Ireland: New national agreement

Management and implementation of the agreement

The agreement establishes a new national-level mechanism in the form of a steering group with overall responsibility for management and implementation of the agreement. The main tasks of the steering group are as follows:

The pay agreements

The pay agreements are to be implemented in the private and public sectors as follows.

Private sector - including commercial-state companies

Key provisions over 18 months are:

Public sector

Key provisions, to be implemented from 1 July 2003 (the previous agreement expires on 30 June 2003) are as follows:

Public sector benchmarking increases

The Public Service Benchmarking Body (PSBB) was set up in 2001 under the terms of the Programme for Prosperity and Fairness (PPF) national agreement to establish fair comparisons between the pay of public sector workers and their counterparts in the private sector. Benchmarking increases are agreed to compensate public servants for additional pay movements in the private sector, outside the general increases agreed under the national increase. To this end, the body issued a report in July 2002 (Ireland: Benchmarking report to solve public service pay problems? ), which awarded an average pay increase of 8.9% across the public service to be implemented as follows:

Formal agreement was concluded in negotiations between the government and the public sector trade unions on the implementation of this PSBB report.

Enforcement

Private sector enforcement

New enforcement measures, agreed voluntarily, mean a greater role for the Labour Relations Commission (LRC) and the Labour Court in ensuring that the terms of the pay agreement are honoured. The new provisions are designed to cater for separate categories of dispute that may, ultimately, go to the Labour Court for a binding recommendation under s.20(2) of the Industrial Relations Act 1969.

These new categories of dispute apply as follows:

It is important to note that legal opinion in union and employer bodies agree that recommendations made by the Labour Court under the new measures are not legally enforceable, even though they may be binding under the aforementioned 1969 Act. What this means, in practice, is that in Sustaining Progress, the social partners have voluntarily agreed to be bound by the new rules, but they both acknowledge that these cannot be legally enforced.

In addition to the increased enforcement role for the state's dispute resolution agencies, the tripartite National Implementation Body (NIB), which was created under the previous PPF national agreement, is to oversee the entire enforcement process. The NIB comprises the general secretary of ICTU, the director-general of IBEC and the secretary-general of the prime minister's department. The body is scheduled under normal circumstances to meet once a month "to ensure delivery of the stability and peace provisions of the agreement". But where particular problems arise, there are provisions that allow it to be convened at short notice. It is also empowered to make recommendations to the social partners as regards specific problems that may introduce "further procedural changes" to ensure the effective delivery of the "spirit and intent of the agreement".

It is envisaged that this enhanced role for the NIB, combined with the new enforcement measures, should ensure overall compliance in cases where a dispute threatens to undermine the entire agreement. At the same time, there is still scope for local agreement between the social partners on pay arrangements that fall outside the terms of the national agreement.

Public sector enforcement

The enforcement measures in the public sector are broadly the same as those that apply in the private sector, with similar provision for referral to the LRC and the Labour Court as and when necessary. In addition, a commitment made in previous national agreements is restated, with the parties again "committed to agreeing voluntary codes of practice" to address, in particular, the maintenance of essential services during disputes. Discussions are to take place within each sector "as a matter of urgency" and under the auspices of the appropriate negotiating machinery, on the adoption of a code of practice for that sector. There is a commitment to complete this process by September 2003. Where such agreements cannot be reached, there is provision for the matter to be referred to the LRC or the arbitration and conciliation service and, if necessary, to the Labour Court or the Arbitration Board acting in an ad hoc capacity.

In the meantime, the NIB will establish a subcommittee to review progress on all aspects of the agreement in the public service.

Public sector modernisation

Agreement was also reached on a range of modernisation issues in the public service, implementation of which is related to payment of the benchmarking pay awards. The modernisation agenda is broadly based and includes commitment to the greater use of open recruitment and more competitive promotions so as to encourage the development of a more modern and dynamic civil service.

