Public service agreement could croak beneath the troika spotlight

ANALYSIS:Inequity in the Croke Park agreement puts it under pressure both at home and from Europe

THE SAVINGS in the public service pay bill, recorded by the body charged with implementing the Croke Park agreement, hardly comes as any great surprise.

The strategy behind the agreement was to protect public service pay by cutting employees to reduce the overall pay bill.

While it can be strongly argued that eliminating jobs to maintain the pay of those who remain, and the pensions of those retiring, is neither right nor fair, that was not the concern of the implementation body.

The other prong of the agreement was to introduce flexibility and reform throughout the public service as a quid pro quo for maintaining pay rates as well as filling the gaps created by the departure of staff.

“The agreement continues to be an effective enabler for the implementation of required reform and change across the public service. A key role of the agreement is to enable a sustained and significant reduction in the size of the public service. A very substantial reduction in staff numbers (11,530) took place during the review period,” said the report, which covers the 12 months to the end of last March.

Some flexibility in work practices appears to have been introduced but the extent of it is not very clear from the report.

Minister for Public Expenditure and Reform Brendan Howlin, who welcomed the report, also said the reforms envisaged by the Croke Park agreement were not being adopted enthusiastically enough.

Mr Howlin welcomed the findings of the implementation body, which said the agreement had saved €1.5 billion in two years, but he made a particular appeal to middle and lower management to identify any barriers to bringing about change.

“Managers haven’t embraced reform as enthusiastically as I would’ve liked,” said the Minister, who clearly believes that flexibility has not gone nearly far enough.

The report itself doesn’t convey the same impression of impatience that characterised the Minister’s response.

Instead it emphasised the benefits of the agreement, not only in terms of reducing the pay bill and introducing flexibility, but in terms of the level of industrial peace delivered by the deal.

“The agreement has been successful in ensuring that the large reduction in numbers and the necessary and fundamental reform that flows from that have been achieved in a climate of industrial co-operation notwithstanding the magnitude of the task of maintaining services with significantly fewer staff,” said the report.

But questions have to be asked about the price being paid, particularly by the younger generation whose job prospects have been significantly reduced as a result of the agreement.

Younger people who are lucky enough to get a public service job are being hired on lower rates and much reduced pension entitlements than apply to their elders who are already employed.

The agreement has institutionalised such inequity as well as reducing the quality of the services through the staff cuts.

The inequity of the agreement is not the responsibility of the implementation body but of the Coalition Government which has followed the model adopted by its predecessor.

Only time will tell whether the agreement, as it stands, will survive budgetary pressures that will inevitably arise later this year.

Even if the Coalition is prepared to persist with the agreement there are signs outside supervisors of our bailout funds might have something to say.

A European Commission draft update on Ireland, published in yesterday’s Irish Times, showed concern that the burden of reform here was not being shared equally.

The commission raised the question of whether it would be better to cut public service pay instead of numbers to protect services. It also said Irish public service pay rates were relatively high by European standards.

The commission warned that popular support for consolidation and reform might wane, especially if growth remained weak and unemployment high.

“To minimise this risk, it is essential that the burden of the necessary consolidation be fairly and equitably shared,” the commission said.

So far the troika, of the commission, the European Central Bank and the International Monetary Fund, has been relatively hands-off in the way it has supervised the budgetary adjustment in Ireland. As long as the overall targets are met it has not been too intrusive.

The leaked document, which came through the usual route of the Bundestag finance committee, indicates that the commission may be getting restive about how the burden is falling.

That could have implications for the Croke Park Agreement.