Ictu urges private sector unions to seek pay rises of up to 6%

The Irish Congress of Trade Unions (Ictu) has recommended that unions should be seeking pay increases of between 4 per cent and 6 per cent in the private sector during the coming year as long as they are affordable for employers.

In its annual bulletin, Ictu’s private sector committee describes the economic outlook as mixed and argues that while inflation continues to fall, workers in many sectors have been left with ground to make up after having experienced decreases in pay in real terms over the past couple of years.

Constituent unions should be seeking increases of up to 6 per cent, it says, but suggests negotiators should also look at alternative routes to obtaining benefits for members such as tax-exempt vouchers, increases to sick pay, pensions or leave, or increases to new entrant or service-related pay.

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“Real wages declined in 2022 and again in 2023 so that workers’ wage gains will need to be somewhat higher than inflation in order to begin to catch up,” said Ictu general secretary Owen Reidy.

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“Forecasts across a range of institutions are generally projecting inflation in the region of 3 per cent in 2024. It is therefore likely that nominal wages will need to grow in the region of 3 per cent in 2024 (and over 5 per cent over the next two years) merely to keep pace with the cost of living.

“Ongoing gains in labour productivity across the economy and the need for that cost of living ‘catch-up’ must be factored into consideration. As such, it is appropriate for unions to seek pay increases in the range of 4 per cent to 6 per cent in 2024,” he said.

At the upper end, that recommendation is down from the 4 per cent to 7.5 per cent range put forward by the committee 12 months ago for 2023, with the change reflecting the fall in inflation. But the numbers are still significantly higher than those put forward for 2022.

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In its wider assessment of the economic landscape for the year ahead, Ictu says “business sentiment and consumer confidence is mixed. The service PMI [purchasing managers’ index] is very modestly positive but the PMIs for manufacturing and construction imply stagnation or contraction.

“Consumer confidence is still below its historical average, reflecting cost-of-living pressures and pessimism over the trajectory of the economy. However, consumer confidence is steadily improving as these pressures recede and expectations improve. Even so, the mildly expansionary budget and strong real wage growth will increase disposable income in 2024 and drive growth in consumption.”

“The growth outlook is fairly muted,” he said. “We expect that modified domestic demand will grow by around 2 per cent to 2.5 per cent in 2024 with a broadly similar outlook for 2025 and 2026.

“Falling inflation provides some hope that monetary policy will begin to loosen in the second quarter of 2024. Such a development would give a boost to aggregate demand and reduce the rate of business failure. As it happens, the full consequences of ECB [European Central Bank] monetary policy have yet to fully play out in terms of falling consumption and weaker investment.”

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