Unions to resist greater contribution by public staff to pensions

Union sources concede once pensions are included it will be hard to argue public sector pay has fallen behind private sector

The last benchmarking report, in 2007, found that the value of public sector pensions should be calculated at an average of 20% of salaries

The last benchmarking report, in 2007, found that the value of public sector pensions should be calculated at an average of 20% of salaries

 

The plans by the Department of Public Expenditure to seek a greater contribution from public servants towards the cost of their pensions will be fiercely resisted by unions who represent the 320,000 who work in the public sector.

But even putting it on the agenda serves a strategic purpose for the employer side – the State – as it seeks to moderate any increases to the public pay bill.

Public sector pensions vary greatly, but a pension based on full service for someone retiring now or in the medium-term future entitles the recipient to a tax-free lump sum of 150 per cent of final salary and a guaranteed 50 per cent of salary every year.

Even union sources concede that once pensions are included, it will be hard to argue that public sector pay has fallen far behind that in the private sector.

The last benchmarking report, in 2007, found that the value of public sector pensions should be calculated at an average of 20 per cent of salaries. This represented an advantage for the public sector of 12 per cent over the private sector. It, therefore, concluded that no increase in pay was warranted.

For some this was altogether too neat. However, it indicated that political and industrial relations considerations could not be completely divorced from such exercises – which are, after all, constructed to solve political and industrial relations problems in the first place.

Putting a value on public sector pensions will be a crucial part of the work of the Public Sector Pay Commission in the coming months, say figures on both the union and the Government side.

Politics

However, both sides also acknowledge privately that calculating their value is not just an actuarial exercise; politics will be a part of this from the word go.

Contacts between the unions and the commission, set up by the Government to report in advance of talks on a new public sector pay agreement next year, have already begun. The commission met with officials from the public services committee of the Irish Congress of Trade Union last Monday evening.

The employers side – the Department of Public Expenditure – has also made its initial submission, as reported in The Irish Times earlier this week, and department officials met the commission earlier on Monday.

Both unions and employers are expected to make further submissions on the pensions issue early next year.

However, all the available indicators suggest that the process is likely to find that public sector pensions comprise a significant benefit, increasing the value of public salaries.

CSO earnings figures already demonstrate that public sector workers are paid on average more than their private sector counterparts, although unions argue reasonably that at least some of this is accounted for by the size of the employer (larger organisations tend to pay better), the nature of public sector roles such as gardaí and nurses, and the greater levels of education in the public sector.

Insiders are sceptical that all of the public sector premium will be explained by these factors, though. Most surveys simply conclude that pay in the public sector is simply better than the private sector.

Expectations

The potential relevance of the pension factor was highlighted last week by the findings of a report by John Horgan, former head of the Labour Court. Its findings have jolted the expectations of both sides.

Horgan found that the value of the garda pension was between 50 per cent and 80 per cent of the garda salary – bringing the total value of the average garda salary to over €100,000 a year once the pension is included.

Horgan admitted that his calculations were “rough and ready”. However, they are based on the actual salaries and pensions paid to gardaí. And while garda pay and pensions are considerably more advantageous than the rest of the public sector, once the value of the pensions is put on the table at all it will significantly diminish the strength of the public sector’s case for pay rises.

That, of course, will hardly be a surprise to the Department of Public Expenditure.

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