Proposals may cause potential rift between coalition partners

RICHARD BRUTON’s proposals to “radically overhaul” wage-setting mechanisms in the private sector has thrown up one of the first potential flashpoints between the coalition partners.

Both Fine Gael and Labour were quick to pour cold water yesterday on suggestions that the issue has already caused a rift between them.

But both sides know this has the potential to develop into a rift if not carefully handled. This is because the Labour base, including the trade unions to which the party is traditionally aligned, is opposed to any measures that would reduce the salaries of low-paid workers.

As such, Mr Bruton’s proposals will be an early test of both the coalition and how Taoiseach Enda Kenny manages his own ministers in Fine Gael.

On the surface, it looks like Mr Bruton will shortly find out he has to take one for the team.

Mr Kenny appeared to leave him distinctly isolated yesterday by saying Mr Bruton was merely following a “personal agenda” with the proposals, and that the Cabinet would ultimately decide.

It was a curious choice of words from the Taoiseach. It appeared that Mr Kenny wanted to mollify anxious Labour colleagues with the message that Mr Bruton’s proposals were only that — proposals — and would be modified to the satisfaction of both Coalition partners at the Cabinet table.

If this is the case — and Labour TDs believe it to be so — Mr Bruton has already been shot down in quite spectacular fashion by the man whose leadership he challenged last year.

As such, it would have been a blunt reminder by the Taoiseach to Mr Bruton of who’s in charge.

But there may be an alternative explanation — and it hinges on who’s really in charge.

These days, when considering proposals emanating from any Government department, it’s important to remember the terms and conditions of the EU/IMF bailout.

The bailout demanded an independent review of the wage-setting mechanisms. This independent review was commissioned and recently furnished to the Government.

Mr Bruton has drawn up his proposals in response to that report, although some Labour TDs say he has gone far beyond what the report is recommending.

But the key point is this: The bailout not alone demanded the review but obliges the Government to agree “follow-up actions” with the European Commission.

In other words, the Government has to overhaul the wage-setting mechanisms in a way that meets with EU approval. Both the Fine Gael and Labour leadership know this, and indeed committed to such an overhaul in the Programme for Government.

But bringing along their respective backbenches will require some deft handling. And so perhaps Mr Kenny’s language yesterday was a message that he wants ministers to finalise policy and communication of policy at Cabinet before flying kites in public.

But Mr Bruton would not have regarded it as flying a kite — he has been demanding measures to improve competitiveness for years — and either way, an overhaul of some shape or form is coming.

The bailout stipulates as much.

The question now is whether Mr Kenny will sacrifice or modify Mr Bruton’s proposals in order to appease Labour. Judging by yesterday’s comments, the signs are that this will happen. An interesting sub-note to this is the willingness or otherwise of Labour backbenchers to revolt. Again on the surface, it looks as if Labour backbenchers are intent on giving party leadership problems if Mr Bruton’s proposals are not scaled back. But it wouldn’t be unheard of for a party leadership in Cabinet to request backbenchers to get vocal about an issue when the leadership itself recognises that it could cause problems with the base. It may be the case that Labour are actually at one on this and want to stop Mr Bruton’s proposals dead in their tracks, while giving Labour ministers the excuse that it was their backbenchers who forced their hand.