Ireland: Towards 2016 accord agreed
A new national partnership programme has been agreed by the government and the main social partners in Ireland. The accord, entitled Towards 2016, provides for wage increases of 10% across the unionised sector over 27 months.
As well as pay rises, the new agreement* includes: a range of immediate measures for enforcing labour standards; commitments on modernisation of public services; initiatives related to pension schemes; a workplace learning and partnership agenda; and broad commitments on a wider social agenda, including healthcare and childcare elements. The pay elements of the agreement - summarised in the box below - and the attendant industrial relations provisions are set within the ambit of an overall 10-year approach to social partnership, reflected in the title of the new pact, Towards 2016. This suggests that similar deals on pay and related issues will be negotiated every two or three years during the decade covered by the framework.
The members of the Irish Business and Employers Confederation (IBEC), the Construction Industry Federation (CIF) and the Irish Congress of Trade Unions (ICTU) formally accepted the agreement on 5 September 2006. It had taken the negotiators almost four months to agree to start negotiations and a further three months to conclude a draft agreement (EIRR 390 p.10) prior to formal ratification by trade union ballots and employer assent. The negotiations, which took place against the backdrop of a controversial dispute at Irish Ferries over employment standards (EIRR 385 p.24), proved to be the most difficult and arduous in Ireland since the social partnership process commenced in 1987. Towards 2016 is the seventh successive national agreement since that date, succeeding the 2003-05 Sustaining Progress deal (Ireland: New national agreement).
Pensions at centre stage
The government and social partners are agreed that pensions, in terms of both their adequacy and their coverage, are to be dealt with as "a priority issue". In an important development, Towards 2016 states: "Industrial relations issues arising from disputes related to pension schemes may be referred to the National Implementation Body (NIB) by either party."
The NIB is a body composed of leading figures from the government, IBEC and ICTU. It monitors the national agreement and deals, in a fairly informal way, with major disputes that might threaten the accord. The NIB tends to channel such disputes into the state's formal dispute resolution agencies - the Labour Relations Commission and the Labour Court - to maintain the integrity of the industrial relations system. For example, within days of the new agreement being ratified, a major dispute at Independent Newspapers over the company's intention to introduce different pensions arrangements for new recruits was set to be examined by the NIB.
The Department of Finance, the Department of Social and Family Affairs and the Department of Enterprise Trade and Employment (DETE) will also participate in a national review of pensions, to be facilitated by the Department of the Prime Minister (Taoiseach). This will include the framing of a social partner response to a special government green paper on pensions policy. The green paper will outline the main policy choices and challenges in this area and the government will come up with a formal policy position on pensions within 12 months of ratification of Towards 2016.
The new agreement also commits the government to transposing into Irish law, by the end of 2007, the optional pensions provisions of the EU Directive on transfers of undertakings (whereby member states may, if they choose, include company pension schemes among the rights and obligations transferred to a new owner). The accord states that the Irish Pensions Board "will be asked to develop an options paper, dealing with the technical issues that would arise. In addition, the board will take into account the extensive existing legislation and technical standards dealing with the disaggregation and merger of pension schemes."
Employment rights and compliance
The agreement includes a general package of measures dealing with employment standards. The trade unions had insisted that there could be no overall agreement unless a set of such measures was agreed in principle. The provisions that emerged were strongly influenced by the controversial dispute at Irish Ferries in late 2005, and by a number of high-profile cases where foreign workers have been "short-changed" in respect of their full legal entitlements.
The dispute between Irish Ferries and the Services Industrial Professional and Technical Union had threatened to derail the national social partnership process. It also highlighted a number of important issues for the future of industrial relations in Ireland. The dispute was triggered when management issued proposals to replace directly employed seafarers with predominantly eastern European agency crew, and to reflag its vessels to Cyprus in the process. The union succeeded in obtaining Irish minimum wage standards and securing the rights of the new workers to have recourse to Irish employment law and to join a trade union. The company was able to proceed with its redundancy plan, has the right to reflag at a future date and has considerably reduced the trade union presence in the company.
The new agreement's employment standards measures are covered under the broad heading of "employment rights and compliance". Essentially, there are two distinct elements within this strand of Towards 2016 - the first concerning the enforcement of existing laws and the second involving the more complex area of acceptable behavioural norms or standards.
New director of enforcement
In the compliance area, there is to be a "major enhancement and expansion of the existing Labour Inspectorate", with a view to increasing its effectiveness. A new statutory Office of the Director of Employment Rights Compliance (ODERC) will be established under the aegis of the DETE. The number of labour inspectors under the ODERC will initially be 31 and increase to 90 by the end of 2007. New legislation giving effect to these changes will also allow authorised officers of the DETE and ODERC to work together in joint investigation units with the Department of Social Welfare and Family Affairs, and the Revenue Commissioners, "involving staff of both organisations in joint investigations in appropriate cases".
