Following settlement of a bitter dispute at Irish Ferries at the end of 2005, which had threatened to derail the process, formal negotiations on a seventh successive national pact commenced in Ireland in February 2006, with the social partners outlining their positions on employment standards and pay.
Talks on a new national social partnership agreement, to follow the 2003-5 Sustaining Progress (IE0301209F and IE0304201N), had been held up by a power struggle between Ireland’s largest trade union, the Services Industrial Professional and Technical Union (SIPTU) and Irish Ferries, which had threatened to derail the country’s consensus model of wage bargaining. The dispute was finally resolved in December 2005 after the state dispute-resolution institutions formulated a settlement acceptable to both sides, following intensive talks (IE0512203F).
The Irish Ferries dispute lifted the lid on a number of issues. In illustrating the industrial relations implications of outsourcing and job displacement in the face of competitive pressures, the dispute presented something of a 'litmus test' for the future direction of social partnership, in terms of finding an accommodation between the interests of economic competitiveness and employment protection. Further, the dispute illustrated the difficulties and tensions facing the government and the social partners arising from labour immigration. In particular, after EU enlargement in May 2004, together with the UK and Sweden, Ireland was one of only three 'old' EU Member States that fully opened their borders to workers from the new Member States in central and eastern Europe.
The interrelated issues of job displacement, employment standards and immigration are currently at the centre of the new national talks, which formally commenced on 3 February 2006. The government wants to conclude an agreement by mid-March, in advance of a visit by the Prime Minister (Taioseach) to the USA for St Patrick’s Day, 17 March. However, this could yet prove to be optimistic given the range of complex issues that has to be negotiated. The talks process has been divided up into various strands, with the contentious issue of employment standards constituting strand one. The issue of national pay increases will be dealt with in the final stages of negotiations, and no definitive percentage rises have yet been put forward. The outcome may be a three-year deal. It is clear, however, that any pay agreement concluded will be of at least two years' duration, to get the government past the next general election.
Union demands
The trade unions have insisted that progress must be made on securing appropriate guarantees (IE0511201N) on improving employment standards before negotiations on a new national pay deal commence. In view of this, creating a 'culture of compliance' with employment regulations and standards through reinforced enforcement measures is one of the key aims of Irish Congress of Trade Unions (ICTU) negotiators in the talks.
In the latest round of national talks in mid-February 2006, ICTU raised a range of employment regulation and labour-related issues with government and the Irish Business and Employers Confederation (IBEC), Ireland’s largest employers' organisation, and said that collective bargaining wage norms should be protected by legislation.
Of the key aims underpinning its current proposals for changes in employment protection legislation, ICTU says: 'We need to protect wages above the level of minimum wage; in particular our legislation needs to recognise the 'standard week remuneration' where this is above the level of minimum wage so that we can provide a legal guarantee for what’s commonly known as the 'going rate for the job'.' By pushing for a 'legal guarantee' for the 'going rate', ICTU is making a further push in the direction of regulation and away from voluntary collective bargaining (IE0503202F). The implication is that ICTU is opting for a more 'continental European-style' wage bargaining system.
Labour market regulation
On the labour market generally and immigration, ICTU asserts that 'it is a very good thing for the country that the trade union movement has taken the initiative on the labour market implications of immigration.' It says that it has tried to balance the rights of foreign and Irish nationals 'in a context where we seek measures to prevent either from being disadvantaged.' In an audit of current activities regarding labour market regulation, ICTU points at a number of developments that it believes should inform consideration of labour market regulation in talks:
- the Irish government is opposing the adoption of the draft EU Directive on temporary agency workers (EU0204205F);
- having opposed it in 1999, the government has recently asked the European Commission to reactivate a draft Directive on seafarers;
- the government is almost a year late in transposing the 2002 EU information and consultation Directive (2002/14/EC) (EU0204207F), and is not willing, so far, to accommodate ICTU requirements (IE0508203F);
- discussions have been in progress for months now about the Irish transposition of two EU Directives on public procurement, with ICTU seeking the inclusion of 'fair employment' clauses;
- a working party is engaged on an examination of the legal environment in which the Labour Inspectorate works, with a view to making its work more effective;
- another working party is trying to streamline the employment rights machinery; and
- a review of the 1971 legislation relating to regulation of employment agencies is being considered by the Department of Enterprise, Trade and Employment.
Among the legal changes that ICTU says may be of assistance in helping to achieve reform would be: amending the existing statute on collective redundancies; amending the Transfer of Undertakings Regulations 1980; amending the Unfair Dismissals Act; transposing the EU public procurement Directives; amending the 1971 Act relating to employment agencies and relevant sections of the Unfair Dismissals and Industrial Relations Acts; and government support for an EU Directive on temporary agency workers, evidenced by advance legislative enactment of its provisions in Irish law.
