THE TALKS on a new national pay deal broke down in the early hours of Saturday morning after unions rejected proposals which would have seen wages rise by 5 per cent over a 21-month period.
However, a deal would also have involved a six-month pay pause for most private-sector employees, an 11-month pay pause for more than 300,000 staff in the public services and a 12-month pause for those in the construction sector.
The unions believed that at a time of rising food and fuel prices this deal would have done nothing for low-paid workers, and that the annualised increase of 2.8 per cent was much less than the expected rate of inflation.
Unions also considered that a 12-month pay pause would never have been accepted by workers in the construction sector.
However, according to highly-placed sources, the potential of a new national pay deal being concluded had been in trouble for a number of days in the run-up to last Friday.
It is understood that unions were greatly concerned at proposals put forward by employers - and conveyed through senior civil servants - for changes in the mechanism for allowing companies to plead inability to pay increases under the national agreements.
This currently involves such companies having their books assessed as part of a process involving the Labour Relations Commission.
However, unions have argued that the employers' proposal would permit companies to plead inability to pay based on projected future difficulties, rather than on their current financial position.
The unions believed that this would have effectively set the national pay rises as a cap and introduced local bargaining to determine whether they should apply in individual companies or whether they should be offset by other measures.
The unions believed that such a measure would significantly reduce the guarantee for workers that they would actually receive national increases.
The negotiations between unions, employers and the Government did not just cover pay, although this was always going to be the most controversial issue.
The talks also dealt with collective bargaining rights for staff in non-union companies, equal treatment for agency workers, competitiveness, the Government's new Employment Rights Compliance Bill which is aimed at overhauling the State's employment rights framework, and modernisation and change in the workplace.
By the middle of last week with the effective deadline of the August bank holiday weekend looming, the secretary general to the Government, Dermot McCarthy, who chaired the talks, summarised the positions of the parties and officials began drawing up compromise proposals on the different areas for discussions.
According to sources close to the talks it appeared that progress was made on the Compliance Bill and on agency workers. It was even possible that highly contentious issues such as collective bargaining could have been moved into a new tightly-framed process to be addressed over time if agreement could be reached on pay.
It is understood that on Friday union negotiators questioned, through the civil servants, whether the employers were in a position to conclude a national deal given the proposals over the inability to pay clause and the pay pause in the private sector.
On Friday evening Mr McCarthy produced the first pay proposals based on his informal consultations with the employers. This involved a low single-digit increase over 21 months with a pay pause of six months.
This was rejected by the unions who then indicated that they wanted a deal to run over 18 months.
The employers' group Ibec at no stage produced detailed pay proposals, but following further informal consultation with Mr McCarthy further proposals of 4 per cent over 21 months and then subsequently the 5 per cent increase in two instalments emerged.
It is understood that the Government side supported the proposal of 5 per cent over 21 months, but sought to extend the current five-month pay pause by a further six months.
This proposal, which was seen as the employers' final position, was rejected by the unions and the talks effectively broke up.
The Taoiseach Brian Cowen met with the parties at about 3.30 on Saturday morning and thanked them for their efforts. He urged the parties to reflect over the month of August and indicated that he would speak separately to them.
At no stage did the union side put forward pay proposals of their own.
The general secretary of the Irish Congress of Trade Unions, David Begg, revealed yesterday that they would have been prepared to accept below-inflation increases if protection of lower-paid workers had been put in place.
