Demand of €1.6bn by public sector will be harmful

ISME: Cut living cost instead

PAY increases being demanded by public servants would transfer more wealth from the private to the public sector, at the expense of important services and infrastructure, it’s been warned.

Public service workers are looking to have their pay restored to pre-2009 levels, with an increase of up to €1.6billion, it emerged yesterday.

Speaking ahead of the Public Service Executive Union’s annual conference yesterday, the general secretary of the union Tom Geraghty said they are ‘going to seek the restoration of what was taken away from public servants since 2009’ in forthcoming pay talks.

But Neil McDonnell, CEO of Isme, which represents small and medium-sized businesses, said the focus should instead be on lowering the cost of living while spending public funds on services such as health and security.

‘The €1.6billion demand will simply transfer more wealth from the private to the public sector, at the expense of needed spending on services and infrastructure.

‘Our children will be the ones to repay the liabilities we incur doing this,’ he explained. ‘Public servants, especially the lower-paid ones, are struggling to make ends meet, particularly in finding affordable housing. The ratio of the average industrial wage (€36,899) to the average new house price (around €304,000) is over eight, figures we last saw back in 2008. On a 2.5 times’ earnings multiplier, a civil servant would require an income of €121,000 to buy the average new house. This is simply never going to happen.

‘But the cost of housing – and other living costs – can be brought down by Government intervention. If the PSEU, and the trade union movement in general, are serious about improving the lot of their members – and increasing their real wealth – they should be joining with Isme in seeking to lower the cost of living, not asking for a wage-price spiral.’

However, Mr Geraghty said public servants are down €1.4billion – an average 10% reduction in the income of public servants – since the economic crash because of wage cuts implemented under the Fempi financial emergency legislation.

‘That legislation was grounded in what was said to be a fiscal emergency. The fiscal emergency is clearly over so the legal basis for the cuts that have been imposed since 2009 is gone. It’s the question of negotiating our way out of it now,’ Mr Geraghty added.

He insisted that public servants are ‘realistic’ and do not expect that the pay will be restored ‘in one fell swoop’. They understand that it would have to be over a period of time and ‘be cognisant of the availability of funds’.

‘The aim would be… to get out of the Fempi legislation and get back to a degree of normality in our industrial relations,’ he said.

Mr Geraghty, who is also secretary of the Public Services Committee of the Irish Congress of Trade Unions (ICTU), represents 10,000 middle-ranking civil servants. When asked how Government could afford the restoration, he said he doesn’t accept public pay levels are not sustainable.

‘The Government ran out of money because of decisions taken around fiscal policy where we narrowed our tax base to the point where we were overdependent on taxes that were based on property transactions. To be brutally frank about it, the country lost the run of itself when we were in times of prosperity in the early Noughties,’ he added. He said public servants were expected to pay disproportionately ‘for the necessary steps to rectify what was, quite frankly, a very strange way to approach fiscal policy’.

Mr Geraghty added: ‘There’s been an awful lot of blame heaped on public servants unfairly. It was not the fault of public servants that public policy was wrong.

‘Public servants paid a huge price for the fact that it was wrong,’ he said. ‘The emergency is over. The justification for pay cuts that were imposed on public servants has now gone, and it’s time to move on. It is not in the interest of public servants to get into a situation where we make some deal that isn’t sustainable. We will be responsible in any negotiations as we always are. We have to find a steady, ordered and measured way of restoring the cuts that were imposed on public servants.

‘That will be the purpose of the upcoming pay talks.’

Ibec director Maeve McElwee said pay in the public service must reflect the average increases that are happening elsewhere.

‘We have to also consider the fact that, between increments and the current payments under the Lansdowne Road Agreement, there’s really no justification for further pay increases in 2017. But the next public service agreement for 2018 should consider whether incremental wage growth is appropriate,’ she added.

Civil servants ‘need €121k for a house’ ‘Public servants paid a huge price’