In December Labour Minister for Employment Ged Nash said 2015 would be "year of the pay rise".

While few workers are likely to have actually received pay awards so far, moves towards securing increases have been gathering pace.

In the public service, the largest workforce in the country, management and unions are gearing up for talks in the months ahead aimed at rolling back the emergency legislation that underpinned the various pay cuts imposed since 2009.

Certainly these will be the first negotiations between the Government and its various employees – civil servants, local authority workers, health staff, gardaí, defence force personnel – since the economic crash which have as their objective the improvement rather than reduction in terms and conditions.

Ministers in recent weeks also began what was effectively an internal conversation about the merits or otherwise of bringing unions and employers together in some form of new “social dialogue”, in which matters such as pay, tax and, possibly, welfare could be discussed.

Last week Jack O’Connor, the head of Siptu, the country’s largest trade union, said he wanted to see increases of 5 per cent across the economy. Before Christmas, another leading union, the TEEU, said it would also be looking for rises of 5 per cent. It represents about 40,000 electricians and craftworkers.

For lower-paid workers, the possibility of an increase in the existing €8.65 minimum wage has been held out by the Government with the establishment of the new Low Pay Commission, which is expected to report by the summer.

O’Connor has also backed calls by social campaigners for a higher “living wage” of €11.45 per hour.

Recession experiences

In assessing the pay situation it must be remembered that different groups of workers have had different experiences during the recession.

Despite a common belief, pay cuts were not the norm across the economy. Pay freezes were far more common. Even in the depths of the economic crisis, workers in some profitable sectors received pay increases.

Reductions in basic pay were imposed on all 300,000 staff in the public service while virtually all employees in the media saw their pay packets shrink. So, to, did construction industry workers and staff in Irish Rail.

The collapse of the overarching national pay deals under social partnership in 2009 led to the return of local bargaining in companies across the country.

In many cases this involved unions agreeing to concessions on terms and conditions (pay cuts, pay freezes, reductions in benefits, longer hours, pension curbs) in return for saving as many as jobs as possible for their members.

However, in the past year or so pay increases of between 2 and 3 per cent have been negotiated by unions such as Siptu, the TEEU and Mandate, particularly in the manufacturing and retail sectors. The trend is likely to expand this year.

It was on this basis that O’Connor’s call for a 5 per cent increase caused consternation among employer groups. Ibec, for example, described the claim as ludicrous.

However, the Siptu chief did not say whether the union would be looking for a 5 per cent rise over a single year or whether it could be spread over 2 years or more. The latter would be more in line with the increases secured in a number of workplaces over the past year or so.

With the unemployment rate now just over 10 per cent and expected to fall further in the year ahead, employers and unions recognise that the labour market is tightening, thus improving the bargaining power of workers.

On the other hand, low inflation and falling oil prices are easing the pressure on wages to some degree.

It is against this backdrop that some senior figures in Government have suggested the establishment of some form of social dialogue.

Old-style social partnership, which saw the Government, unions, employers, farmers, social and voluntary groups, and, latterly, environmental activists, sitting in a room and agreeing plans covering whole swathes of the economy is now considered toxic in many quarters.

Hostile to partnership

In a speech last week, the Nash said employers and trade unions might be surprised at the depth of hostility among public representatives of all parties to a return to full-blown social partnership.

Employers, unions and the Government have held bilateral meetings on issues of importance since the collapse of social partnership. The new-style social dialogue, if instituted, would simply bring the parties into the same room at the same time. Whether the social justice campaigners or environmentalists would be invited remains to be seen.

A new social dialogue arrangement would allow the Government to bring the issue of tax onto the table.

A quarter of a century ago, the original social partnership process had unions accepting wage moderation in return for tax concessions from the government, which boosted their members’ overall earnings.

Income policy

The social dialogue process could result in some form of incomes policy, which could man workers’ earnings boosted from a combination of tax reform for middle-income earners – as suggested by some in Government – and more moderate pay settlements..

Whether part of an overall social dialogue process or not, the Government is committed to holding talks with public service unions, a process that will probably get under way in May.

Some union leaders had considered that a deal might involve a reduction in the public service pension levy, which averaged about 7 per cent, as well as increases for lower paid workers.

However, groups such as nurses are to demand that the two extra hours per week which they were obliged to work under the Haddington Road agreement also be dropped under any new accord.

A Government spokesman recently indicated in a comment to the Sunday Business Post that it would want to see further public service reforms in return for pay increases.

However, it is unclear at present what exactly the Government would seek.

Pension reform is one possibility. The Department of Public Expenditure and Reform commissioned an actuarial report which suggested €16 billion could be saved in the coming decades if it linked increases for pensioners to the cost of living, rather than to pay rises for serving public servants.

Whether a government in the run-in to a general election has the time or inclination for the inevitable battle with public service staff that would follow such a move is another matter.

So pension reform may have to wait for another day.

The Government is likely to want to retain productivity measures arising from the Haddington Road and Croke Park deals, such as the longer working week, as well as the changes introduced to sick leave and holiday arrangements. It is also likely to want to keep the binding arbitration measures for dispute resolution.

The Government will also need to put in place some measure for determining pay increases in the future, given that it is unlikely to want to revert back to the highly controversial benchmarking system.