Irish economic recovery has kick-started a series of pay improvements in the private sector, further upward pay movement will happen this year and the public service needs to keep in step, IMPACT has said.

Speaking at the annual Industrial Relations News (IRN) conference yesterday (Thursday 12^th March), IMPACT general secretary Shay Cody said “Pay movement is not just a sign of economic recovery. It’s one of the elements that really drives recovery. Wage rounds are clearly underway in the private sector. The public service needs to keep in step with those developments.”

Shay was taking part in a panel discussion on “wage bargaining prospects for 2015 and beyond: private and public sectors”, scheduled as part of the IRN conference. The panel included Danny McCoy from the employer body Ibec and Patricia King, general secretary of Congress.

He said that pay rises in the financial, retail, construction and multinational sectors were early indicators of wage recovery, and that pay improvements of between two and three per cent would have a beneficial effect on the economy as long as it was replicated wherever employers could afford to do so. Shay added “Pay improvements across all sectors are key to boosting domestic demand. Most of that money goes straight into Ireland’s small and medium businesses because extra cash in workers’ pockets is more likely to be spent locally. This will be a key driver of job creation and the improvement of living standards generally, workers need to be able to spend more in the domestic economy” he said.

Shay said that talks with the Government on how to unwind pay cut legislation appeared to be getting closer. “The deficit target is on course to be achieved this year and our borrowing costs are lower than a lot of EU states, including Britain and France. These are all signs that something positive can be done on public service pay. We can achieve this in a way that’s keeping in step with what’s happening in the private sector. Wage movement is just one vital ingredient of economic recovery, and public service pay improvement is just one element of that” he said.

Shay added that it was technically possible to start unwinding the FEMPI Acts “from the bottom up which would generate pretty much the same cash amount for everybody. On this occasion, in theory, it is doable and I think we need to have a consensus as far as we can across the trade unions that we should go after that.”

Ictu general secretary Patricia King said real life needed to be injected into the economy but that this could not be achieved from tax reductions, and that all workers needed a pay increase. “We won’t be able to achieve that by tax reductions. Reducing tax reduces the State’s ability to provide quality public services and supplements the profits of companies by decreasing their need to dip into their own increasing profits and provide a reasonable pay increase” she said. 

Expectations

Speaking at the conference, the assistant secretary of the Department of Public Expenditure and Reform, Oonagh Buckley, said the Government’s capacity to pay and the expectations of unions in forthcoming talks “might be very different”, and added there is no certainty that a deal can be reached between the Government and trade unions on pay restoration for public service staff.

Ms Buckley said she wanted to caution that there was “a finite amount of money, a very finite amount of money available.”

Ibec director Danny McCoy said that, economically, the country was at the “cusp of something exciting” though it still had not returned to 2008 levels of economic activity. He added that Ireland does not have an oversized public sector, and said it was important that the Haddington Road Agreement (HRA) was opened up “sooner rather than later, but without unrealistic expectations.”