Ditching of unpaid leave saves face but is it too late?


INSIDE POLITCS:A soft approach to the public sector appeared to aggravate an electorate grimly happy the State was set to act, writes STEPHEN COLLINS

THE GOVERNMENT’s decision to reject the convoluted formula put forward by the unions for savings in the public service pay bill next year has averted a political disaster. Acceptance of the formula would have destroyed the credibility of the Taoiseach and his Government.

As it is, Cowen’s authority has taken another battering because of the perception that he was willing to compromise on his Government’s stated policy on public service pay. The expectation of a deal was so strong that there was genuine shock in the political world when it was rejected yesterday afternoon.

The mystery is why it was such a close-run thing. The indulgence of the long-drawn-out and contorted efforts to find a way of reducing the public service pay bill next year exasperated even some of his most loyal supporters in the Fianna Fáil parliamentary party because the formula on offer always smacked of a three-card trick.

Brian Lenihan and the two Green Party Ministers were highly sceptical all along about the formula for reducing public service pay that involved unpaid leave rather than a straight pay cut.

The notion that measurable and permanent savings in the public service pay bill could be found through a system of unpaid leave, linked to commitments on “reform”, many of which were already contained in previous social partnership agreements, was never taken seriously by anybody outside the bubble of the talks.

While the worst-case scenario was averted, the problem for Cowen is the perception that he actually wanted to do a deal based on the terms on offer. This is unfortunate for him because, after a dreadful first year in office, he managed to convey the impression in recent months that he was prepared to face up to the appalling economic challenge confronting the country, regardless of the long-term political consequences for himself or his party.

The country was bracing itself for one of the toughest budgets in its history and the only imperative was that everybody should be hit equally hard, according to their means, when, out of the blue, a complex manoeuvre to find a way of protecting public service pay and pension rates punctured the public mood. Cowen’s apparent willingness to accept the deal threatened to turn him into an object of ridicule.

His Dáil response to the discourtesy shown by the Vatican to the commission that compiled the Dublin diocesan report, in which he appeared to be making excuses for the way in which diplomatic niceties had been used to obstruct justice, further added to the mood of frustration and even despair among his TDs.

Until recently, the prevailing mood in the Fianna Fáil parliamentary party was that, although TDs recognised Cowen was never going to recover his popularity with the public, they were prepared to soldier on with him at the helm until the next election and take their chances. During the turmoil of recent days some started to talk about the need for change as soon as possible.

Having spent the last couple of months preparing their constituents for the worst, most Fianna Fáil TDs were aghast when they heard the planned one-day public service strike on Thursday had been called off, after what looked very like a capitulation by their leader.

Just to make matters worse, Government sources made it clear there was no similar fudge in the offing to avert cuts in child benefit or social welfare rates.

“If the Taoiseach goes ahead with this, there will be an almighty row in the party and his leadership will be questioned,” was the typical reaction of one Fianna Fáil TD.

The notable feature of the negative reaction was that it came not just from the usual suspects who regularly gripe about the leadership, but from TDs who have been strongly supportive of the Taoiseach and the Government strategy.

There were eerie echoes of Charles Haughey’s disastrous first term in office from December 1979 to June 1981, which began with his now-infamous television address telling the nation it was living above its means and culminated in the fraudulent budget of 1981 where a set of phoney figures substituted for real spending cuts. That budget was a prelude to a dreadful decade and it took most of the 1980s to unravel the damage.

When the current crisis struck last year, the Government and the social partners behaved as if they had learned nothing.

The obviously unaffordable national pay agreement reached in October 2008 was a sign of just how out of touch all of them were. It quickly became apparent a swathe of the private sector simply could not meet the terms of the deal and many workers had to live with pay cuts and not the pay rises promised. That in turn prompted a cancellation of the deal for the public service but it bizarrely went ahead in the banks, which were simultaneously being bailed out by the taxpayer, as well as in the commercial State sector and across parts of industry.

The opportunity for a national approach to pay, across both the private and public sectors, was lost as a result of that major miscalculation by the Taoiseach. In the areas of the private sector where pay cuts were imposed, a graduated scale of cuts from 5 per cent for the lowest-paid up to 20 per cent for the best-paid was often applied.

If something similar had been imposed on every worker in the economy, as well as on the professional fees of doctors, lawyers, accountants and the like, there might have been some prospect of getting the broad national consensus so desperately required. However, the moment was lost due to political ineptitude, and the Government faced an uphill battle.

Surprisingly, it did appear in recent months as if it had recovered its nerve. Since the April budget, Lenihan gave the impression of a Minister getting to grips with the economic and financial problems besetting the country. His repeated commitment in recent months to savings of €4 billion in the 2010 budget reassured many people that the Government at last had a clear strategy for getting out of the mess.

Over the last week, doubts suddenly arose that the Government was preparing to abandon its strategy on pay to appease the unions. The clear objective of the public sector unions was to avoid a cut in pay rates come what may. The unpaid leave formula was a cover for a one-year pay cut but normal rates would have applied from 2011. That would have left the structural imbalance of the public service pay and pensions bill unaltered.

Some of the major reforms offered by the unions to deliver savings in the years after 2010 merely involved implementing measures like the 8am-8pm shift in the health service which they actually signed up to years ago.

With the collapse of the talks, the Government is committed to a straightforward cut in public service pay. It appears, though, the pay cut will not feed into reductions in public service pensions. In the long term that could lead to massive problems, as retired public servants will, after the budget, be on pensions of about 60 per cent of the pay of those remaining in the public service workforce.

Facing into the myriad problems that confront it, the Government would do well to consider the aphorism of American thinker John Jay Chapman who wrote: “People who love soft methods and hate iniquity forget this: that reform consists in taking a bone from a dog. Philosophy will not do it.”

Brian Cowen has learned this lesson the hard way and will have to nerve himself to take away a few more bones in the period ahead.

Stephen Collins is Political Editor

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