Last chance saloon for national wage deal

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ECB urges against "over-generous wage deals" while unions and employers try one last time for a national pay agreement



11 September 2008

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On the day of going to print the social partners were beginning their final week of talks in an attempt to cement a national wage agreement. Talks between employers and the unions collapsed at the beginning of last month, having reached a deadlock over a proposed pay deal. The offer put forward by employer representative Ibec consisted of a 21-month deal, including a six-month pay freeze for private sector workers, giving a 2.5% increase over six months, followed by a further 2.5% over nine months. The proposal also called for an 11-month pay pause for employees in the public sector and a 12-month freeze for construction workers.

The offer was rejected by the unions who, during the last round of talks, were seeking basic increases of around 5% (in line with inflation) for workers above the average industrial wage threshold of E38,000, as well as flat rate increases of approx E30 per week for lower paid workers. It is understood that the employers’ proposal was found to be particularly unacceptable for those under the average industrial wage, and in general, failing to compensate in line with inflation. In addition, the unions believe the current national pay deal ‘Towards 2016’, which provides for increases of 10% over 27 months, will also be eroded by higher than anticipated inflation.

Following the collapse of the negotiations, some unions have begun local collective bargaining. Siptu, Ireland’s largest union, initiated claims with several major employers including Tesco, Glanbia and Britvic Ireland; seeking the stated 5% increase and higher increases from “companies which are considered to be profitable”. The Technical Engineering Electrical Union (TEEU) soon followed, instructing its branches to seek a 10% rise over 18 months, from the time the ‘Towards 2016’ pay deal expires.
The European Central Bank has declared its concern over the rate at which wage growth increased in the Euro zone while productivity decelerated, “Resulting in sharp increases in unit labour costs,” said Jean Claude Trichet, ECB president. Trichet revealed that the ECB is now very nervous about over-generous wage deals sought by European trade unions, and urged governments not to agree deals linking compensation with inflation and cost of living.

On the Friday before the talks were due to resume, Ibec announced that it proposes a public sector pay pause of a minimum of one year, and six months in the private sector. Unite, the country’s second largest union, has said any new deal would have to involve real cost-of-living increases for workers, as well as special provision for the lower paid. ICTU is seeking Government action on inflation, and has proposed it should ensure that retailers pass on the sterling differential to customers and rescind recent increases in gas and electricity prices. Taoiseach Brian Cowen has said that he is “not afraid” to lose Social Partnership but was optimistic an agreement could be reached; otherwise most spectators are primed for another stalemate.



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