ICTU argues that because the Department of Enterprise Trade and Employment 'is essentially charged with promoting the interest of industry it is difficult to accept that there will not continue to be tensions between that remit and that of protecting workers’ rights.' The only way to achieve effective regulation of the labour market would be to vest responsibility for enforcement in a separate agency located in a different department, it suggests. Whether the government agrees to set up a separate agency or not, it does seem as if there will be more labour inspectors and that they will have more power to police employment standards (IE0504204F). The unions will also look for far higher penalties than the modest EUR 3,000 fines levied at present for breaches discovered by the labour inspectorate.
Another vexed question is the draft EU Directive on services in the internal market (EU0407206F), which is before the European Parliament and subject to a myriad of amendments. This is an issue that obviously cannot be decided in the national talks in Ireland, other than the unions and employers securing certain 'bottom-line' commitments from the government. However, such complicated problems indicate that while a new pact is likely, there are enough stumbling blocks around in the employment standards area to make for very tough negotiations.
The Prime Minister may have made commitments to the unions on employment standards, but commentators suggest that once officials get the unions and employers behind closed doors, concessions will not be so easily achieved. There remains a strong view within government - and within employer groups such as IBEC and the US Chamber of Commerce- that the perception of Ireland having what the ICTU leader David Begg calls 'light-touch regulation' remains an important selling point for potential inward investors.
Pay negotiations
When the pay negotiations become serious, the trade union side may press for a local pay bargaining clause to provide more flexibility vis-à-vis national pay increases. An argument will likely be made for an 'ability to pay' clause to match the employers’ 'inability to pay' clause that worked so well under the last national deal, Sustaining Progress (IE0312204F). If this is approved, the pay assessors appointed by the Labour Relations Commission, who have operated this system, could be asked to adjudicate in 'ability to pay' local bargaining cases.
One of the difficulties facing ICTU on the pay front is the widely-held perception in the private sector that public sector workers have received special treatment, by virtue of the public service wage benchmarking system (IE0402202N). Recent reports make the case that public servants have actually fared far better than private sector workers in general for a decade or more. This gives weight to the perception that the benchmarking system is a sort of 'top-up bonus' for public servants, even if the reality is more complex. This makes it hard for private sector unions to deliver modest pay rises at a time when competitiveness pressures are as strong as ever. There is also an added downward pressure on wages in the private sector as a result of inward migration. This is separate from the so-called job displacement issue, and operates as it has done in all economies that open their doors to workers from outside.
NESC report
ICTU also knows that significant issues such as pensions, the future of the state sector and healthcare, can get lost in immediate demands regarding employment standards and pay increases. This is why Mr Begg will be pressing for a fundamental revision of how the social partners do business. He would like to see greater use made of the National Economic and Social Council (NESC) report, which has traditionally provided the backdrop for national talks since 1986. Signed by all the social partners, the report provides a blueprint for social and economic development that, theoretically at least, all sides can live with. Mr Begg’s idea is that there should be a move towards perhaps six, or even 10, yearly blueprints, based on NESC reports, instead of arguing over the text of a national agreement in the relatively short period of time allowed for talks on what are often highly complex issues. The national talks should focus instead on the narrow, but vital, issues of pay and employment-related matters, leaving the broader social and economic issues agreed within NESC to be monitored regularly by the social partners in an ongoing process.
Prime Minister's view
Prime Minister Bertie Ahern, perhaps with one eye on his legacy, commentators suggested, broadly endorsed Mr Begg’s idea of a longer-term partnership framework, when he formally opened the national talks in Dublin on 3 February: Looking to the future, Mr Ahern said, the recent publication by the NESC of its strategy report 'provides a guiding vision for the coming years for economic and social development in Ireland, and more immediately the framework within which the negotiations on a new agreement should take place. Specifically, I believe that we should consider agreeing a 10-year framework for our social partnership process so that it can be aligned with, and contribute to, the development and implementation of this longer-term agenda ... This longer-term approach would be accompanied by specific pay agreements of a shorter duration, which, personally, I feel are of most value when they cover a three-year period.'
The Prime Minister told employers, trade unions, farming organisations and the various community groups involved in the talks, that 'social partnership's record of success in underpinning our economic and social transformation represents the best argument for its continuation'. Mr Ahern said that, as a small and very open economy, 'we have learned that competitiveness and flexibility are key to our economic development. This is a simple reality that must guide us in the talks, not least when it comes to matters of pay.'
