Brian Cowen (Laois-Offaly, Fianna Fail)

I propose to take Questions Nos. 5 to 11, inclusive, together.

The Government and the social partners recently finalised the formal review of Towards 2016 as provided for under the agreement. This report has now been published and is available on my Department's website. Copies have also been laid before both Houses of the Oireachtas. Given that the terms of the pay agreement for the private sector expired from March, the review process included negotiations on a new pay round.

The agenda for the talks was broad in scope and complex in terms of the specific issues up for discussion. Grappling with this extensive and complex agenda required many hours to be set aside for negotiations. Following a lengthy talks process, in the early hours of the morning on Saturday, 2 August the social partners agreed to adjourn their discussions on a new pay agreement. Contacts at official level continued over the summer with a view to establishing whether the potential existed to conclude an agreement.

On Friday, 5 September, I held a series of discussions with the social partners during which I underlined the changed context in which the pay talks were taking place in terms of the evolving economic situation. The parties affirmed to me their commitment to engaging in further discussions aimed at establishing if an agreement on a new pay deal would be possible.

An intensive round of negotiations resumed on Monday, 8 September, within a tight deadline. Throughout this process I monitored developments closely and in the course of the final overnight session of negotiations I held a series of meetings with the parties with a view to facilitating a meeting of minds on the key issues on the agenda. As Deputies will be aware, negotiations reached a successful conclusion on the morning of Wednesday, 17 September, when an agreement was reached on a successor to the first module of Towards 2016.

The agreement provides for pay increases to be paid to workers over a period of 21 months, with pay pauses of three months and 11 months agreed for the private and public sectors, respectively. The agreement reached between the parties also covers a range of non-pay and employment law related initiatives, including those related to agency workers, employee representation and victimisation, pensions, procurement, managing change and innovation, upskilling and public sector modernisation.

There is consensus among the social partners that the pay agreement provides an important transitional framework for meeting the economic and social challenges which Ireland currently faces. Indeed, the proposals have been widely recognised as representing the best terms that could be achieved. The pay agreement also provides a welcome boost for investors and workers alike by providing certainty in pay determination, safeguarding employment and helping to preserve the industrial peace which has been a hallmark of social partnership and which has benefited our economy significantly over the last 21 years. The terms of the draft agreement are now being considered by the social partners with a view to ratification over the coming weeks.

In parallel to the pay negotiations, the Government and social partners reviewed progress under the wider economic and social provisions of Towards 2016. To inform the review, a detailed progress report was prepared on progress since the commencement of the agreement under each commitment. Each social partner pillar was also invited to make its own submission with its assessment of progress during the first phase of the agreement and these provided the basis for discussion.

Social partnership is a responsive and evolving process, an important aspect of which is ensuring wide and appropriate involvement. During the negotiations, the interests of taxpayers and consumers are represented by the Government. The Government and the social partners have agreed an assessment of progress over the first two and a half years of Towards 2016 and the economic challenges facing the country in the short and medium term. Using this shared understanding, the Government and the social partners intend to work together through the current period of economic transition and uncertainty to ensure that the vision and goals set down in Towards 2016 can still be achieved.

They have accepted that economic conditions require a re-prioritisation of public expenditure while recognising the need to seek to protect the most vulnerable. They have also identified a small number of priority issues on which they will work together as social partners over the next phase of the agreement. Social partnership has served us well in the past and, by reaching agreement at this point of economic difficulty, the process has demonstrated a capacity to contribute to managing more challenging times.

I met with representatives of ICTU last Friday. They conveyed to me their concern that the effect of the income levy announced in the budget, the overall progressive effect of which they welcomed, could be seen as being at odds with one of the important features of the draft pay agreement, namely, its focus on those on low incomes. While the Government believes that it is not unreasonable that everyone should make a contribution, however modest, in accordance with their income in these difficult times, it is prepared, in the context of the importance we attach to social partnership and to the draft agreement, to provide in the Finance Bill that the levy will not apply to incomes up to the level of the national minimum wage.

The National Implementation Body, NIB, which has been in existence since the start of 2001, continues to meet as necessary to oversee delivery of the industrial peace and stability provisions of Towards 2016. The NIB has met on a number of occasions recently to assist in the resolution of industrial disputes. Over the past six months, the NIB has considered such issues as the implementation of the 37.5 hour working week for nurses, the extension of flexi-bands in the Department of Social and Family Affairs, pensions issues at RTÉ and the introduction of an incident command system in the fire services. Meetings of the NIB also provide opportunities for informal discussions on some broader issues relating to the social partnership process and the industrial relations climate generally.

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