A breakthrough was achieved just before 3 a.m. today in talks on a new pay agreement between IBEC and ICTU. It is understood that the employers have agreed in principle to a significant increase in the national minimum wage, a 15 per cent pay rise and for the agreement to last for two years and nine months.
The first instalment of the agreement is expected to be over 5 per cent.
Both sides are to reconvene at noon to agree the detail. Agreement on tax, social inclusion and other non-pay elements are expected to be wrapped up by this evening.
A package for low-paid workers had been the most serious obstacle. The Irish Congress of Trade Unions was seeking large flat-rate increases for those earning less than £250 a week, and a national minimum wage significantly higher than £4.40 an hour.
The Irish Business and Employers' Confederation is believed to have accepted the need for across-the-board pay rises of 15 per cent over the next two years and nine months, but the actual phasing of the increases is still under discussion.
IBEC is also seeking guarantees that any pay increases which are conceded will not undermine competitiveness and employment. Labelled "cost-absorption measures", this is the first time employers have sought some form of productivity in return for pay round increases which normally come into force automatically.
An IBEC director, Mr Turlough O'Sullivan, said earlier last night: "We are not in an environment where we can give something for nothing. We have to achieve agreements which are mutually beneficial." He added that large pay increases which undermined competitiveness would send the wrong signal to investors.
"There are still substantial differences between us, but both sides are determined to stick with these talks as long as there is a possibility of getting agreement," the general secretary of the ICTU, Mr Peter Cassells, said last night.
"The union team has an onerous responsibility to secure the best possible deal for over 500,000 members who have turned this country round, who expect a fair reward for their endeavours and who will be the final arbiters of the merits of any agreement."
The Taoiseach, Mr Ahern, remained on standby yesterday to intervene in the talks, if required. He was briefed on developments by the secretary general of his Department, Mr Paddy Teahon, and by the secretary general to the Government, Mr Dermot McCarthy, who are chairing the talks.