Benchmarking pay was €1.2bn annual 'mistake' [Independent.ie]
- Published: 02 March 2011
IN the boom years, social partnership was seen as a cornerstone of our economic success. But now a damning review of the Department of Finance's performance over the past 10 years has accused the national wage bargaining process of contributing to the failure of social partnership.
National wage agreements were credited with creating industrial peace and wage stability. But a new report has revealed the cost to the Government, and ultimately taxpayers, as a result of pay rises in successive wage agreements and controversial benchmarking increases -- with benchmarking for public servants alone costing €1.2bn a year.
The report stated that social partnership deals between unions, employers and the Government were initially based on wage moderation in exchange for lower tax rates, but after 2000 they became a "major driver of spending".
It said this was due to high wage demands and labour shortages as the economy "overheated".
"Economic overheating, along with the social partnership process, led to a major deterioration in competitiveness in the private sector and to very high public service wages, especially relative to international partners," the report stated.
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