New legislation will also be published next year "to provide that every employee must have an identifiable employer within the state who has a legal responsibility for compliance with all aspects of the applicable employment rights legislation". Better payroll records will be enforced and the onus will be on employers to ensure that these are kept up to date. The penalty for non-maintenance of statutory employment records will be up to €250,000 on indictment.
The agreement notes a need for legislation (promised in 2007) to strengthen the powers of the minister for enterprise, trade and employment in relation to the investigation by labour inspectors of particular employments.
The social partners also agree on the need to monitor changing patterns of employment, including that of workers from overseas. The indications are that workers from Bulgaria and Romania, which are due to join the EU in 2007, will not be accorded unimpeded access to the Irish labour market. Workers from Poland and other central and eastern European countries that joined the EU in 2004 have been eagerly snapped up by Irish employers to fill labour market gaps. However, like the UK, Ireland is widely expected to introduce some restrictions next year in respect of Bulgaria and Romania, most likely in the form of quotas or work permits.
Action on "compulsory replacement"
To address the issue of "compulsory displacement", a number of specific changes are planned in response to the Irish Ferries dispute. In the Irish Ferries case, the employer offered a redundancy package and replaced a majority of the employees with lower-paid workers from eastern Europe. Irish Ferries, as an international seafaring operation, was able to operate outside of Irish and EU employment law. The unions objected to the approach adopted by Irish Ferries management, on the ground that it represented a new form of "job displacement". They insisted on new measures to prevent what has become known as an "Irish Ferries on land" scenario. They feared, for example, that a company could offer voluntary redundancy to existing unionised workers on good pay and conditions and simply replace them with workers on legal minimum rates. IBEC said that these fears were exaggerated but agreed to a range of limited new measures that could act as a disincentive to any employer that might choose to go down this route.
The new agreement comments that the "possibility of the collective compulsory replacement of workers" by lower-paid workers from new EU member states has, "in certain circumstances", the potential to be harmful to the maintenance of good industrial relations. To counter such developments, it provides that a special redundancy panel will be established to advise the minister for enterprise, trade and employment on whether a particular case should be referred to the Labour Court for a "binding opinion". This opinion could be appealed to the Employment Appeals Tribunal by either party.
The intention is to address exceptional collective redundancy situations and prevent the "Irish Ferries on land" scenario, by introducing an element of labour market "protectionism" to avert the possibility of the collective compulsory replacement of existing workers by lower-paid workers .
Specific criteria will be applied to identify such cases - "normal and legitimate" business activity must not be affected. To avoid any confusion, it has been agreed that this special mechanism will not apply to: the employment of agency workers; situations where temporary business needs are involved; or where outsourcing or contracting out is used. This means that standard business restructuring practices will not be affected. Employers were concerned that trade unions could use the new rules to hinder normal business restructuring.
In specific circumstances, the new redundancy panel may request the minister to investigate a case and, subsequently, the minister may refer the matter to the Labour Court: "The situation must involve a collective redundancy proposal on a compulsory basis, with the planned replacement of staff by direct employees employed by the employer effecting the compulsory collective redundancy; or the use of other replacement workers by the aforementioned employer, in the same location or elsewhere within the jurisdiction (except where the aforementioned employer has an existing operation with established terms and conditions), on materially reduced terms and conditions, and with the new workers performing essentially the same jobs as those to be made redundant."
Before the panel makes any request to the minister, it would have to satisfy itself that the following requirements have been met:
- that the applicant (employee representatives or an employer) has sought "local engagement" through the established internal dispute-resolution procedures in place, or availed of by custom and practice in the employment concerned, or through normal consultative procedures, and this has failed to resolve the matter;
- that the applicant has behaved reasonably and has not acted in a manner that the panel considers to have frustrated the possibility of agreement to the introduction of necessary change or other restructuring proposals required to secure the viability of the business and the best possible levels of employment and conditions; and
- that there has been no recourse to industrial action from the date of referral to the panel.
The national agreement also provides for an amendment to the Unfair Dismissals Acts, which will allow for the awarding of higher levels of compensation where employees make a successful claim for unfair dismissal in instances of collective redundancy.
Social and economic consensus
Commenting on Towards 2016, the prime minister, Bertie Ahern, said that the agreement is not just about pay: "It is also about maintaining a supportive macroeconomic environment in order to enhance productivity, competitiveness and build a stronger society. Put simply, it is about improving the quality of people's lives."
Much of what is contained in the lengthy agreement- covering 139 pages - deals with broader social and economic issues, aspects of which are often overlooked in the media. However, the details are taken seriously by government departments, by the main social partners and by the various voluntary and community groups that also have an input into the agreement.
The groundwork on these areas was agreed prior to the negotiations on Towards 2016 in a report - Strategy 2006: people, productivity and purpose - from the National Economic and Social Council (NESC), another social partner body. The NESC has always played a "scene-setting" role in the social partnership process, with the partners reaching a consensus in principle on policy regarding a whole range of social, economic and fiscal areas. The 2006 NESC report commits the partners to the NESC's vision of Ireland in the future, the key foundations of which are "a dynamic, internationalised and participatory society and economy, with a strong commitment to social justice, where economic development is environmentally sustainable and internationally competitive."