The health service has been affected by continued incidences of industrial action in recent years as it deals with public dissatisfaction over its inefficiencies - despite major investment programmes - and achieving a stable industrial relations environment in this sector is a key aim of the modernisation agenda.

The agreement notes that the recommendations of the PSBB benchmarking body replace any pay links that had previously been in force. It also underlines the commitment to consultation, to reflect the experience of the benchmarking exercise, as regards a number of issues. These include the terms and operation of a further benchmarking exercise as well as its establishment and timescale.

Worker representation

The failure to agree on the issue of worker representation had been one of the reasons that the negotiations on the new agreement had broken down in December 2002. ICTU had been looking for mandatory collective representation and bargaining rights, along the lines of rights introduced in the UK in June 2000 by the Employment Relations Act 1999. This proposal was rejected by both the government and IBEC.

The agreement includes a commitment to change the so-called "right to bargain" provisions according to the Industrial Relations (Amendment) Act 2001 (Ireland: Binding provisions of new Industrial Relations Act in place )  - the parties agreed that the effectiveness of the procedures encompassed in the Act needed to be enhanced. Although these provisions fall short of providing statutory trade union recognition rights for workers, they do allow for a series of procedures that may result in a binding Labour Court determination on specific workplace issues brought before the court. At the same time, the so-called "good faith protocol" in the current legislation is to be dropped. This governs how the parties are expected to behave in a dispute. A trade union can ask the Labour Court to investigate an issue where an employer has failed to participate in the voluntary procedure, appropriate internal procedures have failed to resolve the issue and there has been no recourse to industrial action. This procedure is to be dropped in order to shorten the process and limit abuse. The timeframe for processing such cases will thus be reduced from the current 18 months or more to between six and eight months. The new provisions will involve four key stages as follows:

As regards the issue of demands by ICTU for formal statutory trade union recognition, the negotiators were unable to reach an agreement on this highly sensitive issue for government and employers. However, the agreement notes the "ongoing debate within the EU" on this issue, and thus it appears to reflect a view that, ultimately, the EU may conceivably force change in this area.

Statutory redundancy terms

Under the agreement, the government is committed to the following:

Currently, statutory redundancy pay entitlement amounts to half a week's pay for every year of service up to the age of 41, and one week for every year of service from the age of 41 upwards.

The redundancy issue provoked major campaigns by unions over the past year (Ireland: National day of protest over severance pay) and the government came out in favour of what represents a significant concession on the part of the employers, albeit in an area that all parties agree was in need of some improvement. Crucially, however, the change is not expected to have a major impact on the above-average settlements that are commonplace in voluntary severance programmes throughout industry in Ireland.

Statutory minimum wage

The government is prepared to increase the statutory national minimum wage from its current level of €6.35 an hour to €7.00 an hour, with effect from 1 February 2004. Sustaining Progress, however, unlike its predecessor the PPF, does not provide for a minimum cash pay increase for the lower-paid.

Anti-inflation initiative

IBEC and ICTU are agreed that bringing inflation down as quickly as possible towards levels that are comparable with that of trading partners and the eurozone average has to be a top priority so as to secure jobs - inflation in Ireland averaged 5.1% in February 2003.

Accordingly, the agreement states that: "Investigations will be undertaken in sectors where price increases do not appear justified by market conditions." These surveys should be targeted at sectors that were identified in a report by the main state training agency, Forfas, as areas where "levels of competition for the supply of certain services in Ireland are most likely below certain levels". Furthermore, where such investigations reveal evidence of excessive price levels, the government will be asked to give detailed consideration to introducing measures, including: "temporary price controls, where appropriate, pending realisation of more acceptable markets and real competition".

Housing - a specific commitment

While the social and community groups that make up what is known as the "voluntary pillar" have mainly been associated with the range of social measures in the various partnership agreements, ICTU has always insisted that it, too, has a central role to play in this regard. One of its major concerns has been the shortage of affordable housing, above all in urban areas. In Sustaining Progress, ICTU has secured a commitment from the government to engage in a novel programme of social housing, with a target of providing up to 10,000 affordable homes annually.

