Budget could be key in final push for pay deal

A final push to get agreement on the second stage of the current national wage agreement began this afternoon after breaking …

A final push to get agreement on the second stage of the current national wage agreement began this afternoon after breaking up last night with little progress made.

Sources have indicated that pay increases were not discussed until late in the evening and that there was little sign of the divide between unions and employers being bridged.

Today is seen as the last chance to strike a deal before the summer. The secretary-general of the Department of the Taoiseach, Mr Dermot McCarthy, is chairing the talks, but is due to depart with the Taoiseach, Mr Ahern for a crucial EU summit in Brussels tomorrow.

Mr Ahern's intervention is expected to be needed if the second 18-month stage of Sustaining Progress is to be agreed. However, a Government spokesman indicated that he had not been called upon at the time of writing.

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While there has been some progress on non-pay issues such as redundancy entitlements; consultation in the workplace; extra staff for the State's labour inspectorate and pensions, pay is the main sticking point.

The employers group IBEC is finding difficulty with two pay elements put forward by ICTU: a flat-rate increase of around €20 per week for low-paid workers and general pay increases reflecting economic growth which is about one per cent ahead of inflation.

Both IBEC's director general, Mr Tulough O'Sullivan and ICTU's general secretary, Mr David Begg last night indicated that a deal did not appear to be imminent.

IBEC says the seven per cent increase obtained for the first 18 months of Sustaining Progress was ahead of inflation and that if pay hikes were index-linked this time, workers would still be getting rises ahead of inflation over the lifetime of the deal.

But ICTU maintains that inflation is a blunt tool for measuring the needs of many workers. It says people with families are facing large mortgage and childcare costs which will not be significantly alleviated by an index-linked pay increase.

They point out that, despite a Government commitment to take workers on the minimum wage out of the tax net entirely, this has not happened. This issue could prove to be a crucial element in getting agreement.

Hovering over the talks is the Government's plan to break up Aer Rianta. The Cabinet yesterday postponed a decision on bringing the legislation needed to effect the restructuring before the Oireachtas.

Mr Ahern has given unions guarantees that workers' pay and conditions will be not be affected if the break-up goes ahead. Success in today's talks may rely on how much store the unions put in the Taoiseach's commitments.

Traditionally, they have been reluctant to fall out of favour with Mr Ahern, who is a strong advocate of partnership, while employers have looked to the Government to bridge the divide through taxation measures.

While general pay increases will grab the headlines, it could be measures in the next budget which seal the deal.