Ibec warns conditions not yet ready for developing new agreement on pay

Ibec has admitted a case is beginning to develop for a new national pay agreement, but warned conditions are not ready for it yet, as well as ruling out pay increases across the private sector.

There have been numerous references in recent weeks to pent up frustration among workers that they are not sharing in the economic recovery through increases in their take-home pay.

Ibec director general Danny McCoy acknowledged that as the economy enters recovery mode, “we will start to see that frustration of expectations that has been building up and so we will have to find a new route in order to manage the economy”.

But he added: “We need to be realistic in terms of pay demands.”

Mr McCoy said he agreed with Siptu president Jack O’Connor that there is a need to increase disposable income, but he said he did not believe it should be through across-the-board wage increases but through tax cuts.

“I would agree we need to get disposable income up but I don’t believe it is through across-the-board wage increases. If they are productivity justified, and they are in many sectors — we see anything up to 50% of companies expect to be paying pay increases in 2014 and 2015 — but that is not across the board,” he told Newstalk radio.

“The way to get disposable income up is to start to reduce the taxes. The income tax levels now, particularly with the universal social charge, are really punishing. It is not just the marginal rate that is high, the average tax rate has gone up significantly.”

On the potential for a national framework agreement, he said: “There is a case beginning to develop around the conditions for it. I think we are still some way off. I think enterprise level bargaining is where we found ourselves over the last two years. I don’t see that changing in the very short term.

“I think the argument for some framework that will help the economy ensure we don’t choke off the growth prospects and employment prospects has a lot of merit. We will certainly be open to any suggestions on that front but I don’t think we are going to be in a position right across the business community to go back into even sectoral level bargaining in the short term.”

He did not think the three parts required for an agreement, the Government, trade unions and the business community “are there just yet”.

On the same programme, Siptu leader Jack O’Connor said he was “agnostic” on a new social partnership agreement as the senior party in government, Fine Gael, had rejected the proposition.

“My job is to ensure, as far as I can, within the limits of the circumstances we find ourselves, the interests of workers. If the Government and employers are saying “no to national agreements, we won’t sit around a table, we will fight you on an employer by employer basis, we will try to curtail wages” even if it means restricting the growth of the economy, I can’t do anything about that,” he said.