Unions doubtful on pay deal

UNIONS warned yesterday they were not optimistic a new national pay deal could be struck.

Reacting to suggestions that private sector workers may have to accept a pay freeze of up to 12 months, Irish Congress of Trade Unions president Joe O’Toole said such a measure would be intolerable.

“We’re absolutely committed to reaching a deal. I know it can be achieved but I’m not optimistic that it will be at this stage,” Mr O’Toole said.

The employers’ group, IBEC, has called for a pay freeze of anything up to a year to bring wage growth here into line with other European Union countries.

The comments were made yesterday as the Government, employers and unions, sat down to discuss a new national pay deal which will replace the Partnership for Prosperity and Fairness, which is due to expire at the end of this year.

Finance Minister Charlie McCreevy said a new pay deal was a Government priority but that it was going to come at a price.

He hinted that public servants would also have to accept a pay freeze for an unspecified period of time, but signalled that they would receive backdated payments owed to them under the benchmarking process.

Mr McCreevy put the economic situation in stark terms, saying the boom was finished and increases in spending over the last few years had to come to an end.

“The outlook for 2003 should come as no surprise. What has changed is the extent of the action now required to cope with the situation. The first priority has to be to get back to a sustainable rate of spending growth,” he said.

“The relationship between a new general round and benchmarking must be considered in the context of the budgetary pressures facing us.

“We have to be willing to contemplate all options, including the commencement date of any new general pay round.”

Labour leader Pat Rabbitte yesterday said workers should not have to suffer because of the Government’s failure to tackle inflation and said he was pessimistic about the prospects of a new agreement being concluded.

Taoiseach Bertie Ahern, however, was more optimistic and said an agreement could be reached if there was moderation and realism in the negotiations.

“While nobody wishes to go back to the bad old days, we do have to moderate our expectations so that we are in a healthy position to take advantage of the upturn in the world economy when, eventually, it comes,” he said.

Tánaiste Mary Harney was also upbeat about the prospects for a deal despite her admission that the Government would not have the same flexibility in adjusting income tax rates as they had before.

Ms Harney said workers had benefited from a sustained attempt to bring down levels of income tax and she was still determined to take all minimum wage earners out of the tax net.