Taoiseach warns that pay deal expectations must be 'realistic'

Taoiseach Bertie Ahern has warned that expectations in the forthcoming talks on a new national pay deal will have to be "realistic". Martin Wall , Industry Correspondent, reports.

Speaking at Dublin Castle yesterday, where a review of the current Towards 2016 national agreement was formally announced, both Mr Ahern and the Tánaiste, Brian Cowen, said it was important for the country to maintain and improve competitiveness.

The Taoiseach said if the country remained competitive then it would be able to do a lot of things but if it did not there would be problems.

Mr Ahern said that two pieces of legislation dealing with employment rights - which are critical to the prospect of unions taking part in the new talks - would be published within the next few weeks.

Mr Cowen told the plenary meeting of the social partners it was crucial that wage expectations in the forthcoming talks were "kept in line with the rapidly changing economic environment in which we are operating".

While employers called for pay moderation, unions argued that increases were affordable and if the expectations of workers were not met then any new deal could be rejected.

Mr Cowen said that over the last number of years wage increases had exceeded productivity growth, with a resulting loss of competitiveness.

"Regaining market share will require an approach to wage determination which takes greater account of productivity developments as well as labour cost developments in our major trading partners," he said.

Mr Cowen also said it was now clear that the rate of inflation had peaked and that the pay negotiations should take account of this development.

The director general of the employers' group Ibec, Turlough O'Sullivan, said that pay moderation was essential if economic success was to be safeguarded.

"Pay rates in Ireland have been growing at twice the pace of those in other euro area countries. This is simply not sustainable. In the upcoming negotiations pay moderation is an urgent requirement," he said.

The general secretary of the trade union Impact, Peter McLoone, said the pay proposals that emerged from the talks had to be sufficient "not just to protect people's living standards but to recognise and reward their contribution, which is significant, to the productivity of the country".

Siptu president Jack O'Connor said that until there was clarification on whether key elements of the existing deal regarding protection of workers would be honoured, his union would not be going into any talks.

"There are formidable obstacles against conclusion of another agreement but we think we can afford to be positive as well," he said.

© 2008 The Irish Times

This article appears in the print edition of the Irish Times