Government must hold firm on pay

PUBLIC servants have suffered significant reductions to their incomes over the past eight years which they never expected to suffer. This has been difficult for many people and it would be unfair not to acknowledge that. The effects of that income loss have been confounded by a sense that some of the criticism of the public sector in national discourse has been less than fair.

That said, adjusted for inflation, Ireland’s public sector pay bill doubled between 2000 and 2008, six times greater than the real increase in spending on public pay across the Eurozone, where the aggregate bill rose by only 17pc. As the country emerged from recession, Ireland’s public pay bill was down from its 2008 peak, but it had only returned to levels recorded between 2006 and 2007.

Despite still being deep in debt, the Government last year announced that it planned on giving its 300,000 employees a pay rise. The announcement was timed to relate to the fortunes of the then coalition, particularly Labour, ahead of the election. The bottom line then, as now, is that the planned increase in pay will have to be funded with borrowed money. This gain for public-sector workers will, therefore, be paid for by everybody else, as taxes will have to be used to pay the interest on this borrowing and, ultimately, to repay it.

Since that commitment, workers in the public sector, such as gardai and teachers, have led a charge to have pay restored earlier than already scheduled. If the last coalition had ever been serious about facing down those who wield most clout, it would have rejected from the beginning the notion that pay increases should be “restored” to 2008 levels, as if bubble-era pay levels were a right. However, neither this nor the last government, nor governments here in general, have ever shown serious intent in this regard. In the private sector, pay bargaining between employer and employee is clear and straightforward because each side has relatively narrowly defined interests. But governments, when negotiating as employers, have interests beyond getting value for money. They have an innate instinct to buy off those who are capable of kicking up a fuss most, both because they want a quiet life and because those who benefit are more likely to re-elect them.

Now the country’s largest trade union is to ballot its members in the public service for strike action unless the Government agrees to early talks on a new pay deal. Siptu represents about 60,000 workers in the public service, mainly in the health, local authority and education sectors. Siptu president Jack O’Connor has called on the Government to convene new talks by the beginning of February.

Few people disagree with some form of redistribution in society. But fewer believe, as a matter of principle, that wealth should be redistributed from people who earn less to people who earn more, or from those who can lose their jobs to those who enjoy cast-iron job security.

But that is what the last government committed to doing. However, this Government must resist pressure to cave in to the demands from public sector unions to increase pay before it has stopped adding to the national debt. The Lansdowne Road Agreement must be adhered to and the new Public Service Pay Commission must be allowed to conduct its work in the time frame already agreed.