Turning to the vexed issue of employment standards, Mr Ahern said that 'at the same time, we do not want to see people building competitive advantage based on poor wages, casualisation of labour, low health and safety standards or other poor compliance practices.' He noted that the issue has been flagged by ICTU as a core agenda item: 'I have made it very clear that the government does not wish to see a race to the bottom in the Irish labour market; and our progressive record on employment, real take-home pay and working conditions shows that we mean what we say. What this government is about is ensuring that we keep up in the race for greater productivity and enhanced competitiveness based on new products and services, upskilling of staff, new work practices and technological innovation. Lowering of employment standards forms no part of our vision. In fact, it is the exact opposite of it.'
Mr Ahern is now seen as the main political bulwark on the pro-partnership side (IE0503201N). Some commentators, many of them severely critical of social partnership, have suggested that the process may not survive his political passing. This may also be why he is suggesting a 10-year framework, in order to bolster the model for the long term and ensure its continuation as part of his political legacy.
Employers' position
Meanwhile, IBEC issued its usual pre-talks statement of intent on affordable pay rises and the need to maintain competitiveness. A strong advocate of the social partnership process of the past 19 years, the employers’ body had maintained a 'diplomatic silence' in the weeks prior to commencement of formal talks, as the trade unions, in particular SIPTU, came to their decision finally to accept the government’s offer to enter talks on a new agreement, following settlement of the Irish Ferries dispute.
IBEC has no objection to the enforcement of existing employment standards, and it is unlikely to have any problems with the appointment of more labour inspectors. However, it could have difficulties with new powers for the inspectors, or with anything that it thinks might damage the attractiveness of Ireland as a location for foreign inward investors.
On pay, IBEC does not want pay rises above the level of Ireland’s main competitors (around 3% a year), or beyond the inflation rate, but it also knows that, due to Ireland’s higher growth rates, this target, which it always adopts, has been impossible to deliver. So while IBEC adopts a tough stance to start with, according to observers, it knows that compromise is inevitable. That said, it looks unlikely that IBEC will back down from on its insistence that there can be no local bargaining clause. This is partially due to the fact that its members have not been very happy with local bargaining in the past. 'Either we have a national agreement or we have local bargaining - we can’t have both,' IBEC director general Turlough O’Sullivan has stated. Similarly to the Prime Minister, IBEC would also like to see a three-year pay agreement, but this is not a precondition.
IBEC is also likely to seek to strengthen the pay compliance measures introduced under Sustaining Progress, whereby LRC-appointed pay experts assess 'inability to pay' claims. The employers prefer that all referrals to the assessors should be binding, not just in cases where the question is one of a company’s ability to pay.
On union representation, it is understood that IBEC would like to see the timeframe for dispute resolution under the 2001-2004 Industrial Relations Acts extended (IE0409204F). The employers’ body believes that the timetable that starts ticking once these cases are formally set in train should be extended beyond the average six months it now takes cases to reach finality. It is unlikely that the unions would agree to such a change in the 2001-2004 Acts, which are seen - apart from the pay agreement - as the major dividend to emerge out of Sustaining Progress from a trade union point of view. IBEC remains staunchly opposed to any form of statutory union recognition, and even the trade unions believe that there is little point in their putting this demand on the table again.
IBEC may also raise the issue of trade union involvement in private companies that succeed in securing contracts for work hitherto performed within the public sector. IBEC wants no compulsion on contractors to recognise unions in such cases. Local authority work would be a prime example of this, such as refuse collection.
Commentary
Following settlement of the bitter Irish Ferries conflict, the path now seems clear for a seventh successive national deal to be finalised in Ireland by the end of spring 2006. The economic outlook remains positive in early 2006, though, of course, a major international shock could always change this state of affairs. Talks on pay will again be centre stage, but this time round there will be considerable focus on the critical issue of bolstering employment standards in the context of increasing inward labour migration. However, negotiations will not be easy, and we can probably expect some stumbling blocks along the way.
The bottom line, though, is that all sides appear to have sufficient reason for sticking with social partnership, and the perceived benefits still appear to outweigh the costs. The process will always attract criticism, some of it valid and healthy, but the difficulty lies in presenting a practical and workable alternative in the current economic and political climate.
For the Irish government, especially one led by current Prime Minister Bertie Ahern, the process provides a certainty and a way of doing business and managing change that it is comfortable with. Indeed, Mr Ahern was one of the prime architects of the process. For employers, the level of pay rises and the certainty this provides within a system that is becoming more regulated retains a strong attraction within the unionised sector. Above all, the employer side values the certainty provided by the institutional architecture of social partnership. For the unions, the process gives a majority of them an influence beyond what might be achievable at a time of falling density levels in the private sector (IE0510201F). In short, it allows them to punch above their weight. This influence can ebb and flow, depending on circumstances such as the timing of a general election, but it is nonetheless real. For the public sector unions, the system underpins the government’s commitment to the public sector benchmarking pay determination system and provides a timetable for the payment of awards. (Tony Dobbins, Industrial Relations News)