Small businesses ‘sold out’ in controversial new pay deal

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Larger unions and IBEC urge members to accept the controversial draft pay plan

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9 October 2008 | 0

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Last month the pay talks finally came to an end with the drafting of a new national deal that has saved the country’s social partnership for another year. The proposed agreement provides for a pay pause of three months in the private sector, followed by a pay increase of 3.5% for the next six months and an increase of 2.5% for the following 12 months. The terms also provide for an extra 0.5% increase in the second phase for those earning less than €11 per hour.

The deal represents a compromise for employers who sought a 12-month pay freeze, and for the unions which were seeking increases of around 5% “in line with” inflation for workers above the average industrial wage, as well as flat rate increases of approx €30 per week for lower paid workers.

The Irish Small and Medium Enterprise Association (ISME) has strongly criticised the draft pay deal, saying that it has effectively “sold out” small firms throughout the country. Calling for ‘crisis talks’ with the Taoiseach in the wake of the proposed deal, ISME asserted that businesses “are not in a position to comply with the terms without having to make wholesale redundancies across the board.”

In reaction to the events of last month, ISME chief executive Mark Fielding said: “It is beyond comprehension that IBEC have agreed to a deal, the terms of which are far superior to what was on offer just 4 weeks ago…It is obvious that the so-called employers’ organization is prepared to sacrifice the survival of smaller indigenous businesses to protect their high fee paying members, the banks and other big businesses.”

However, Retail Ireland, the IBEC arm that represents the Irish retail sector, says that the new draft agreement covering the next 21-month period of Towards 2016 represents the best available terms.

Retail Ireland director Torlach Denihan commented: “The draft agreement provides for wage increases at the limit of what the country can afford, while at the same time providing the necessary flexibility to ensure exemptions on grounds of inability to pay, and cost off-setting measures for companies in difficulty. It strikes a fair balance between the commercial pressures on retailers on one hand and the needs of their employees on the other.”

In conclusion he added: “The agreement is a positive step towards addressing the serious challenges facing the economy. It is vital that it is supported by resolute action in the upcoming budget to rebalance the public finances, boost competitiveness and protect jobs. Government must not make the mistake of increasing excise or VAT, thereby providing a greater incentive for cross border shopping.”

 

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