Congress Rejects IBEC Demand on Pay Deal
27 Jan 2009
Congress General Secretary David Begg has formally rejected an employer demand for a deferral of the current pay deal and an "indefinite delay" to a rise in the Minimum Wage.
In a letter to the Irish Business and Employers' Confederation (Ibec), Mr Begg warned that the demand could make agreement on a national recovery plan more difficult, stating that: "If Ibec proceeds to detach itself from the process in the manner suggested...then it will make it very difficult to establish any form of a Social Solidarity Pact."
Mr Begg noted that some 50 agreements have already been reached on payment of the deal, between employers and unions in the private sector, while other companies have advised of their intention to pay the deal.
In addition, he also pointed out that the deal that was concluded late last year included a strengthened and more robust Inability to Pay mechanism, "provisions that were framed....at your request."
Mr Begg also explained that current problems did not stem from wage costs, as unit labour costs in Ireland are well behind those in other EU countries. A recent Congress report found that "the hourly compensation cost of industrial workers in Ireland is relatively low compared to many other countries...We still have a competitive advantage on wage levels and with our higher productivity we have an even higher advantage on unit labour costs."
(see Page 35 of the Congress response to the Government's Smart Economy document.
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See below full text of letter to IBEC:
27 January 2009
Mr Turlough O'Sullivan
Director General
I B E C
Confederation House
84/86 Lower Baggot Street
Dublin 2
Dear Turlough
Your letter of 23 inst was considered by the Executive Council of Congress yesterday and I am directed to make the following observations upon it.
At this stage in excess of fifty agreements have been recorded and intention to pay the terms of the Transitional Agreement have been advised by other companies. Where trading difficulties have emerged these have been dealt with pragmatically by the parties at local level.
I would remind you that problems associated with the current period of economic uncertainty were specifically recognised in paragraph 1.3 of the agreement and the 'inability to pay' provisions were framed to take account of this factor at your request. In fact there has been very little use of these arrangements so far, mainly because of the pragmatic approach referred to above. But they remain available and they have worked satisfactorily in the past. You have offered no evidence in your letter to suggest that they are no longer fit for purpose. Whatever difficulties the economy is confronting in broad terms unit labour costs is not one of them. Therefore we are very opposed to any deferral of wages due and especially your proposal for an indefinite delay in an adjustment to the National Minimum Wage. This offends against the concept of a Social Solidarity Pact.
The current discussions initiated by Government are proceeding within the framework of the Transitional Agreement. We are willing to meet you in that context.
In conclusion I must say that we were somewhat surprised and disappointed to receive your letter. There is no benefit to Congress in engaging in the current talks. We are only doing so because it is the right thing to do for the country at this time - however cynically such sentiments might be regarded in some quarters. On the other hand, as is clear from the Government's framework document, there are very explicit benefits for business in doing so. However, any agreement which may emerge will only find acceptance if it is capable of ensuring that the burden of economic adjustment is borne by those most able to do so. If IBEC proceeds to detach itself from the process in the manner suggested in your letter then it will make it very difficult to establish any form of a Social Solidarity Pact.
Yours sincerely
David Begg
General Secretary
cc Mr Dermot McCarthy, Secretary General, Department of An Taoiseach
Congress Executive Council Members
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