THE GENERAL secretary of the Irish Congress of Trade Unions (Ictu) has said the issues surrounding the negotiation of a State pension-protection scheme for private sectors workers are more complex than those on proposed cuts in the public sector pay bill.
David Begg was speaking yesterday as the social partners held talks on an economic recovery plan against the backdrop of the closure of Waterford Crystal.
Mr Begg said unions could not satisfactorily explain to the public that they had come out of the talks on a recovery programme with nothing on pensions at the same time as the National Pension Reserve Fund had been used to recapitalise the banks.
“We all know that there are completely different reasons, but I do not think that you could credibly explain it,” he said.
Moves by unions to seek improvements in pension protections for private sectors workers have received a significant impetus as a result of the closure of Waterford Crystal last week and the issue was considered for several hours yesterday at talks on the recovery plan.
Mr Begg said for the Government there was a question of how much such a system of State protection would cost the economy as well as the possibility of exposing itself to a “moral hazard whereby employers in circumstances in which they know there is cover do not actually invest in pension funds”.
He said unions were also concerned that the Waterford situation – they fear some workers could be left without their pension despite having made contributions for many years – could be just one of a number of similar cases.
“Potentially in a recession there are other . A total of 90 per cent of pension funds are underfunded.”
Speaking at Government Buildings, Mr Begg confirmed for the first time that the talks between the Government and unions on cutting €2 billion in exchequer spending this year would “inexorably focus” on public sector staff paying more for their pensions.
He said there were not too many instruments available to generate the savings. The union movement had ruled out pay cuts for principled and practical reasons, that scaling back on allowances could hit some sectors disproportionately and curbing increments could be a nightmare as some people at the top of the scale would not be affected.
Jerry Shanahan of the union Unite said resolving the difficulties at Waterford Crystal would be central to reaching agreement. Waterford would be a test case because workers all over the country were facing a similar situation.
The employers’ group Ibec said it was hopeful that agreement could be reached on reducing exchequer spending by €2 billion.
The talks at Government Buildings in recent days were aimed at agreeing a new national economic recovery programme.
However, while the proposals to reduce exchequer spending by €2 billion this year have received the bulk of attention, the agenda under consideration is far wider.
The discussions in recent days have also embraced taxation, supports for business, energy costs and social infrastructure to keep people in work and to assist those made unemployed.
As part of a package of measures, the Government is also expected to announce a series of spending cuts. Minister for Health Mary Harney said yesterday she did not want to confirm or deny reports that the Government was considering cutting the early childcare supplement.