increase of 3.5% for a period of six months;
  • pay increase of 2.5% for a period of 12 months – or a pay increase of 3% for workers earning €11 an hour or less on the date that the increase is due.

In the public sector, that is the public service, the deal provides for a:

  • pay pause of 11 months;
  • pay increase of 3.5% from 1 September 2009 for a period of nine months;
  • pay increase of 2.5% from 1 June 2010, except for workers earning up to and including €430.49 a week (€22,463 a year) on that date, who will receive a 3% increase.

Industrial relations issues

The draft agreement also covers a range of key industrial relations issues besides those relating to basic pay terms, including:

  • a process to develop a national framework for the employment rights of temporary agency workers;
  • measures prohibiting the use of temporary agency workers in the event of official strikes or lockouts;
  • optional recourse to voluntary arbitration on change at enterprise level;
  • a time-bound process in which the issue of employee representation and the appropriate legislative framework will be addressed; this includes the proposed introduction of a statutory prohibition on the victimisation of employees based on their membership or non-membership or activity on behalf of a trade union, and on incentivising non-membership of trade unions;
  • provisions for pensions under Council Directive 2001/23/EC on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses;
  • commitments to modernising the public service, including a response to the report Ireland: Towards an integrated public service (6.13Mb PDF) issued by the Organisation for Economic Co-operation and Development (OECD).

Debate over lower paid workers

The ICTU’s call for a higher pay increase for lower paid workers was a major issue for the trade unions, as most national pay deals have contained some level of additional increase for those who earn a lower wage. On this occasion, the special rise will take the form of an extra 0.5% for all those earning €11 an hour or less on the date of the second phase.

The latest National Employment Survey of the Central Statistics Office (CSO) found that 18% of all employees are under this threshold, with wide variations emerging between the sectors. For example, up to 48.7% of hotel and restaurant workers were in this wage bracket, along with 33.4% of wholesale and retail workers and 33.5% of those working in ‘other services’.

The agreement makes no reference to the national minimum wage (NMW): the role of setting the NMW is a separate matter for the social partners, or failing agreement, for the Labour Court and the Minister for Enterprise, Trade and Employment.

‘Inability to pay’ provisions

The draft agreement also maintains the same ‘inability to pay’ provisions introduced in recent agreements, which allow for disputes concerning employers that argue that they cannot pay the deal to be referred for adjudication by an assessor appointed by the Labour Relations Commission (LRC). A finding by an assessor can be referred to the Labour Court for a binding decision, but these assessor findings are generally endorsed by the court.

The agreement will be overseen by the informal social partner body, the National Implementation Body (NIB), whose mandate is to ‘ensure delivery of the industrial relations stability and peace provisions’ of the process.

‘Fat cats’ clause

A timely new element of the pay agreement is a clause – referred to as the so-called ‘fat cats’ clause – which backs a policy of pay moderation in the area of executive pay. It states the following:

In the context of the changed economic circumstances, and the acceptance by the social partners of the importance, in the national interest, of observation of pay moderation under this Transitional Agreement, employer bodies will, as a matter of policy, encourage their members to ensure that pay moderation is also observed in respect of executive pay.


The draft agreement has been negotiated against the backdrop of an unfavourable economic climate and an international financial crisis, which have not been seen in Ireland since 1987 – the year when consensus was reached on the first of the current series of such agreements. Ireland’s recently appointed Taoiseach, Brian Cowen, will no doubt be grateful for this political success, especially after his government’s failure to convince the electorate to back the Treaty of Lisbon. The government also believes that the deal will prove to business and outside investors that Ireland’s social partnership system can still deliver stability.

The critical stage in the talks was the five-hour face-to-face negotiations between top representatives of IBEC, CIF and ICTU, as well as senior civil servants. According to the specialist weekly publication Industrial Relations News (IRN): ‘those involved in the “face off” (session) agreed that if the session were to fail, then the positions adopted by each side would be set aside – as if the session never happened. This allowed those involved ... to spell out their bottom line positions.’ This suggests that a high level of trust between key individual leaders remains a hallmark of the Irish social partnership process.

Brian Sheehan, IRN Publishing

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