A slow dance on public sector pay

Sat, Nov 24, 2012, 00:00

A three-speed process appears to be under way in negotiations aimed at reducing the cost of public service pay and allowances. Minister for Finance Michael Noonan, in the role of “hard cop”, is demanding union commitment to specified savings in advance of budget day; Minister for Public Expenditure and Reform Brendan Howlin plays the “soft cop” in cajoling reluctant participants, while union leaders, having won in previous bouts, wonder if they can repeat the process.

Negotiation in such circumstances is preferable to confrontation. Due to worsening fiscal conditions, however, talks between the Government and the public sector unions should involve clear objectives and definite saving timelines. Progress has been made in terms of standardised leave and more flexible working arrangements. But the bulk of savings has come from a reduction in numbers. That, in turn, has seriously affected public services.

A fall in projected economic growth requires additional savings of €1 billion by 2015 in order to meet commitments made to EU-IMF lenders. There was a flurry of activity in September after Mr Howlin admitted that planned savings of €75 million on public sector allowances and premium payments would only amount to €3.5 million. Taoiseach Enda Kenny asked all Ministers for proposals on efficiencies and payroll reductions. The results were communicated to the trade unions. They have now agreed to talks without preconditions.

It has been a carefully choreographed exercise. Carrots and sticks are in evidence. On one hand, the Government is offering to continue its protection of public sector pay, pensions and employment in return for specified savings. On the other, the prospect of unions being blamed for cuts in hospital and other services draws closer. Mr Noonan put it bluntly: the choice lay between cutting services or securing savings in public pay. A supplementary health estimate may provide some cover for Ministers in that regard while, on the broader front, reform of Oireachtas allowances and expenses in the new year will provide a useful example of political belt-tightening.

The stop-start nature of the Government’s engagement with the trade unions does not inspire confidence. It may be, however, that union leaders needed time to advise members that a refusal to negotiate on these issues would amount to shredding their guarantee of no further pay cuts and no compulsory redundancies. The sector has been well protected at a time of national insolvency and high unemployment. A demand by Mr Noonan that public service unions provide indicative saving figures for inclusion in the 2013 budget suggests growing Government impatience. Less than two weeks remain until budget day. The parties should get on with it.

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