Within the 10-year framework of Towards 2016, the social partners accept that to achieve the NESC vision requires a longer-term strategic-planning perspective, "which, in turn, warrants a longer-term partnership framework". Regarding the 27-month pay agreement and its attendant provisions, Towards 2016 says "it is understood by the parties that there are identified strategies and actions to be achieved during the first phase of this agreement (27 months)." In other words, the new accord is regarded as containing a specific agreement on pay and industrial relations issues for 27 months within a rolling 10-year framework.
Separate sections of Towards 2016 deal with policy areas such as education and training, art and culture, rural development, environmental sustainability, sport and tourism. The agreement thus covers almost every conceivable policy issue, most of which overlap with what is set out in the NESC report, as well as a number of government policy documents, such as the National Development Plan (2007-13), and the EU's Lisbon agenda.
An entire section is devoted to what is termed "the lifecycle framework", which adopts the approach that the citizen is "the centrepiece of building a new social policy approach". The key lifecycle phases relate to: children, people of working age, older people and people with disabilities. It develops a new framework to address the key social challenges that individuals face at each stage of their life.
Commitment to manufacturing
The accord includes a number of commitments regarding the manufacturing sector, which is a key concern for IBEC members and for trade unions with members in vulnerable firms. Measures will be taken to ensure that manufacturing continues to play a key role in the economy. The "upskilling" of workers is seen as a priority. There will also be a new director for the framework research and development programme support structure "to support manufacturing companies to maximise their involvement with these programmes" A high-level manufacturing group will be established to review challenges facing the sector, to be chaired by an industry figure "with significant experience" of manufacturing.
Comments
Assessing the outcome of the pay agreement, most observers believe that employers have paid a premium for rejecting the trade unions' demand for the inclusion of a clause that would have allowed for local pay bargaining, in addition to the basic pay deal. Previous national pay deals have included such local bargaining clauses, but they proved to be unpopular with employers, which generally prefer the certainty provided by a set of straight pay rises. According to the independent weekly publication, Industrial Relations News, rejection of the local-bargaining clause "set the bar that bit higher when it came to the basic wage rises" in the Towards 2016 negotiations.
On the public sector side, a five-month pay pause has given the government breathing space until December. "Value for money" remains the maxim, with the government side determined to secure as much as possible under the "ongoing change" provisions attached to the basic pay deal. The government does not want to have the bulk of its "change agenda" contingent on implementation of the next public service pay "benchmarking" exercise, which is expected sometime in 2007.
The most critical factor for the government is the extent and substance of the public service modernisation agenda, particularly in the health area. Major reforms of the health sector are dependent on industrial relations agreements being concluded across the sector. The modernisation agenda in Towards 2016, however, is unlikely to be broad enough to achieve the degree of change required in this area. The state of the health services, which in Ireland are a mix of public and private, will be critical in the next general election, which is widely expected to be held in the late spring/early summer of 2007.
* Towards 2016: Ten-Year Framework Social Partnership Agreement 2006-2015 (PDF format, 2.86MB).
This feature is based on research and material prepared by Brian Sheehan, editor, Industrial Relations News, Dublin.
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The Towards 2016 pay agreement provides for a 10% rise over 27 months, payable in four phases as follows:
Starting dates for the increases vary across the private sector. In the public service, the same pay rises as above apply, with a start date of 1 December 2006 - this represents a five-month pay pause. What are termed "inability to pay" pleas by private sector employers (and those in the commercial semi-state sector) can be referred to the Labour Relations Commission (LRC), which in turn may appoint an agreed independent assessor. This process requires the employer to make full disclosure of information. If the assessor's finding does not resolve such a dispute, then it may be referred to the Labour Court for a final decision. The court bases its findings on the assessor's report, and only occasionally will it make alterations when issuing what, in effect, is a binding decision. The "inability to pay" assessment system was introduced in 2003 under the previous agreement, Sustaining Progress. It has been widely accepted by employers and, in the main, by trade unions, despite their initial concern that it would compromise the traditionally "voluntarist" nature of the Irish industrial relations system. Observers suggest that this sort of innovation is further evidence that the system of industrial relations is becoming more regulated as the incidence of binding arbitration grows. In the private sector and in the commercial semi-state companies, the need for cooperation with "normal ongoing change" and for "continued adaptation and flexibility" is accepted in the agreement. A similar commitment applies in the public sector, including cooperation with "satisfactory implementation of an agreed agenda for modernisation and the maintenance of stable industrial relations and the absence of industrial action". Government departments have the right to refuse to sanction payments if these commitments are broken. The agreement notes that the Public Service Benchmarking Body, which tracks comparable movements in private sector pay every four years, is set to report its findings in 2007. The implementation of the outcome of this review will be discussed by the parties in the context of whatever arrangements on pay and conditions are put in place on the expiry of Towards 2016. |
