Two of the country's largest employers, AIB and Tesco, are in the middle of negotiating new deals, both of which are being hammered out before any white smoke on a new national agreement.

About 8,000 AIB staff in the Republic are in line for significant pay rises of up to 15% under a new pay scale system that has been under negotiation for about two years.

The AIB deal is separate to any annual pay offer. In fact, any new national agreement will be paid on top of the increases that are currently being put to members of the Irish Bank Officials Association (IBOA).

But headline figures that show pay increases of up to 15% before any new national agreement will still be closely noted by other unions and employers.

AIB workers are also in line for more generous bonus and profit share payments, and this will also be taken into consideration by other unions.

Moving from tellers to tills, Tesco's 13,000 strong workforce has recently been offered increases of up to 13%. The main Tesco union, Mandate, has rejected the offer, while Siptu has urged its members in Tesco to accept the package, which has increases ranging from 3% to 13%.

Although the pay increases being offered by Tesco and AIB are not comparable, since the bank deal covers a major restructuring, unions would argue that both companies have the "ability to pay" significantly more than any national agreement, and they want this reality to be reflected in any new deal.

Under previous agreements, firms could withhold pay increases if they successfully argued an inability to pay. Unions now argue that the reverse should also apply: that companies making huge profits should pay their workers more than the national agreement.

Union leaders will argue that the profits being made by successful firms have also increased greatly since corporate tax rates have fallen dramatically in recent years.

Given the important position held by AIB and Tesco within IBEC . . . and the fact that employers are pushing for a 2% to 3% per year deal . . . these two new pay deals come at a very awkward time.

While some commentators argue that the partnership process is skewed towards the public sector, the private sector is very strongly in favour of a new deal.

A recent survey of more than 200 chief executives conducted by accountancy firm PwC found that a massive 82% of them believe that social partnership is necessary.

Presumably the reason so many bosses back another deal is that 77% of them are worried about the cost of labour. Surprisingly, the availability of labour is not a major issue as more than two-thirds of firms are happy with the supply of workers.

Given that rising costs were identified as a key issue by the bosses, the prospect of a new, moderately pitched national wage agreement that would give relative certainty on labour costs is an alluring one for employers.

The talks have yet to get to the core issue of pay, but, given the smoke signals, there should be some interesting days ahead.