ANALYSIS: The Taoiseach has been receptive to any way of avoiding a confrontation with the unions, writes STEPHEN COLLINS
HAS THE Government abandoned its plan to cut the public service pay bill by €1.3 billion next year? The cancellation of tomorrow’s public service strike suggests that it has, although some Government sources continued to insist last night that it is still a fundamental part of the budget strategy.
The noises coming from the Taoiseach’s department and the Department of Finance have been diverging over the past couple of weeks as Brian Cowen got more directly involved in the budgetary process.
Cowen is reported to be taking a more conciliatory line in the talks with the public service unions and is certainly perceived by the union leaders as being much more accommodating to their arguments than Minister for Finance Brian Lenihan.
Cowen now seems to have taken control of the process. Yesterday morning, he met union leaders along with Lenihan
and afterwards it was the Taoiseach and not his Minister for Finance who briefed the Cabinet on the budget options facing them.
On the basis of that briefing, the Cabinet authorised the officials involved in the pay talks to go back and tell the union leaders that there was a basis for continuing the discussions about unpaid leave as a way of dealing with the issue next year as well as talking about the longer-term “transformational agenda”. That in turn prompted the decision by the union leaders to call off tomorrow’s strike and make optimistic statements about doing a deal for next year on the basis of unpaid leave rather than cuts in pay rates.
In a statement later in the day, the Taoiseach welcomed “the fact that the industrial action planned for Thursday will not now take place and hopes that progress can be made in the coming days”.
The indications are that Cowen is determined to do a deal with the unions even if that involves a serious dilution in the targeted savings of €1.3 billion in the public pay bill.
This is not really a surprise, considering that the Taoiseach and the main union negotiator, Peter McLoone, have echoed each other for the past week or so in emphasising the need to focus on next year for dealing with the pay issue while dealing with the longer-term “transformational agenda” later.
The unions came up with the idea of unpaid leave as a way of tiding them over the imperative of making savings in the public service pay bill next year. On the Government side, Cowen has been receptive to any way of avoiding a confrontation with the unions, despite the misgivings of the Department of Finance.
The union side maintains that savings of about €800 million can be made next year through an unpaid leave formula. It will mean that basic pay won’t be touched and the leave can be recouped at a later stage if and when the economy improves.
Under the union plan, 12 days of unpaid leave, one a month, would give the Government savings of about €700 million with a further €92 million coming from changes in the overtime payments to public servants like gardaí and prison officers, bringing the total close to €800 million.
Where 12 days unpaid leave next year is not possible, the unions have suggested that it be spread over three years with four unpaid days a year, although the savings for the full 12 days would be factored into next year’s budgetary arithmetic.
There are a number of problems about the whole plan, not least the fact that even on the optimistic scenario presented by the unions the total savings would be far short of the €1.3 billion originally envisaged by Lenihan. Last night, there were suggestions that if the savings could be got up to €1 billion it would be enough to secure a deal.
A more important problem is that Finance officials do not believe that the savings from 12 unpaid leave days would come remotely near €800 billion and they have calculated that it would be more like €300 million. The feasibility of the scheme across such a diverse range of public services is also a serious concern for Finance.
One of the attractions of it from the Taoiseach’s point of view is the promise of real flexibility for a “transformational agreement” dealing with the longer-term reform of the public service. What the Taoiseach is clearly hoping for is long-term reduction in public service numbers of about 19,000 as recommended by the McCarthy report but that doesn’t save money next year.
The most fundamental problem of all relates to the Government’s credibility. It took the Government three attempts from July of 2008 to last April before it came up with a budget that dealt with economic reality of 2009. If it now rows back on its commitment to make savings of €1.3 billion in pay for 2010 while ploughing ahead with its plans to cut social welfare, its credibility could suffer a fatal blow.