Notes on the Front

So the pay talks have ‘collapsed’, or as one commentator on Newstalk put it, ‘the social partners are entering into a period of trial separation’.  The Taoiseach wants to meet the social partners later this month to ‘review the situation’. And this is a deeply embedded institution – its been around for over 20 years in its current form.  So reports of the demise of social partnership may still prove to be premature.  Still, as of now, unions are preparing to lodge pay claims, the employers are shrugging their shoulders and the Government appears to have run out of any ideas as to how to progress us out of this recession.  Its shaping up to be one heck of a blood sport.

Why did it collapse?  There are several factors but much of it revolves around the employers’ position.  Did they miscalculate?  They could be excused for expecting ICTU to swallow a lot just to stay inside the tent.  After all, some senior trade unionists had been going around for years claiming there was no alternative to centralised pay bargaining.  When you take that position, publicly and consistently, don’t expect your ‘bargaining partner’ to give you much room for manoeuvre. 

Still, the employers’ appeared to over-play their hand.  They offered a 21-month pay deal consisting of a six month pay pause, followed by a 2.5% pay increase for six months, and a further 2.5% for nine months. This might be passable for a starting position but was always unsustainable as a bottom line.  Such a deal would have meant annualised pay rises of less than 3%.  In real terms this could have led to pay cuts of up 3% per year – depending on the inflation rate next year.

In addition, they were demanding a revision of the ‘inability to pay’ clause that would have allowed companies to use ‘future trading prospects’ s a basis to opt out, thus leaving the whole process open to abuse.  And if that weren’t enough, they gave no room on other issues: flat-rate increases to help low-paid?  Go away.  Right to collective bargaining? A hearty laugh.  Mandatory earnings-related pensions? A chilling silence.  And a determination to fight a long-term rearguard battle to gut the EU’s agreement on agency workers’ pay and conditions. 

But maybe this was all part of a greater design.  Maybe the employers’ weren’t all the pushed for a deal.  If the unions accepted their offer- or something close to it – fine.  If they didn’t, no sweat.  Maybe the employers’ weren’t interested in giving the Government, the state’s largest employer, a dig out.  They might have assumed the rising Exchequer deficit and public opinion would take care of that. 

Only one-in-five private sector employees are members of unions, so the threat of lodging pay claims doesn’t really resonate throughout the economy in the way it might have 20 years ago.  And the companies that are unionised – well, they tend to be the better companies, with better profit sheets and a developed negotiating mechanism, so they’ll be okay.  As to those sectors that have no representation, the employers can have a field day.

Ultimately, employers can drive hard bargains in recession times.  They can just wave P-45s around the workplace to keep their employees in line.  In times of rising unemployment, people will find it hard to improve their pay and working conditions, regardless of how profitable their company is; how much more so when they don’t have the power to bargain collectively.

In this sense, the employers may have had another agenda, one in which their extremist demands made sense.  But if the employers had another agenda, what about the unions – and specifically, ICTU’s David Begg.  Had he long ago realised the game was up?  I’ve written about this before, but certainly he was talking tough, provocatively so: 

Mr. Begg is a supporter of the Nordic model, an enhanced social wage, and a pro-active public realm in the area of wealth generation.  He, too, may have concluded that, with a Government hostile to those principles and an employers’ body opposed to anything smacking of ‘social’, these talks could go nowhere.  When ICTU projected an inflation rate of 6.5% – they must have known there was no chance the employers would match that with pay rises. 

Of course, pay talks are more complex affairs – ICTU itself is made up of different unions with their own agendas, their own demands (low-pay, pensions, local bargaining).  To overlook these tensions is to miss the dynamic that being played out – and that’s just one side of the bargaining table.  IBEC had the Small Firms Association and ISME stalking the streets like attack dogs.  And the Government have their own issues.

And one of those issues s that, whatever about the differences between ICTU and the employers, there is a growing consensus (in private conversation, anyway) that the front-line economic Ministers – in Finance and Enterprise/Employment – are just not up to the task; that even the Taoiseach is bereft of ideas and strategies to deal with this recession.

So the unions are gearing up to lodge pay claims.  Then be quick about it.  The higher the pay increases, wherever it can be achieved, will help the economy.  More money in circulation, more disposable income to spend in the consumer market – which will help retain jobs and maintain profitability; more tax revenue which will ameliorate public sector cutbacks which if, enacted in full, would only deepen the recession.  Is this a programme for recovery and growth?  No, it has only a short-term and limited value – but with nothing else of value happening we’ll take what we can get.  A full-blown recovery programme is ultimately a political task – a task that the Left parties have yet to grasp.  The pay-talks collapse will hopefully motivate them.

But most of all the trade union movement must get their message out.  Already, the ‘commentators’ at the Sunday Independent are poring through their thesauruses, finding new adjectives to hurl at unions and workers (they’ve gone through greedy,selfish, grasping, avaricious, rapacious – next they’ll be rummaging through Middle English for more invectives). 

Yet it is the trade union movement that identified the problem correctly, drew the line in the sand, and stood firm.  For that, they should come out of all this with their reputation enhanced.  The next step is to build the organisation and develop the tactics to vindicate the interests of  working men and women:

After all the analysis, all the fall-out, all the blame-game that will emerge, it was Mr. Begg who kept his word.