Deal 'lacks credibility', say employers

The proposed compromise between Government and unions on cutting €1.3 billion from the public service pay bill “lacks all credibility”, employers’ group Ibec has said.

Union leaders and Government officials resumed talks this morning to work on a modified plan to cut the pay bill that involves a 12-day unpaid leave arrangement for public sector workers.

The Government agreed elements of the plan yesterday in order to secure a deal with the public service unions.

The planned strike by over 250,000 public servants tomorrow has been called off following agreement to continue talks on unpaid leave next year as an alternative to cuts in pay rates.

The draft deal involves two stages, a 12-day unpaid leave scheme to produce savings next year and an overall transformation programme for the public service from 2011.

But Ibec director general Danny McCoy described the plan as “a fudge”, saying the Government was exchanging “one day of no strike or service” for withdrawing 12 days of service next year.

“If we really believe it will have no impact on service then you have to ask the question in terms of how many people are in the [public] service at the moment not actually being productive,” he said.

Some sources have suggested that where it is not practical for staff to take 12 days’ unpaid leave next year, they would in effect be asked to work for nothing in 2010 with the leave being added to holidays at a later date, possibly over a three- to four-year period.

Taoiseach Brian Cowen and Minister for Finance Brian Lenihan met trade union leaders yesterday morning and afterwards Mr Cowen briefed his Cabinet colleagues on the detail of the discussions.

Following approval by the Cabinet, officials were instructed to tell union leaders they were authorised to negotiate on unpaid leave as an alternative to cuts in pay rates.

In return the unions agreed to call off tomorrow’s planned strike. That decision was welcomed later by the Taoiseach who expressed the hope that progress could be made in the talks in the coming days.

The unions estimate that savings of over €800 million next year can be made through agreement on unpaid leave. The figure, which is considerably more than the estimate made by Department of Finance officials, falls well short of the €1.3 billion target of Mr Lenihan.

Government sources said last night that a crucial aspect of any deal would be an agreement on a longer-term programme to reduce the size of the public service.

Ministers believe that if the savings from unpaid leave can be augmented to bring the total close to €1 billion a deal can be done but officials involved in the talks are believed to be more sceptical.

Fine Gael deputy leader and finance spokesman, Richard Bruton, last night described the deal as the worst of all possible worlds. “They’ve bottled it. They had a chance to deliver real change and cost reductions in the public sector and they’ve blown it. This deal, if it turns out along the lines currently being described, represents the worst of all worlds.”

He said every public sector worker would lose the same proportion of their pay while customers would lose out through reduced services.

However, Labour Party leader Eamon Gilmore welcomed the development. “For more than a month now I had been pressing for the opening of talks between the Government and the unions with a view to reaching a negotiated settlement on steps to reduce the overall public sector wage bill without cutting basic pay,” he said.

The draft agreement means Impact general secretary Peter McLoone and the other union negotiators have succeeded in convincing the Government that savings can be generated without cutting pay, introducing compulsory redundancies or changing pension arrangements.