The last roll of the dice for Government, Ibec and unions

 

ANALYSIS:THE GOVERNMENT’S initiative to invite the trade unions to new talks on a national agreement on economic recovery has averted a damaging wave of strikes which were scheduled for next Monday. However, the move does not mean that securing a deal between the social partners will be easy or even achievable, writes MARTIN WALL

Yesterday David Begg, the general secretary of the Irish Congress of Trade Unions (Ictu), said that if the 10-point plan for economic recovery drawn up by the unions was central to the forthcoming discussions then there was a reasonable chance of progress. However, while both the Government and employers’ group Ibec have acknowledged that there were some merits to this document, it very much remains to be seen how much of its content they would be prepared to accept when the negotiations get under way.

The big issue overhanging any new social partnership talks was always going to be spending cuts and tax rises required to keep the Government’s borrowing requirements within its official targets. This was one area where an immediate clash between the trade unions and the Government seemed likely.

However, the signal by the Taoiseach yesterday that it may have to borrow more than the 9.5 per cent of GDP which it had originally said could ease the progress of the talks. The unions had argued that such a target could force the economy into a deflationary shock and it proposed that the Government’s borrowing requirement should be relaxed to 11 per cent this year.

It is unclear yet whether Brian Cowen’s signal about higher levels of borrowing represents some form of choreography with the unions in advance of the new talks, whether the spending cuts in the offing may not be as severe as had been forecast, or whether the Government’s revenue figures for March are even worse than had been feared.

In his letter to the Ictu inviting it to take part in talks, Cowen said that the core elements of a new integrated national response to the economic and other related crises had been outlined in the framework document agreed between the social partners in January. However, in that document, the trade unions signed up to cuts of €2 billion. The target for reduction in spending in next month’s budget could now be up to €6 billion.

How this figure is to be achieved is likely to prove highly controversial in the forthcoming negotiations. Government figures have also signalled that in the course of the budget next month, the €21 billion social welfare budget would have to be considered. However, cuts

in any form of social welfare payments, for example, would prove to be hugely problematic for unions.

While the Taoiseach acknowledged that there may be higher borrowing levels this year than anticipated, he stressed the importance of bringing this back below 3 per cent of GDP by 2013. However, the trade unions want this timespan to be extended from a five-year period to seven years.

Another key element of the unions’ 10-point plan is an amelioration of the controversial pension levy on staff in the public service.

Ictu has described the levy as “a crude and unfair instrument”, and indeed this was the issue that effectively prompted the collapse of the last round of talks in early February.

However, it remains to be seen, given the deterioration of the public finances since the breakdown in those talks, how willing the Government will be to amend the levy, particularly if this involved any loss of revenue.

Ictu is also seeking for the Government to allocate €1 billion immediately to introduce a new model of employment protection which aims at maximising the numbers working and providing upskilling opportunities.

The unions also want greater protections for families facing mortgage difficulties. They want measures to ensure that banks use mediation in the event of a default and that no one should face legal action for repossession for two years.

However, since early February, the Government’s opposition to tax rises in the immediate term – which had been a major issue for the unions – has disappeared, and it now seems ready to raise taxes considerably. It has also moved on introducing caps on executive pay.

Separately, a shift in the position of Ibec last weekend could also improve

the prospects of a new deal. In its letter to unions at the weekend, Ibec effectively said that while any new agreement would have to involve a lengthy pay freeze, it would not stand in the way of any employer who was in a position to pay the wage increases on a voluntary basis.

The new talks come at a time when the general perception appears to be that the unions’ hand has been weakened following the patchy response of workers to the day of strike action planned for Monday – in particular the failure of Impact, the largest public sector union, to generate sufficient membership support to take part. A month ago the unions organised 120,000 people to march on the streets of Dublin, and it appeared that the wind was behind them in dealing with the Government.

However, it can be argued that they did not sufficiently capitalise on the momentum of the march and that the strategic decision to go for the day of strikes highlighted the lukewarm attitude of many members towards industrial action in the current climate.

On the other hand, the unions will point out that the campaign on the day of strikes did lead to many private sector employers engaging with them on the national pay deal, and that the campaign succeeded in persuading the Government to go back into social partnership talks.

Begg said yesterday that it was hard to envisage the final outcome of the talks process being greeted with delight by anyone – given that it will inevitably involve some painful decisions. However, if the negotiations are to be successful from the unions’ perspective, they will have to be able to point to areas in any new agreement or in the budget next month which they have influenced, whether that be on employment protection measures, initiatives on house repossessions or on other key elements in the 10-point plan.


The Irish Times