Tax break demand for minimum wage staff

EMPLOYERS have called for tax breaks for minimum wage workers as a way to save the national pay talks and tackle the country’s economic difficulties.

As Taoiseach Brian Cowen moved to try and rescue the negotiations from collapse, IBEC director general Turlough O’Sullivan insisted business would not budge from its below inflation stance.

He said Mr Cowen had room to “tweak” tax and PRSI scales for the low paid to sweeten any deal.

The Taoiseach is set to try and resurrect the stalled talks this week after giving both sides a month for reflection, after attempts to hammer out a deal ended bitterly in early August.

Mr O’Sullivan said the financial situation faced by industry had worsened since then and indicated IBEC was in no mood to compromise on its tough stance.

Employers were believed to have offered a 21-month deal, working out at a rise of about 2.8% per year. Unions said they were prepared for a below-inflation increase as long as the low paid received a better result.

The IBEC chief said with the economy “worsening by the week” no offer could match inflation.

“We can’t chase inflation, if we chase inflation we make inflation worse. We have a high pay economy — people in Ireland are doing Okay,” he said.

Mr O’Sullivan insisted it was time for the Government to show strong leadership on the issue of pay.

“They need to get this by the throat — the economic crisis that we are in.”

He said the Government had room for manoeuvre to deal with the issue of minimum wage earners, insisting it could “tweak something in the tax or PRSI department for those at the bottom of the scale”.

The IBEC chief also demanded the Government bring in “substantial” reform of the public services, which he claimed are heavily overstaffed and ripe for reductions as the downturn takes hold.

Mr Cowen will contact unions and employers in the next few days following criticism that he did not do enough to try and keep the last round of talks going.

The Taoiseach faces considerable pressure to bring the two sides together, as a return to local bargaining for the first time in 21 years could trigger a winter of industrial unrest.

The move comes against the backdrop of continued sniping between employers and unions in the wake of the abrupt ending of negotiations a month ago.

Unions are also split on the matter, with public service representatives more receptive to resuming talks than those in the private sector.

Non-pay issues will also prove crucial to any deal.