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Cut profits to get new pay deal, bosses told

FINANCE Minister Brian Lenihan last night warned employers they will have to be prepared to sacrifice profits if they want to revive the collapsed pay talks.

Mr Lenihan finally broke his silence on the breakdown of the crucial negotiations and said workers could not be expected to shoulder the burden of the economic downturn alone.

In an interview with the Irish Independent, the minister said business owners, executives and managers will have to take an equal share of the pain when negotiations for a national pay agreement resume.

"One of the points that has come across in my discussions with other European finance ministers is the widespread concern about the very high levels of profit-taking and self-reward that is taking place at the higher echelons of the private sector," he said.

"I share that view. It wouldn't do for employers to expect all the restraint to be on the part of the unions or the workers. They have to lead by example -- it must be demonstrable, and it must be verifiable."


Mr Lenihan's intervention comes as the Government attempts to salvage the crumbling national pay deal.

His warning to employers will come as a welcome relief to unions, who have been growing increasingly disillusioned with IBEC's continued refusal to agree to workers' demands for pay rises in line with inflation.

Taoiseach Brian Cowen, whose subdued role in the talks process has been heavily criticised by unions, is also desperate to secure a new deal and prevent an all-out pay war and a winter of industrial strife.

Mr Lenihan said the Government had shown an example by voluntarily giving up pay awards made last year by the review group on higher level remuneration.

"We did it without linkage to anything else, and as a gesture of good faith. I would like to see that kind of example being followed, especially for the times we are in."

The minister said there had to be sacrifice and a shared commitment to restoring the competitiveness and effectiveness of the economy, especially in terms of maintaining employment and creating future jobs. This had to be seen "right across the board".

The partnership approach had meant a parity of esteem between the social partners from its early years and he did not wish to see this eroded, he said.

"Social partnership has served Ireland very well in the past, and it has brought a track record of progress over 21 years. I am very much of the belief that it is not at an end, and that it can serve us just as well into the future, although economic conditions are now more difficult," Mr Lenihan added.

"The Taoiseach has asked all sides to reflect on the situation during this month, and I too would ask all sides to consider what could be lost. Partnership is something that will have to be achieved again in some form, and the well-paid will, I think, have to face up to their responsibilities."

Mr Lenihan said he made much the same point when addressing the social partners at an early stage of their negotiations.


But he said he felt that the Government move to forego pay increases for political officeholders and senior civil servants had to some extent been overlooked when it was intended to serve as a lead and inspiration.

"Don't forget that public service retirement lump sums and bonuses have now gone back to what they were before the pay award was introduced," Mr Lenihan said. "Big increases were scrapped and there is concern already about some of the very high packages we are seeing elsewhere.

"Whether it is cuts, or moderation, or something else being given up, we need to see that. It has to be demonstrable, and as I say, any deal that is reached in the national interest has to be one that involves shared responsibility across the board."

Mr Lenihan's comments came after the Taoiseach indicated that he wouldn't be commenting on the current state of industrial relations in a bid to allow a cool sense of reason to prevail on all sides.

Mr Cowen has called for a period of reflection in the wake of the breakdown, although some unions have acted quickly to prepare a wave of private sector pay claims.


The Taoiseach has no further public engagements until next Friday, when he is due in Omagh for the commemoration marking the 10th anniversary of the Real IRA bombing that devastated Market Street and took 31 lives.

Meanwhile, sources have clarified that a committee made up of officials from three Government departments, which is currently studying inflation, was not set up as a consequence or 'patch' following the collapse of the talks, but always existed under the structure of the 'Towards 2016' agreement.

Union sources have already said a Government anti-inflation package would not be sufficient to get them to swallow unpalatable medicine on pay which is likely to be prescribed again by the employers' side when the talks reconvene next month.

Tanaiste Mary Coughlan last week said an anti-inflation package was more important to the Government than the idea of raising taxes in the Budget to meet deep Government revenue shortfalls for this year and next.

However, Government sources yesterday said it was too early to say that any specific anti-inflation package was in preparation as a precursor to any resumed dialogue. A spokesman said officials were continuing to liaise on the issue.