Recovery plan includes job and pension protection measures

After six months of talks with the social partners, the Irish government has put forward a set of recovery plan proposals outlining specific measures in key areas like job protection and pensions, as well as a commitment to transform the public service. A new employment subsidy scheme will be funded through the European Commission. The recovery plan broadly suspends the private sector pay deal concluded under the 2008 ‘Transitional Agreement’.

The government’s long-awaited proposed recovery plan (64Kb PDF), after six months of negotiations with the social partners, is entitled Further measures to support national recovery through social partnership. It includes:

  • proposals on new job protection measures;
  • a plan to cover insolvent private sector pensions;
  • a re-affirmation of commitments to improve employment rights measures;
  • greater protection for mortgage holders in the current economic climate;
  • a commitment on ‘transforming the public service’ (IE0906019I);
  • a major amendment to the terms of the private sector pay deal, which was ratified on 17 November 2008 as part of the Transitional Agreement (2.8Mb PDF) (IE0812019I, IE0901039I). The latter was negotiated under the overall framework social partnership agreement, Towards 2016 (2.9Mb PDF).

Suspension of private sector pay increases

The proposed private sector pay arrangement would suspend the pay deal of 6% over 21 months ratified in the Transitional Agreement, except in certain defined circumstances. The private sector pay formula states that the Transitional Agreement measures have been reviewed and that the parties are agreed that its pay terms ‘are suspended’. Pay arrangements to apply from 1 January 2011 will be determined by the parties at that time. In advance of that date, the application of the terms of the Transitional Agreement will be re-examined immediately ‘should the Consumer Price Index return to the end-September 2008 level’.

Rates of pay will only be increased where the first or second phases of the Transitional Agreement have already been agreed. It is acknowledged that nothing in the agreement can prevent an employer from paying any part of the Transitional Agreement ‘on a voluntary and exceptional basis’. However, there can be no referral of a claim to a third party except where both parties agree to such a referral. Where this happens, cases will be processed through the state’s industrial relations machinery having regard to the principles set out in the Transitional Agreement. In such cases, the Labour Court (An Chúirt Oibreachais) can make a voluntary recommendation or the parties can use agreed adjudication procedures.

If a trade union makes a claim of ‘ability to pay’ on an employer, the onus will be on the union to establish the validity of the case and provide ‘prima facie’ evidence to the employer. If the employer does not accept the validity of any such claim and the trade union wants to pursue it, then the case will be referred to the National Implementation Body, which is operated by the social partners.

Meanwhile, a review of the national minimum wage by the Labour Court ‘will be suspended and … reviewed in line with the same timeframe as proposed for the amended private sector agreement’.

New tripartite jobs body

The job protection measures are set out in a new Temporary Employment Subsidy Scheme. This scheme will commence with an initial €250 million for job support measures for companies engaged in manufacturing and/or internationally traded services, and which are currently exporting. Such companies ‘must not have been in difficulty on 1 July 2008’. The scheme will run for a maximum of 15 months, with a maximum subsidy of €200 a week per employee.

The government plan states that the scheme is designed and implemented

in a way which minimises the risk of the taxpayer supporting jobs which would not have been lost (deadweight), or supporting jobs in one firm at the expense of other jobs which are simply lost in another firm (displacement).

It is intended that the initiative would operate under the terms of the European Commission’s temporary aid scheme for Ireland, permitting the payment of direct grants of up to €500,000 to any company in 2009–2010. It will be managed by Enterprise Ireland and the County and City Enterprise Boards (CEBs) and overseen by a new tripartite body, made up of government and social partner representatives.

Pension support

Regarding pensions, the government has offered to provide €100 million a year as part of a new Pensions Insolvency Payment Scheme (PIPS) to run on a pilot basis for three years. This would assist workers in cases of ‘double insolvency’, where both the company and its pension fund are in serious financial difficulty. Existing pensioners could receive up to €12,000 a year from the fund, while those who have not retired could claim up to half of their entitlement up to a maximum of €6,000 a year.

Brian Sheehan, IRN Publishing

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