National pay talks - The vulnerable will suffer

THE pay talks finally collapsed at about 4am on Saturday morning. For the first time in more than 20 years, since the economic nightmare of the 1980s, there is no pay agreement in place.

With the economy appearing to slide into recession, the remedies being offered by the various sectors were simply irreconcilable. But there would appear to have been no rancour. No side sought to blame the other. All purportedly desired an agreement, but they simply could not agree on the measures to be taken.

At present no side seems to have any plans to rescue the situation. The Taoiseach and the Tánaiste thanked all for their efforts.

The employers were prepared to offer a pay increase of 2.5% after a six-month pause, followed by another increase of 2.5% after a further nine months. This would have amounted to a 2.8% annual increase, which would not have matched inflation which is running at 5%, although some experts suggest it will drop to 4% next year.

The unions were prepared to accept increases somewhat less than inflation provided special measures were adopted to protect lower-paid workers, those worst hit by inflation. The unions suggested a mandatory payment for the less well off.

Secretary of the Irish Congress of Trade Unions David Begg acknowledged that the employers had a definite case in arguing that the lower paid are often employed in vulnerable industries.

Expecting those vulnerable industries to bear a higher share of the burden would weaken their competitiveness and ultimately undermine the jobs.

The unions suggested that the Government could help by contributing to lowering inflation by cutting VAT, which hits the poor section of society harder because all pay at the same rate without regard to their income. The Government could also combat inflation by ensuring that the real differences between the euro and the sterling prices of imported goods from Britain are passed on to Irish consumers.

If the country returns to the free-for-all situation of the 1980s, the more vulnerable sector will be hurt most. Employers will simply cut back, and unions will be able to use their muscle to protect their members.

The Government is supposed to ensure fairness and thus protect the weaker sections of society. The Taoiseach indicated that he might call the social partners together to try to tackle the difficulties again at the end of August.

This, of course, would be after he and his colleagues will have had their holidays. Nobody would expect politicians to allow the national interest to interrupt their holidays, would they?