At the macro level the union leaders became alarmed at various developments which appeared to run against Partnership 2000 and became very proactive about it. House price highs were followed by the Budget tax changes weighted towards the wealthy, which were followed by the prospects of inflation way beyond the P2000 rises fueled by climbing sterling profiteering and the economic boom in general.
Peter Cassels of ICTU said that comments from trade and industry organisations that they would have to put up prices by around 6% because of the falling punt, were "wrong and unreasonable" (Irish Times, 16 January 1998). He urged Charlie McCreevy to warn the trade associations that price rises like this would lead to withdrawal of his £102 million budget cuts in corporation tax.
The next day various union leaders joined in, adding a stronger element: that price rises might be met with pay claims. Des Geraghty of SIPTU said that if business did not show the same restraint as workers SIPTU "would have to review the situation" on pay. Michael O'Reilly of the ATGWU saw no problem with renegotiating the pay rises in P2000 "if inflation rises to 5 or 6 per cent". IMPACT's Peter McLoone said his members would not wear price rises of 5 or 6 per cent.
On 18 January in a Sunday Tribune survey, ten top economists pooh-poohed fears of 6 per cent inflation, predicting between 2.25 per cent and 4 per cent for 1998. Nevertheless, when P2000 was negotiated the talk was of an annual average of about 2 per cent. P2000 provides for a wage rise of 2.25 per cent this year with a (once-off) local claim of 2 per cent negotiable.
Congress sought a meeting with the government, which took place on 26 January, in which they would, according to Padraig Yeates, make clear their concern that this government is not fully committed to its obligations under P2000. Union leaders were concerned specifically over tax reform, inflation, EMU and union recognition. They were expected to say that 'the Budget failed to deliver the sort of increases in personal tax allowances and tax bands for lower income groups they anticipated when they sold the deal to members.
They will also warn the government that further pay demands could be made if inflation takes off, because of EMU, or "overheating in the economy". Peter McLoone said "trade union recognition is the biggest banana skin out there" for P2000 because of the general atmosphere of distrust that now exists. He continued "A lot of us went on the record at the time of the deal going through that tax cuts would benefit people at the lower end most". More people would be paying tax at the top rate by the end of 1998 than there were in 1997. (Irish Times, 26 January 1998).
Despite the talk by some of new pay claims, it would seem, from the thrust of their remarks and the outcome of the meeting with the government, that for most, preservation of P2000 was a major concern. They saw the inconsistencies they so eloquently decried as departures from an otherwise satisfactory arrangement rather than as serious evidence of its hollowness.
The agreement reached at the meeting was clearly within the underlying strategy of P2000 of "underpinning moderate wage increases with significant tax reforms", i.e. 'you'll get your tax reform in lieu of a pay rise'. Additional wage increases or price controls to address new inflation did not figure. Both sides committed themselves to developing partnership at company level (presumably by continuing to privatise them).
There was an air of tiffs smoothed over. peter Cassels said both sides acknowledged there were tensions developing in Partnership 2000. "Obviously we are not going to resolve them at one meeting" he added. Another senior leader was quoted as saying it was a "getting to know you" meeting. It now remains to be seen if they could do business.
Before the meeting Des Geraghty had said "it is incumbent on the government to ensure all actors on the economic scene show restraint". Similarly Peter Cassels had said "the benefits of the record levels of growth of the Irish economy are not being shared fairly among all the people." Both statements merely reflect the essence of these partnership and centralised deals; as their opponents are tired of repeating: these deals hold down wages and nothing else!
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