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Public sector pay game is now afoot but deal over summer seems unlikely

Ministers will preach restraint but Coalition leaders will see an election coming on to the horizon

A well-rehearsed game of public pay talks between unions and Ministers Paschal Donohoe and Michael McGrath is under way. Photograph: Gareth Chaney/Collins
A well-rehearsed game of public pay talks between unions and Ministers Paschal Donohoe and Michael McGrath is under way. Photograph: Gareth Chaney/Collins
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Pat Leahy
Thu Apr 13 2023 - 05:30

If it’s Easter, it’s time for the teachers’ unions annual conferences. And if it’s time for the teachers’ conferences, it’s time for calls for pay increases. Some things you can set your watch by.

The signals from union leaders and delegates this week that teachers and their public sector colleagues will be seeking pay rises did not shock officials in the Department of Public Expenditure. Rather, it was greeted with something akin to a knowing shrug.

“Very much to be expected,” said one senior figure.

The current pay agreement – an extension to the previous deal – expires at the end of this year. The ambition will be to have a successor agreed by then, with comments from the union conferences signalling that the process will soon begin.

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Last year’s pay deal, reached in September, saw unions accept a 6.5 per cent pay rise over last year and this year, with 3 per cent backdated to February 2022. They received 2 per cent last month and are due to get the final 1.5 per cent in October. Government and unions will seek to have a fresh deal concluded by the time the final installment is paid.

As ever, though, the sides will start well apart. Union members this week spoke about the necessity to have a deal that matches – at least – the current rate of inflation, chugging along at about 8 per cent. Government figures flatly say there is “zero chance” of a deal at anything like that level.

Besides, they say – inflation is falling. This is one of the things that could delay the start of the talks. A continuation of that trend would strengthen the hand of the Department of Public Expenditure and Finance in arguing for more modest increases.

[ Pay increases key to addressing teacher supply crisis, says union head ]

Sources expect some engagement between the sides before the summer, but the real deal-making happening in the autumn. This runs the risk of running into – and complicating – the budgetary process, with budget day likely to be in early October. A deal over the summer seems unlikely, as these things tend to get done when they have to be, not before.

Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe (who have swapped places since last year) will be the loudest voices for fiscal restraint in Government. Their ministerial colleagues tend to be in favour of prudence when it comes to other departments’ spending, rather than their own.

Minister for Education Norma Foley’s endorsement of a range of allowances for teachers this week was a good example of this. Ministers often see themselves as advocates for their stakeholders as much as members of a collective central authority. There was some severe grumbling among officials about Foley’s intervention.

The attitudes of the Coalition party leaders – McGrath’s and Donohoe’s bosses, remember – will be interesting. With an election in the middle distance, they will not want conflict with the public service unions. This will add to the pressure on the two Ministers to seal a generous deal. The unions, of course, know all this.

They also know that the public finances are in good health, with big corporation tax revenues flowing into the exchequer. Donohoe will make the argument that the current levels of income cannot be relied upon, and that build recurring expenditure commitments on the back of them would be the height of folly. It’s an unchallengeable argument, but also one the unions have heard before.

The well-rehearsed game is now afoot.