Dáil Éireann Debate, Thursday - 23 January 2014
13. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation his views on the merits of a new national wage agreement; the way he feels this would impact on the prospects for jobs and consumer spending; and if he will make a statement on the matter. [2960/14]
View answerI am aware that a number of public statements have been made in recent weeks, accompanied by media speculation, concerning the prospect of a return to some form of national-level wage bargaining for the private sector.
The commentary has been framed in a very constructive manner; it has been driven by concerns about the potential economic and industrial relations issues that might arise over the medium term as the economy continues to stabilise and wage bargaining perhaps returns as a noticeable feature on the Irish industrial relations landscape.
The return to such wage bargaining is already visible and I note, in this regard, that the Irish Business and Employers’ Confederation has indicated that around half of its members expect to experience some level of pay increase over the next 18 months. This will have a positive potential impact on domestic demand.
It is vital that any wage increases negotiated are not excessive, do not hamper the emergence of job opportunities, increase costs locally or impact on our competitiveness internationally.
We must never forget that Ireland’s economy had become increasingly and critically uncompetitive in the five years up to 2008. Regaining cost competitiveness, which has included wage restraint among other things, has been key in our fight to recover. We must be very careful that the gains so hard fought for over the past few years are not eroded.
Indeed, it could be argued that we have further to travel in this regard. According to the 2013 Forfás Report on Labour Market Competitiveness, despite some reductions, labour costs in Ireland remain above OECD averages. The Report found that Ireland has the 17th highest total labour cost level in the OECD-32 and the 11th highest net wage level in the OECD-32.
At the moment, I believe that firms and employers are taking stock of how the next 24 months will possibly pan out. Each assessment will be different and I do not believe that there is a homogeneous model for all Irish business at the moment. Rather, I think that employers must make their own assessments based on their personal experience of how their own business and sector is performing.
We know that some sectors are expanding at a faster pace than others while some are only beginning to stabilise and return to growth. In such a current scenario I am not convinced that a national wage agreement is feasible or desirable. Indeed, I have noted IBEC's view that local bargaining based on company-level realities is the appropriate manner in which to deal with wage pressures at this stage.
With some exceptions, Ireland has been through a period of industrial peace. IBEC and ICTU have agreed two separate Private Sector Protocols for the Orderly Conduct of Industrial Relations and Local Bargaining. This has played a significant role and I would hope that any disagreements arising during pay negotiations where they arise at company level do not cause industrial unrest.
However, I can assure the Deputy that it is an issue that I am monitoring closely. The next 18 months will be key in terms of getting the economy expanding again and I am determined to ensure that the gains achieved and the image of Ireland as the best small country in the world in which to do business are not damaged.
