“Perhaps it is because we have gone through seven years of economic hell, that we have forgotten that wage increases are part of a normally functioning economy.
What we must not forget, however, is that sustainable pay improvements, in both public and private sectors relate to productivity and our capacity to pay for them. We cannot return to the mistakes of the past.”
Brendan Howlin Minister of Public Expenditure and Reform
There are clear signs of economic recovery which is creating an expectation that people will see an improvement in take home pay. In the private sector, local bargaining has established a benchmark of 2% in 2014 and managing pay expectations will be a key issue which will gain momentum in 2015.
The Haddington Road Agreement does not expire to the middle of 2016 but the minister has indicated that discussions with public sector unions will commence in the summer. The minister has acknowledged that it is a legitimate expectation for the public sector trade unions to expect a return to normal industrial relations. The unions have already signalled that talks will focus on pay restoration and a claw back of the 7.0% pension reduction imposed on public sector workers in 2009.
In the private sector, local bargaining has established 2.0% benchmark in the multinational sector. While most deals were on basic pay terms there is growing evidence of the inclusion of bonuses, sick pay, annual leave and service awards. In the multinational industries deals tend to be for longer periods – 2 to 5 years – reflecting the preference for longer term planning horizons.
There is no inflation in the economy and therefore no argument for ‘cost of living’ based increases.
Negotiators should heed the ministers warning “not to make the mistakes of the past”, as too much hard work and pain has gone into achieving productivity gains and restoring stability in public finances.
29 January 2015