Ní ceist don Taoiseach í seo. Ba mhaith liom a rá go bhfuil súil agam go mbeidh Nollaig shona ag gach uile duine sa Teach agus acu siúd atá ag obair i dTithe an Oireachtais.

I wish Members of the House and the staff of the Houses of the Oireachtas a happy Christmas and peaceful new year.

In view of the fact that the Government is on record as saying that it wants another partnership agreement and in view of the differences between the employers and the unions, given that these talks are hosted by the Taoiseach's Department, that the Secretary General of the Taoiseach's Department attends to the talks and the importance of this process to the economy, does the Taoiseach intend to personally intervene or what proposals has he to bring both sides back to the table to see whether this matter can be resolved?

I thank Deputy Kenny for his question, which is an important and serious one. Discussions on a new partnership agreement to succeed the PPF have been under way for many weeks. They have been taking place against the backdrop of the recently published NESC strategy report. We have been following the same procedure, process and system we have followed since 1987.

I, the Tánaiste and the Minister for Finance have kept in touch in this regard, when necessary, for the past three or four weeks. Our assessment yesterday morning was that the talks were going relatively well. We had decided early yesterday morning to have an intensive and prolonged session yesterday. After ten hours of discussion in the early hours of this morning it became clear that progress was not being made and that a basis for agreement on a new pay deal had not been identified. Accordingly, the parties agreed to adjourn without specific arrangements to meet again. However, the chair – the Deputy referred to an official in my Department – arranged to contact both sides again this morning to assess whether there was a prospect of any change in positions which would make agreement possible.

I recognise that both sides have engaged in good faith and with considerable effort in the process. I thank them because in fairness to both sides, they have given three full weekends – not to mind all the mid-week days – to this process. Like the Government, they recognise the value of social partnership agreements and have sought to put in place a new agreement in the period ahead. We knew that this would be difficult, but it is right that the parties should reflect on the implications of failure to agree. Local bargaining can proceed on an orderly, responsible basis. However, I have good reason to believe it can also produce significant disruption and conflict and, in time, competitiveness pressures of a different kind.

The Government clearly wants agreement to be reached. I sent that message to both sides again this morning, but last night's conclusion was difficult. I will leave it at that. Frankly, I am not very hopeful, but I use this reply to Deputy Kenny to urge both sides to think about this. We were a very long way down the road yesterday morning. The talks went on for a long time yesterday and did not finish until 1 a.m. or 1.30 a.m. The people involved have been under a certain amount of stress and pressure, but I urge them to reflect on the process. We are available and ready to continue in every way we can.

Direct intervention is not necessary in these matters. The process is in place and those involved are all aware of it. They are aware that the Government is in the background ready to continue the process. The Tánaiste and I will remain ready in that position. Anything else would be unhelpful.

While the Government wants agreement, both sides need to want it as well. I urge both sides to listen to what we and our officials are saying. We are anxious to try to conclude an agreement and we would very much like to conclude these issues. We continue to press ourselves as far as we can to deal with these issues, but we must be conscious of what is right for the economy, competitiveness and the future of the country. It is not good for the future of the country for these talks to break down.

Does the Taoiseach agree that the inflationary consequences of the Book of Estimates and the budget are making it more difficult to get agreement on these talks because of the increased pressure on consumers as a result of that? What is the Government's view on a pay pause? What is the Taoiseach's view in respect of the separation of public and private agreements? If his message to both sides this morning does not result in a willingness by them to return to the table, is the Taoiseach prepared to personally intervene again in view of the importance the Government attaches to getting an agreement and the signal that will send out in respect of competitiveness in Ireland and our ability to maintain jobs, increase trade and generate further prosperity?

The Deputy has asked me if the higher inflation figures are an obstacle. I would like the figures to be lower, but that is not insurmountable. That aspect could be resolved.

On the other issue of a central agreement proving impossible to achieve, we should not allow the social partnership process to collapse. There are substantial areas of agreement and these are reflected in the National Economic and Social Council. Many of these relate to local partnership and are outside the direct pay area. We have produced valuable outcomes in economic and social terms from these arrangements and this process should not be allowed to collapse. While we had a form of social partnership for many years before the first programme in 1987 in the form of well established tripartite structures which will continue, immense benefits have been derived from the type of process we have had for the past 15 years.

The Government as an employer will reach an arrangement with its staff. There will have to be a public service agreement. That will not conclude for many months but it is our intention as an employer to have a public service agreement with our staff.

Most of the agreements that expire on 31 December are in the private sector and involve large private sector companies. Should it come to it, I hope the issues can be solved by local bargaining. There are many difficulties for companies and trade unions in using this option, but they are quite capable of doing it if that is what they have to do. However, it is not in their best interests. I thought through all the weeks of talks that both sides would see greater merit in having an agreement than in not having one.

I have no proposals to intervene directly. There is a process and these are grown men and women. My sitting on the other side of the table will make no difference. They know we are not far away and they know my position on these areas. Direct intervention will not help.

