Public pay rises could spark private sector demands – EU Commission

The European Commission is concerned that pay rises for public service staff in Ireland could spill over into greater demands for increases in the private sector. Highly placed sources said the commission considered that any such occurrence would be a very worrying development for the country.

It is understood that European commissioner Pierre Moscovici is likely to raise the issue of Ireland's "cost-competitiveness" during a planned visit to Dublin on May 25th.

Sources said the scheduled pay restoration for about 300,000 staff in the public service had been raised with the troika at the last post-bailout visit, which ended on May 1st.

Talks on public service pay restoration began yesterday with an initial 15-minute plenary meeting between trade unions and Government representatives. However, substantive talks will not get under way until next week.

Gradual unwinding

It is understood that at the brief meeting yesterday, Government officials said negotiators had been given a mandate to discuss the gradual unwinding of financial emergency legislation which underpinned the various cuts to pay and earnings for public servants over recent years.

Unions were told the talks were predicated on continuing and building on the productivity gains secured through the Haddington Road/Croke Park agreements.

In a letter sent to its branches last night, the trade union Impact said the management side had signalled that while it was open to the Government to act unilaterally and propose changes to the financial emergency legislation to the Oireachtas, the Minister for Public Expenditure and Reform was committed to a process of collective bargaining, negotiation and agreement.

“Management pointed out that they are operating under two substantial constraints. The first is the fiscal constraint; a limit on how much this Government has to spend on public service pay and any additional numbers to be employed in the public service. The second constraint is a legal one; when discussing financial emergency legislation unwinding, it is substantially different from a traditional pay deal.

The management side is limited to a restricted range of measures it can use in this regard.

“The measures available are limited to changes to the pension levy or reversal of part of the pay reductions, or a combination.”

Hard deadline

While it was hoped the talks could be completed within three weeks or so, the Government has set a “hard deadline” of the end of June.

The unions, for their part, outlined their preference for the negotiation of a single agreement for the entire public service as well as for a flat rate amount which would give something back to all workers while disproportionately benefiting those on lower rates.

Impact’s letter also said: “The pension levy is the preferred vehicle by which these measures can be achieved, but it isn’t assumed at this point that the pension levy can be the sole mechanism to achieve pay restoration in all cases.”

The talks are due to resume tomorrow with a fiscal briefing set out by officials of the Department of Public Expenditure.