This affordable housing initiative is to be achieved using the National Development Finance Agency. It is aimed at those people who would have previously been expected to purchase a house from their own resources but who are unable to do so under the conditions of the current housing market. It is also intended that these houses would be made available for sale to a target group that would be defined in terms of income and/or housing need on a full cost-recovery/commercial basis. Thus, the agreement maintains that the scheme would not impinge on central government finances and would protect the funding available for local authority and other social and affordable housing programmes.

This housing initiative is regarded as a key aspect of the new agreement by ICTU general secretary David Begg. ICTU strongly believes that this should provide a blueprint for other social initiatives for which unions try to secure government commitments.

Conclusions

A critical stage in the three-year timeframe of the Sustaining Progress agreement will arrive when the interim 18-month pay agreement expires in mid-2004. Negotiations on a pay agreement to cover the final 18 months of the three-year programme are likely in advance of the expiry date of the "first phase" of the pay agreement.

Given the general economic slowdown of recent years and the international uncertainty caused by the war in Iraq, the social partners will hope that the economic outlook will be both clearer and more positive when the pay negotiations take place. Central to these discussions will be the rate of inflation, the impact of exchange rate movements and whether IBEC and ICTU are satisfied with the operation of the enforcement measures.

In industrial relations terms, the most notable feature of the deal is the enforcement measures. Compared with previous partnership agreements these represent an important additional element of "policing" the pay agreement. The enhanced roles envisaged for the Labour Court and the NIB should ensure that the vast majority of disputes over the terms of the pay agreements are resolved well short of industrial action. The measures should also ensure that any major disputes of national significance that have the potential to undermine the entire agreement can be "corralled" and eventually defused by the social partners.

These enforcement innovations will not, of course, prevent employers and trade unions from concluding local pay agreements that may be higher than the nationally agreed increases. In other words, the tighter level of enforcement in Sustaining Progress must still be seen within the context of an industrial relations system that remains broadly based on the principle of voluntarism, although some would argue that a "creeping legalism" has been gradually eroding the voluntarist nature of the Irish industrial relations system for the past decade or more.

Apart from the new enforcement mechanisms, the most potent factor regarding overall compliance with the agreement will be the wider economy. This has been the case in the past, with the first three partnership agreements all being closely adhered to during a period when unemployment remained relatively high. This all changed in the latter part of the 2000 agreement (1997-1999) and, even more strikingly, during the first two years of the just-expired PPF (2000-2002), when many employers agreed to pay "above the norm" increases in order to retain or attract staff in a very tight labour market. By 1999, unemployment had fallen to around 4% and shortages of skilled and even unskilled labour helped to drive wages above the level agreed in the PPF.

That situation started to change significantly in the latter half of 2001, and in early 2003 there were indications that unemployment was rising again as major public sector recruitment programmes were put on hold. Industrial relations observers were in agreement that the underlying economic situation, with unemployment growing again, albeit slowly, will help to ensure there is minimal trade union pressure on the new agreement. Therefore, any disputes over pay that occur in the private sector are more likely to be due to employer "inability to pay" claims, because of proposed "restructuring and change" programmes, or as a result of new "productivity" or "modernisation" plans. The LRC and the Labour Court are likely to have more cases to deal with that come under such headings. Nonetheless, there is no indication that such disputes would lead to any increase in strike activity, which began its downward trend in the mid- to late 1980s and has remained low ever since.

What the new measures are likely to do, however, is prevent potential major "flashpoints" in key private or commercial state-owned companies that could threaten the stability of the new pact. Over the past 15 years, there have been a number of high-profile cases where the social partners have acted together to "protect" the existing agreement. The difference today is that the rules and the "mechanisms" that deal with such cases are more structured than they have been at any time in the past.

This feature is based on research and material prepared by Brian Sheehan, editor, Industrial Relations News, Dublin.