By Andrew Bushe
DUBLIN — High-level talks are taking place this week between the government and the social partners about the threat to the national pay deal from soaring inflation.
The Irish Congress of Trade Unions executive has already decided to seek a review of the 33-month-long deal in an effort to protect the living standards of workers and those on State benefits from being eroded by rising prices.
Official figures show annual inflation in June was 5.5 percent — a 15-year high — and it appears set to go higher in coming months.
"Most people are very worried that the bubble is going to burst in this country, that the success that we have had to date is now going fall away because of the dramatic increase in inflation," said ICTU general secretary Peter Cassells.
ICTU is an all-Ireland trade-union umbrella body that represents 48 unions with a membership of about 500,000 in the Republic.
Sign up to The Irish Echo Newsletter
There are divergent views within the membership, with some unions opposed to centralized pay bargaining. Even those unions in favor of the deal have different approaches to how the inflation crux should be dealt with.
It only agreed to the Program for Prosperity and Fairness pay deal in March. At that time it was predicted that inflation would peak at about 3 percent.
Finance Minister Charlie McCreevy has come out against any change in the PPF terms, saying it could "put the economy off the rails."
The PPF is a linchpin in the government’s economic strategy. These deals have been a central feature of the economic boom since the late 1980s. They have delivered relative industrial peace and set fixed pay parameters for economic planning.
The PPF is to deliver 15.75 percent in pay increases and 10 percent in tax cuts in three phases. The inflation spike is eroding the benefit of the first phase of 5.5-percent pay increase. The government maintains that, with tax cuts in last December’s budget, workers will get increases of 9-14 percent this year.
ICTU said that, in addition to a special review of the pay deal, it also wants to immediately start negotiations on next December’s budget.
"We want to seek ways, not only of protecting people’s living standards, but to do in a non-inflationary way or in a way that doesn’t worsen the problem we have at the moment," Cassells said.