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04-12-2000 Statement by the Taoiseach on the Implementation of Pay Agreement under the Programme for Prosperity and Fairness


The Taoiseach, Mr. Bertie Ahern, T.D., and the Minister for Finance, Mr. Charlie McCreevy, T.D., this evening welcomed the agreement reached between the employers and the Irish Congress of Trade Unions on an adjustment to the terms of the Programme for Prosperity and Fairness. The agreement also provides for a renewed commitment to industrial peace and the creation of a climate for greater stability, which has been the hallmark of the social partnership process to date.

The text of the agreement reached is attached.

4 December, 2000

Implementation of Pay Agreement under the Programme for Prosperity and Fairness

This note sets out the outcome of discussions initiated under paragraph 5.3 of the Programme for Prosperity and Fairness between the parties to the Pay Agreement.

Statement of Intent

The Government, the ICTU and IBEC/CIF recognise that Irish society is in a critical period of transition, which has implications for our social partnership model as for other institutional arrangements.

As we agreed in the PPF, a key challenge facing all of us is to secure real improvements in living standards and the quality of life for all, and to do so in a way that is both fair and sustainable.

In doing so, we are equally committed to securing a strong basis for further economic prosperity and keeping our economy competitive in a rapidly changing world.

The parties are committed to attaining these objectives by strengthening commitment to social partnership at all levels and, in particular, through the full implementation of the Programme for Prosperity and Fairness.

They recognise that a number of recent disputes have damaged confidence in the social partnership model and in the stability which has been one of its major achievements. The parties renew their strong commitment to the key terms of the Pay Agreement and will actively pursue adherence by their respective members.

The parties believe that an integrated approach, as set out below, will:

·        enable the higher living standards, which are one of the core objectives of social partnership, to be achieved while maintaining our competitiveness;

·        reinforce the operation of the PPF and in particular the pay agreement annexed to Framework I;

·        strengthen and reinvigorate the partnership process at national level and at the level of the individual workplace.

Stability Enhancing Measures

In the context of Budget 2001, the Book of Estimates commitments to increased spending and the need to underpin the PPF and reinforce the strong commitments contained within it, the Employer Organisations and the ICTU are agreed on the following:

Employers and trade unions shall negotiate a further change in rates of pay of 2% of the basic pay of the group of employees concerned, as it applies in each employment or industry, with effect from 1st April, 2001, subject to the provisions of the following paragraphs. The parties shall also negotiate a once-off lump sum payment equal to 1% of basic pay, as it applies in each employment or industry, to be implemented on 1st April, 2002, subject also to the following paragraphs.

Clause 1 of the Pay Agreement commits the parties to full and ongoing co-operation with change, flexibility and to increasing productivity and employment. Negotiations in relation to the above element will take full account of the implications for competitiveness and employment and the need for flexibility and change.

This element shall not be pursued through industrial action of any kind. Any dispute about it shall be referred to the Labour Court as provided for in Clause 12 whereby the parties agree to comply with the Court's findings. In this context Congress are fully committed to renewing the effectiveness of Clause 11 of PPF and to the use of recognised dispute settling procedures.

A National Implementation Body representing Government, IBEC/CIF and ICTU will meet quarterly to ensure delivery of the stability and peace provisions of PPF. Where particular difficulties arise or are anticipated, the group can be convened at short notice.

Clause 7 provides a mechanism to recognise difficulties employers may have in meeting the pay terms of the PPF and enables employers to claim inability to pay. In the context of these stability enhancing measures, particular regard must be had for a number of circumstances where competitiveness and employment are at risk, including:

·        Employments in vulnerable sectors

·        Employments where wage costs, within the terms of the PPF, have increased significantly,

·        Employments who are experiencing economic and commercial difficulties and/or those who may be adversely affected by changes in exchange rates

·        Employments where pay costs, have increased significantly above those implied by the terms of the Agreement.

Other than as provided for in Framework 1 (annex 1) of the PPF no further cost increasing claims will be made or processed during the currency of the Agreement.

Improved Living Standards

The parties recognise that the achievement of higher living standards and quality of life reflects more than nominal pay, as is recognised in the PPF.

In particular, the parties believe that Budget 2001 has the potential to make an important contribution in resolving the problems created by higher than expected inflation. The priorities of the parties with regard to the Budget have been conveyed to the Minister for Finance. They note the stated intention that Budget 2001 will have a particular focus on the appropriate response to inflation, taking fully into account the views of the social partners. The parties are confident that the implementation of the taxation provisions of the PPF will enhance the value of the pay terms, including the adjustments set out above.

Improved living standards also require the development of an adequate infrastructure and network of public services. In this regard, the parties welcome the increased provision made in the Book of Estimates for a number of priority areas identified under the PPF, including in particular healthcare, housing and education. The provisions to be made for social welfare will be announced in the Budget. The parties emphasised the importance of continued progress in implementing the inclusive approach to living standards set out in the PPF.

Strengthening the Partnership Process

In addition to the National Implementation Body which the parties have agreed to establish in the context of the pay agreement, a number of other steps are being taken to strengthen and reinvigorate the partnership process:

- the National Centre for Partnership and Performance will be established shortly (the positions of
Executive Chairperson and Director have been advertised);

- through the National Centre, IBEC and ICTU will develop joint proposals to promote partnership in the workplace and to support and facilitate gainsharing and profitsharing on a voluntary basis;

- the social partners will support the development of initiatives to enhance productivity through skills training, especially in vulnerable sectors and new consultative arrangements will be put in place in this regard;

- in accordance with the PPF, further action will be taken by the Government and the social partners on the development of family-friendly policies at the level of the workplace, supported by developments on childcare.

Application of the terms in the public service

1. In the case of the public service, it has been agreed that an increase of 2% will be applied, with effect from 1 April 2001, to all points of the salary scale of each grade, group or category of employee and that a non-pensionable once-off lump sum payment will be paid on 1 April 2002 equal to 1% of basic pay on that date.

Public Service Benchmarking Body

2. The Public Service Benchmarking Body is to report by 30 June 2002. The Body’s recommendations are to be based on in-depth and comprehensive research and analysis of pay levels right across the economy and one of its central tasks will be to situate public service pay levels in an appropriate position by reference to existing pay levels in the rest of the economy. It has now been agreed that:

(i) following receipt of the report, discussions about implementation will commence immediately between public service employers and the Public Services Committee of the ICTU;

(ii) one-quarter of any increase arising from the report will be implemented with effect from 1 December 2001; and

(iii) the balance will be implemented on a phased basis, to be agreed between the parties, which takes account of the desirability of implementing the Benchmarking Body’s recommendations as speedily as possible thereafter, the level of increases involved, any successor to the PPF which might be agreed between the social partners (or whatever other arrangements may be in place on the expiry of this Programme) and the need to respect any links which the Benchmarking Body might establish between levels of pay and other developments.

3. The same provisions will apply in the case of the agreed parallel arrangements for craftworkers and general operative/non-nursing personnel.

Review Body on Higher Remuneration in the Public Sector

4. The Employer Side confirmed that Report No. 38 of the Review Body on Higher Remuneration in the Public Sector had been presented to the Minister for Finance and that the question of implementation would be considered by the Government shortly. The Union Side pointed out that the Review Body’s examination of the remuneration of the groups within its remit had been undertaken within a particular time frame and said it was important that reports by an independent body like this should be implemented without delay.

5. All the other provisions of the agreement apply equally to the public service.