I want to tease this important matter a little further. It is clear that the Taoiseach acknowledges that social contracts since 1987 have been a cornerstone of economic and industrial management by successive Governments. I am surprised then to hear him say that he has no intention of intervening. I am especially surprised that this Taoiseach says that. He has earned a reputation as one who intervenes and as a conciliator. The portents must be very bad if he has decided not to intervene. Is that what he is saying?

On the proposed separation of the public and private sector, am I correct in assuming that the purpose of drawing a distinction is to defer a further phase of benchmarking beyond 2003? What is the Taoiseach's assessment of the quantum of difference between trade unions and IBEC on the pay front? Is it not the case, as was put to him by Deputy Kenny, that the Book of Estimates and the budget have made the prospect of a 5% phased increase over 18 months unrealistic for trade unions?

Will the Taoiseach deal with the question of whether the Government is washing its hands of reconvening the parties and is leaving it to the social partners whether there will be a new contract?

On the separation of the public service and private sector pay issues, Deputy Rabbitte is well aware how these discussions operate given that he has played a professional part in them over the years. He understands the process. On public service pay, it was always intended to deal with implementation of the benchmarking report as part of the discussions on the successor to the Programme for Prosperity and Fairness. If there is no central agreement, these discussions will have to take place on a different basis. I am satisfied that substantial progress has been made on the significant change agenda which the benchmarking body recommended, and that should be the basis for the implementation of its pay awards. I am confident that we can do a deal on pay with public service workers. I hope we do that, and we will continue to endeavour to achieve it.

On political intervention in the process, both the Tánaiste and I have been briefed regularly on the detail of the progress on a daily basis, as has the Minister for Finance when the issues have affected him. I met the social partners at the beginning of the process and during the budget period. We attended the Dublin Castle plenary meeting. Well used processes exist for dialogue with either the Tánaiste or myself on these matters and they will continue. It is not an issue of whether we are sitting at the table because we are never too far away.

As far as I and the Government are concerned, the basis for settling the new contract existed yesterday morning but, after ten hours of discussions it no longer existed. That is perhaps not unusual, but it is disappointing. It was hoped to complete the process yesterday or today and, unfortunately, yesterday we regressed on almost every point. I am not too sure why that happened, but Deputy Rabbitte will appreciate that in negotiations, a point is sometimes reached which results in either a conclusion or the opposite. Yesterday was a hopeless day, to put it bluntly and frankly. We began the day with agreement almost reached on several points and ended the day with no agreement on almost every point. That is disappointing. It is no good the Government being ready. The parties will have to change their views and attitudes, even to the point they were at yesterday morning. If that were possible, it would be useful, but there is no point, and I am sure Deputy Rabbitte agrees, in concluding when people are getting on each other's nerves. I cannot put it more directly than that.

Does the Taoiseach not accept that, since he can no longer trade tax reductions for moderate pay increases, he must adopt a new approach?

When he says he is confident of a public service deal, that implies the problems are in the private sector. Is it not the case that one of the major problems on that side is the issue of trade union recognition? Is it not true that the legislation the Government implemented on this issue is farcical and is claimed to be such by the trade unions concerned? Is it not the case that they seek to have something similar to the United Kingdom legislation enacted to give the right of trade union representation?

Is it not the case that, for example, coming forward with decent proposals to amend the Redundancy Payments Acts would be a factor in easing discussions, especially in the light of cases such as the Peerless Rugs workers who still occupy their factory and who have not received compensation other than a half-week's pay per year of service, Miza in Roscrea where the workers were left without compensation, and Wexford Electronics? There have been a number of such casualties and there may, unfortunately, be more in the pipeline.

Would improvements on the legislative front, such as trade union recognition and reform of the Redundancy Payments Acts, not enable the trade unions to get around the table for discussions? Is it not an irony that, as we approach the 90th anniversary of the 1913 lockout next year, a sovereign Government is bending the knee to IBEC on the issue of trade union recognition? Would it not be appropriate for someone of the Taoiseach's background and knowledge and claimed involvement in trade union affairs to move as the leader of a sovereign Government to give the right as enshrined in the Constitution to workers to be represented by a trade union?

I can answer both those points positively. The Government is prepared to make changes in the arrangements to deal with problems that arise in companies which do not have a framework for collective bargaining, even though this has only been put in place recently. We believe it is an important way of enabling trade unions to be heard in representing the interests of their members. I agree with that point. I acknowledge that the trade union movement has the goal of statutory recognition of collective bargaining.

As I said during Question Time recently, it is a sensitive area given the importance of the overseas non-union sector which, by and large, applies highly sophisticated human resource management policies and provides generally good conditions for its employees as the trade union side has always acknowledged. However, it is an area that is evolving at European level not only through the information and consultation directive, which is to be implemented here, but also in terms of the place for collective bargaining in human rights legislation. While it would be premature to reach a conclusion about how collective bargaining should be dealt with in the future, I believe sensible progress could be made and the Government will be prepared to facilitate that. I am restating that for the record because it is our position in the talks.

Equally redundancy legislation is a matter for negotiation and we have made it clear that we were prepared to negotiate on that basis.