Mixed feelings towards new national wage agreement

Small/medium businesses and hotels warn of dire consequences for jobs

Fightin’ talk — An Taoiseach Brain Cowen with members of the Olympic Boxing Club at the Fianna Fá¡l parliamentary party seminar held in the Clayton Hotel, Galway  on Monday. Photo:-Mike Shaughnessy

Fightin’ talk — An Taoiseach Brain Cowen with members of the Olympic Boxing Club at the Fianna Fá¡l parliamentary party seminar held in the Clayton Hotel, Galway on Monday. Photo:-Mike Shaughnessy

Many strands of Irish businesses wasted little time this week in hitting out at the new national wage agreement struck early on Wednesday morning, saying that the propsoed wage increases could represent the final nail in the coffin for many small to medium businesses.

The new national wage agreement provides for a pay increase of 6 per cent for all workers to be paid over 21 months.

The money will be paid in two phases with a 0.5 per cent increase at the end of the agreement for workers earning less than €430.49 per week, or around €22,463 per annum.

All private sector workers will have a three-month pay pause. They will then receive a 3.5 per cent increase over six months, and a further 2.5 per cent for the following year.

Public sector workers will have an 11-month pay pause from the last module of Towards 2016.

They will then receive 3.5 per cent for the next nine months (commencing September 1 2009 ), and a further 2.5 per cent for the remainder of the agreement.

Taoiseach Brian Cowen made a statement at Government Buildings after 22 hours of negotiations.

He said the new agreement will include provisions to prevent employers using temporary agency workers to break strikes.

There will also be a statutory prohibition on the victimisation of trade union members and inducements to encourage trade union members to leave their unions.

'The National Pay Agreement will give a sense of confidence and stability in the challenging period ahead,' Mr Cowen said.

'The negotiations were very lengthy and complex and the social partners made commendable efforts to enable the terms of a draft agreement to be identified.'

The Taoiseach said the agreement contains commitments on public service modernisation to reflect the OECD report.

He said he had not given any promises to commitments in the Budget in any specific way but had emphasised the difficult fiscal situation.

Mr Cowen said the deal would help to get the country back into a positive position when the economy recovered.

Fine Gael leader Enda Kenny has welcomed the conclusion of the pay talks but said he wanted to see the Government's detailed plans for the recovery of the economy.

The director general of the employers' group, IBEC, Turlough O'Sullivan, said there were many positives in the deal.

The Irish Small and Medium Enterprises Association (ISME ) has expressed its outrage at the draft terms of the new national pay agreement.

The organisation said that the deal, if approved, could be the final nail in the coffin for thousands of small firms and lead to "wholesale redundancies across the board".

The deal is to include a six per cent pay rise for both public and private sector workers over a 21-month period, with an extra half-of-one-per-cent wage hike for the lower paid.

ISME claims that this will ensure that labour intensive companies, the majority being small business, will be subjected to pay claims well in excess of what is currently affordable.

"The agreement will have a devastating impact on our sector of the business community," said ISME chief executive Mark Fielding.

"On that basis, it is beyond comprehension that IBEC have agreed to a deal, the terms of which are far superior to what was on offer just four weeks ago.

"In the interim the economy has deteriorated dramatically, with financial markets in crisis, record redundancies being announced, exchequer finances in disarray and growth projections plummeting on a daily basis.

"It is obvious that the so-called employers’ organisation is prepared to sacrifice the survival of smaller indigenous businesses to protect their high fee paying members, the banks and other big businesses."

Fielding said that many firms have already contacted the association to outline that they cannot and will not be complying with the latest terms agreed.

In conclusion, Fielding confirmed that ISME has called for an emergency meeting with the Taoiseach to discuss in detail the impact and consequences of the new agreement on a sector that has been ignored, overlooked and disregarded.

The Irish Hotels Federation (IHF ) stated that unless there is a substantial improvement in its trading environment, the hotel sector will be unable to pay the increases included in the proposed national pay deal announced this morning.

The hotel sector is already committed, under the legally binding Joint Labour Committee system, on October 16 2008, to a pay increase of 2.5 per cent, - the final phase of the previous agreement.

The first phase (3.5 per cent ) of the proposed agreement would be applicable from mid July 2009.

The effect of these increases will be that legally binding minimum wage rates in hotels in July 2009 will be 6.1 per cent higher than in July of 2008, the IHF has claimed.

“This level of increase is not sustainable in an industry in a market where the additional costs cannot be passed on to customers in price increases,” said IHF president Matthew Ryan.

“Nationwide hotel occupancy rates are down 11 per cent on 2007 and the CPI index indicates that hotel prices in the domestic market are 3.3 per cent lower than last year.

“In addition, the North American, European and British markets in the hotel sector are down by 25 per cent, 18 per cent, and five per cent respectively.

“Last July, the IHF called for a pay pause in the new agreement, at least until the end of 2009. The situation has worsened since that call and the proposed agreement will put many hotels in an impossible position which will result in job losses.

“The hotel industry in Ireland employs over 65,000 people. If we are to sustain those jobs, there must be a pay pause until the end of 2009.”

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