The public service in this State may have many strengths but the ability to reform itself has rarely been one of them. Well-established industrial relations practices in the private sector, such as performance-related pay and full flexibility, have still to take root across much of the public service.
But comprehensive reform cannot be deferred much longer. The pay row at Forfas, that threatens to cripple the IDA over the next fortnight, is only the latest in a series of recent disputes that suggest traditional public sector pay policy is dying on its feet.
Other symptoms of terminal illness have been the wholesale closures of hospital wards because of a shortage of staff nurses, loyalty payments worth up to £10,000 for IT specialists in the Civil Service and confidential deals offering 20 per cent pay rises to people with similar expertise in Telecom Eireann and An Post.
In short, the public service cannot recruit and hold people it needs to deliver quality services without incurring huge extra pay bills, or the threat of industrial disruption from other public service workers doing totally different jobs.
In the bad old days, when up to 50,000 workers a year were joining the dole queues due to "restructuring" in the private sector, public servants were glad of the security that working for the Government gave them. When a new generation of national pay agreements emerged to replace the "free for all" with the Programme for Competitiveness and Work (PCW) in 1987, it was sold to the public sector unions partly on the basis that, once pay restraint had helped sort out the public finances, a series of "special" pay claims would allow them to catch up with their brothers and sisters in the private sector.
That strategy has worked very well. Since 1987 the public sector pay and pensions bill has risen by 104 per cent, while the average manufacturing wage has risen by only 46 per cent.
In subsequent national pay deals, a determined effort was made to "restructure" public sector pay. There was provision for a once-off "special", or local bargaining clauses, that would allow unions and management to negotiate far more flexible deals and break out of traditional relativities.
It never happened. Both sides had unrealistic expectations of what was attainable, and neither side had the expertise, experience or resources to make the new system work. Neither had they the ideological commitment needed to jettison old industrial relations baggage.
For instance, while talks between unions and management took place at local level, every negotiation had to be referred back to the tiny personnel and remuneration division of the Department of Finance for clearance. Talks backed up on each other, frustration grew and, far from restructuring deals breaking down pay relativities in the public service, each group sought to work off its frustration by extracting a better deal than the groups that had settled before it.
The 3 per cent rise envisaged grew to 5.5 per cent, then 7.5 per cent and eventually 14.5 per cent, when the traditionally quiescent nurses revolted. The negotiations came to resemble "a slow bicycle race" where those who came in last won. And, far from weakening relativities, the dramatic victory of the nurses only reinforced them.
When the gardai engaged in "blue flu" tactics to maintain their own position in the pecking order visa- vis the nurses, the INTO general secretary, Mr Joe O'Toole, reminded everybody that his members would also be looking for a "second bite" of the public sector pay cherry. At that stage the Taoiseach, Mr Ahern, intervened with a proposal that future public service pay increases should be performance-related.
If the unions would settle for a 2 per cent local bargaining increase under Partnership 2000, then a new attempt to allow serious local bargaining could emerge under its successor, he promised. The general secretary of the ICTU, Mr Peter Cassells, endorsed the Taoiseach's approach. Congress was prepared to recommend "new methods of pay rewards for public servants which will not automatically result in knock-on claims".
All was well with the world, briefly. But in September last year the Minister for Health, Mr Cowen, announced at the publication of the Report of the Commission on Nursing that its proposals on further pay increases for nurses would have to be referred back to the public service committee of the ICTU. The Irish Nurses' Organisation reacted with white anger and the spectre of strikes in the health service was revived.
It is still with us. And with it is the renewed threat of "knock-on" claims from other public service workers. Far from the 2 per cent local bargaining clause of Partnership 2000 providing a breathing space before discussions begin on a new type of public sector pay deal, there is increasing danger that it may be overtaken by a renewed outburst of industrial unrest.
The tight relativities mean that nurses, or IT specialists, or any other group of public service workers in high demand cannot easily be given pay rises needed to attract, or hold, recruits without large numbers of other workers also having to receive similar pay rises. But the reality is that not all public service workers are of equal "relative" value.
Even within vocational groups there are enormous differences in the work performed. Not all staff nurses, gardai or clerical officers do the same job. Not all work locations are equally productive, or stressful.
Yet public service pay structures are so rigid that they cannot even be adjusted to allow people doing identical work - but coming from different administrative backgrounds - to be paid at the same rate without horrendous financial implications elsewhere in the system.
The current dispute at Forfas is a classic example of this. The Government, in its efforts to rationalise services to industry, has brought the IDA, Forbairt and ABT under the umbrella of one super-agency. In the process it has created a monster, where workers operate on 48 "active" grades inherited from the agencies they came from. There are a further 15 "inactive" grades.
The Department of Finance says it is impossible within existing public service pay structures to rationalise the structure. And yet the Department has agreed a radical departure for its own staff, with the introduction of loyalty payments to hold on to IT specialists whom it can ill-afford to lose to the private sector. Thus, the realities of labour market pressures are beginning to impinge - even in the Department of Finance. It can no longer ignore them without risking serious damage to the delivery of services to the public.
This is a problem that unions as well as management must tackle. The reality is that paying for change in the private sector was a concept that died during the "free for all" of the 1980s, when the alternative for many workers was the dole queue. While the Government must be prepared to offer real money for real change in the public service, the unions must be ready to deliver it. They have to stand up to those members who think public service workers are somehow insulated from the wider world of work.
Perhaps the most difficult challenge the unions will have to face will be the breaking of traditional relativities, yet such a move could ultimately be as liberating for the workers as it could be for the Government - not to mention the taxpayer.
Tomorrow: Peter McLoone, chairman of the ICTU's public service committee.