Lenihan and Gormley in loop as union plan rejected


BACKGROUNDThe savings through unpaid leave were never supported by the Department of Finance

THE GOVERNMENT’S rejection of the unions’ alternative plan for reducing the public sector pay bill followed weeks of contacts between the parties and five days of intensive talks.

The Irish Times revealed last Saturday that a compulsory unpaid leave proposal was central to this alternative. However, it was only after the unions signalled last Tuesday evening that a deal on this basis was all but done that the firestorm really began.

As union leaders went back into Government Buildings on Thursday for what proved to be more than 20 hours of talks, they were certainly conscious of the raging opposition to the unpaid leave proposals among Fianna Fáil backbenchers. They had also long been of the view that the Department of Finance was hostile to the plan and preferred a straightforward pay cut.

The unions’ strategy involved a transformation programme for the public service that would generate significant savings from 2011 onwards – and secondly, the agreement of exceptional or bridging measures for next year.

These “bridging mechanisms” were effectively a code for temporary cuts in earnings which would be reversed when the savings generated by the transformation programme came on stream from 2011.

By Thursday night difficulties remained in both of these strands. While much work had been done in the areas of education, local authorities and the Civil Service, the key health sector – which is the largest employer in the public service with 111,000 staff – remained incomplete. Talks between unions and management on Tuesday had effectively collapsed over the issue of the introduction of an 8am to 8pm core day, and five over seven-day rostering – both of which were aimed at reducing the payment of overtime and premium rates.

The Government had signalled that it wanted to reduce the pay bill by €1.3 billion in 2010, but the central component of the unions’ alternative plan – the 12-day unpaid leave scheme – as then set out would not come close to this target. This scheme would have involved all staff facing a 4.6 per cent pay cut next year while being able to take the 12 days leave over a period of up to six years.

The unions looked at the possibility of introducing higher pay deductions – on a graduated basis of up to 7 per cent – for higher earners. They believed that this would bring the saving over the €1 billion mark. They also discussed reducing overtime rates or deferring increments, although no formal proposals were made.

A union spokesman told The Irish Times that officials had indicated yesterday that they would accept a saving of €1 billion from the talks. The balance would come from other measures such as cuts in top-level pay and savings from the continuation of the moratorium on recruitment.

The main negotiations broke up shortly after 2am on Friday, but the health service teams remained on to continue the talks. Shortly before 8am a draft agreed health reform plan was signed off which both sides believed could revolutionise health service delivery and cost structures. It include the 8am to 8pm core day, and five over seven-day rostering.

By lunchtime a parade of union leaders took to the airwaves to highlight the new health agreement as a model of the transformation programme in action. However, from mid- morning there had been ominous noises from Government sources that the writing was on the wall.

The decision to reject the union proposal came yesterday afternoon after Taoiseach Brian Cowen consulted two key Cabinet colleagues, Minister for Finance Brian Lenihan and Green Party leader John Gormley. He spoke to other Cabinet colleagues during the morning about the emerging shape of the proposals being offered by the union negotiators.

Mr Cowen was briefed on the final contents of the union deal at about lunchtime by the secretary general of his department, Dermot McCarthy. He then contacted Mr Lenihan and Mr Gormley, both of whom expressed strong opposition to savings in the pay bill next year through the mechanism of unpaid leave.

Following those conversations, the Taoiseach instructed Mr McCarthy to tell the union leaders that their proposal could not be accepted.