Social pact urged over pay deals

Cabinet seeks union/IBEC forum

THE Cabinet wants to set up a new social partnership that would agree wholesale pay rises for the public and private sectors, the Irish Mail on Sunday has learned.

A Cabinet source says that ‘momentum for pay rises’ will be ‘irresistible’ after the first quarter’s tax receipts are published.

Private sector employers have accepted that pay rises are inevitable, with IBEC conceding that at least 2% is coming for most employees.

‘Improvement can’t occur without payback’

However, negotiated and widespread pay rises for the public service will be controversial.

Labour’s political heartland is the public service and its popularity has waned in the wake of state pay cuts. However, the party is pressing its coalition partners into action.

Sources say a pay forum involving Government, employers and unions, could be set up within months.

‘We would expect the unions to come looking for a 5% pay increase and we eventually agree 2.5% across the board, that’s the way these things work from my experience,’ said a minister. Cabinet sources say that the Economic Management Council – made up of Taoiseach Enda Kenny, Tánaiste Joan Burton, Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin – all support pay rises in principle. The problem is political – how to deliver the measures without accusations of auction politics, and how to avoid antagonising EU neighbours.

Cabinet sources say that political strategists within Fine Gael – particularly the Taoiseach’s advisers – are ideologically opposed to pay rises.

But Fine Gael’s work with focus groups tells them that pay rises will be a key factor in the next election.

Labour ministers all want to see pay rises. ‘It is inevitable,’ said one. ‘The economic improvement cannot occur without payback, and it cannot improve our political standing without pay rises.’ Fine Gael ministers, meanwhile, urge ‘financial prudence’.

The Technical, Engineering and Electrical Union says its strategy will be to lodge 5% pay rise claims, 50 times the current 0.1% rate of inflation. SIPTU’s Gerry McCormack said its standard 2% claim over 12 months will rise to between 2.5% and 3%.