Squaring the circle of public-service pay a perennial challenge

Any pay increase for nurses will have a knock-on effect across the public service

“The issue of ‘relativities’ is evident again in the current disputes involving nurses and healthcare assistants.” Photograph: Frank Miller

“The issue of ‘relativities’ is evident again in the current disputes involving nurses and healthcare assistants.” Photograph: Frank Miller

 

A former chairman of the Labour Court once recounted to me in considerable detail how a pay rise gained by a clerical grade in a public body spiralled out across equivalent public-service grades until it ended up being applied to the pay of members of the choir in Bunratty Castle.

The story neatly encapsulates a major abiding dilemma of public-service pay determination: how to reach agreement with any public-service group without facing knock-on claims from others and possibly from all public-service unions. Commonly described as the issue of ‘relativities’ or ‘specials’, this challenge is evident again in the current disputes involving nurses and healthcare assistants. Any breakthrough by teaching unions on two-tier pay would also extend to all the public servants recruited since 2012.

The strongest recent illustration of the impact of relativities is the Garda dispute and threatened strike in 2016. The pay increase won by the Garda unions effectively brought the shutters down on the then Lansdowne Road agreement. The Garda settlement added an estimated €50 million to the Garda pay bill, but other public-service unions immediately lined up to demand equivalent improvements in their members’ terms and conditions. This resulted in the accelerated renegotiation of Lansdowne Road, which morphed into the current Public Service Stability Agreement.

Social partnership

Throughout the 1970s special deals for different groups of public servants became almost routine. Public servants could look forward to repeated special awards on top of basic national pay awards and annual service increments. The pattern continued during the social partnership era that stretched from 1987 to 2009. Limited scope for local pay bargaining in social partnership agreements resulted in a series of headline pay awards far exceeding the agreed ceiling for locally-bargained pay rises.

The resulting pay scramble resulted in near anarchy. Public-service pay determination was rebuilt through ‘pay benchmarking’. The new model sought to accommodate growing pay pressure from public servants, insistent that they were falling behind as the economy reached record levels of growth and full employment.

The first cycle of benchmarking awards in 2001 fixed the relativities problem for a while by recommending different pay awards for different public-service grades, based on comparisons with the pay of groups doing equivalent work in the private sector. Benchmarking was a case of ‘jam for all’ and lots of it for many: pay rises averaging near 9 per cent ranged between 3 per cent and 25 per cent for different groups. The second cycle of benchmarking in 2007 proved much less generous and took account of the value of public-service pensions. But the benchmarking model, colourfully described by one union leader as an “ATM machine”, was consigned to history.

Given the depth of cuts to public-service pay after 2009 and the dramatic economic and fiscal recovery of recent years, it was inevitable that some public-service unions would demand improvements in pay and conditions to reflect their special circumstances.

This was especially the case among groups such as nurses, who work under unrelenting pressure. The INMO claims that only one in four nursing job vacancies can be filled and the union is unimpressed that the Public Service Pay Commission sees no case for a general pay rise for nurses on grounds of recruitment and retention problems. Two-tier pay has for some time convulsed the teaching unions. Delaying the removal of lower terms and conditions for those who entered the profession from 2012 is seen as grossly unfair. Ministers defend the status quo pragmatically by highlighting the cost of equalising post-2012 public servants’ pay more rapidly.

The commission, now in the eye of the storm with health service workers, was intended to provide a pathway to a new mechanism for determining public-service pay. It hit the sweet spot in 2017 by recommending a pay rise that accorded with the positions of public-service unions and the Government then engaged in renegotiating the Lansdowne Road agreement.

Longer-term measures

Finding a way out of the current debacle is likely to involve both short-term and longer-term measures. In the weeks ahead efforts at troubleshooting will be to the fore. Interventions in the nurses’, healthcare assistants’ and teachers’ disputes can be expected variously from the oversight body that manages the Public Service Stability Agreement, the Workplace Relations Commission and possibly the Labour Court.

In the longer term the parties will yet again need to apply their minds to the challenge of finding an orderly and fiscally sustainable model for determining public-service pay. This is likely to begin with a framework agreement on principles for public-service pay determination, including a more formal statement on how to handle special pay claims without explosive pressure for across-the-board pay rises on grounds of maintaining relativities.

Periodic pay comparisons with the private sector seem unavoidable, whether conducted by a beefed-up Public Service Pay Commission or some other body. Some in the political system may wish to see special pay review mechanisms for groups delivering essential public services, such as healthcare or law enforcement, coupled with dispute-resolution arrangements involving arbitration. The perennial challenge of squaring the circle of accommodating special pay rises while preserving stability in public-service pay remains unavoidable.

Bill Roche is professor of industrial relations and human resources in the College of Business, University College Dublin

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