Analysis: At €880m, public pay deal will not come cheap

The Government will hope that the proposed three-year extension to the Lansdowne Road agreement will provide industrial relations stability in the public service as it enters potentially turbulent economic waters in the wake of Brexit.

However, at a cost of €880 million over three years, the deal will not come cheap. It will, on the other hand, realise more than €500 million annually for the exchequer by converting the pension levy – introduced as a financial emergency measure in 2009 – into a permanent arrangement.

The deal, however, still has to be approved by members of individual trade unions and representative bodies before it can be ratified, probably in September.

The pay and pension elements of the proposed agreement are complex with different levels of benefits for various categories of staff, based mainly on earnings and existing superannuation arrangements.

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Staff on about €55,000 who were appointed before 2013 will receive pay improvements of about €4,000 over three years. Employees on similar salary levels recruited since 2013 will get about €5,400.

The pay improvements come from a combination of salary rises and reforms to pension contributions.

All public service workers will gain from the proposed agreement but those with faster accruing pensions will benefit least as the Government wants groups such as gardaí and judges to pay more for their benefits. The move will in essence erode in relative terms some of the gains made by gardaí from a controversial deal last November to avert a threatened strike.

Concessions

The 13 days of pay talks saw both unions and management make concessions to secure a deal.

The Government at the last minute dropped proposals to relax existing restrictions on the outsourcing of public services as well as for an extension of Saturday working.

Unions had to agree to a continuation of the controversial requirement of staff to work additional unpaid hours. The Government argued this productivity measure was just too valuable to concede as the elimination of these additional working hours would cost it more than €600 million.

All unions and representative bodies will now refer the proposed agreement to their executive committees for consideration and ultimately on to their members in ballots.

The Government will watch carefully the attitude to the new proposals of nurses, gardaí and teachers in particular.

Nurses and doctors had sought special financial incentives to tackle recruitment and retention difficulties in the health service. There is no provision in the proposed accord for such special payments.

Instead it is envisaged the recruitment and retention issue should be examined by the Public Service Pay Commission in an assessment to be completed by the end of 2018.

The demand by teachers’ unions for an end to the two-tier pay structure in schools is also not specifically addressed in the proposed accord. This issue is also to be referred to a new process to be finalised by the end of next year.

The Government will hope that the pay improvements and the rules of the proposed accord will avert any further unrest in the public services.

Unions will have to consider whether the measures will sufficiently address the rising levels of expectations shown by their members in recent times.