A delicate balancing act

Tue, Mar 5, 2013, 00:00

The Government is engaged in a delicate balancing act as it attempts to meet the deficit targets agreed with the troika while, at the same time, cutting the public sector pay bill and maintaining industrial peace. There is no certainty it will succeed. A number of unions and representative bodies withdrew from the Croke Park talks and rejected any extension of working hours or cuts in allowances and premium payments. To counteract that militancy, a fund of €100 million was set aside by Minister for Public Expenditure and Reform Brendan Howlin as a “sweetener” for those public sector unions that remained in the talks.

The basis for a deal has now been reached. But its cost-cutting nature means the terms are unlikely to be recommended for acceptance by union leaders. In their view, it represents the “least bad deal” that could be negotiated, with balanced reductions and protection provided for many low-paid workers. Special concessions for firefighters, prison officers, members of the Defence Forces and national school teachers provided additional justification for staying at the negotiating table. The Government’s carrot-and-stick approach contains risks. By providing a special fund to reward compliant unions, it has opened the door to additional claims that could undermine its cost-saving programme. Already, Siptu president Jack O’Connor has suggested those groups that pulled out might be rewarded through this mechanism. Minister for Transport Leo Varadkar hinted at such a possibility when he said unions that stayed in the talks had received concessions while those boycotting gained nothing.

Getting the revised deal across the line will be the Government’s first priority. With a €14 billion gap between income and expenditure, its ambition to cut public service costs by €1 billion over three years appears relatively modest. The troika has expressed concern over the manner in which job numbers, rather than pay, are being cut. The Labour Party and the Irish Congress of Trade Unions are also conscious that the deal may have a divisive effect on the trade union movement. Suggestions of a serious split are premature. But militant workers are increasingly unhappy at the level of control exerted over national agreements by the largest unions.

Investment in jobs and growth will depend, to a significant extent, on acceptance of the Croke Park deal extension. Industrial peace in the public sector is an important consideration for international financiers as the Government seeks to exit the bailout programme; raise funds for a strategic investment programme and get people back to work in the private sector. The results of the various ballots are expected within two weeks. There is still time for compromise.

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