Minister must put Garda genie back in the bottle
HERE’S an easy one for Paschal Donohoe – he only has to put the ‘Garda genie’ back in the public service pay bottle.
Then the Public Expenditure Minister can embark on his Herculean task of seeking a new public pay deal with a strong message in his ear, including threats of industrial action, from the main nursing union the INMO, who met in Wexford last week.
The gardaí were the outliers in this complex multi-layered chess game and their gains have become the ones many other public sector workers will now aspire to.
But apart from the crucial issue of public pay, the upcoming weeks of intense talks will mainly centre on the increasingly high-profile question of how to fund public sector pensions. They will also touch on the equally thorny issues of work practice reforms and increased productivity.
The public pay bill has to be fixed before serious preparations for next October’s Budget. So a very frenetic few weeks of talks loom into view with the hope in Government circles that a tight deadline can concentrate minds. Talks could actually start as early as next Monday.
The one big factor which screamed out of the Public Service Pay Commission report was that most public servants should contribute more to fund their pensions. The Commission, chaired by former Labour Court chairman Kevin Duffy, was set up last October to examine public and private sector pay, along with some international comparisons.
Its findings will be a major part of negotiations for a successor to the Lansdowne Road Agreement, largely dealing with a phased restoration in public sector pay reductions negotiated in the teeth of recession. On pensions, the tricky issue is what to do about the 85pc of
public servants who joined up before changes in 2013.
This group’s pensions are calculated on the basis of final income. The people recruited after 2013 have pensions based on the average salary.
The report finds these pre-2013 public servants should pay more towards their pensions. Take it as read that there will be very stiff resistance here.
But the interesting suggestion is that negotiations could form part of unwinding the pension levy which was also part of anti-recession pay cuts. The Commission report calculates that public sector pensions are 12pc to 18pc above private sector pension norms.
Crucially, from Mr Donohoe’s point of view, the report states that any unwinding of emergency pay and pensions measures must be based on the State’s ability to pay. In all his media appearances yesterday he stressed the uncertainty Ireland faces in the fall out from Brexit, and the impact prospective business tax changes mooted by US President Donald Trump. Already, there is alarm about the fall- off in tax revenues in the first quarter of this year.
Mr Donohoe does have one distinct advantage in the likelihood that Fianna Fáil will not rock the boat. That is a considerable asset.
Mr Donohoe said the 12pc to 18pc premium on these pre-2013 pensions was “reasonable and fair”.
Tip-toeing through a veritable minefield, the minister added that public service pensions had to be made affordable.
On pensions, the comparisons with the situation in the private sector will be rehearsed frequently in the coming weeks. Up to 60pc of private sector workers have no pension provision and 75pc of current pensioners are totally dependent on the State Old Age Pension. Ireland’s “pension timebomb” is ticking and long-delayed planning to address it for all workers appears to be finally close to delivery.
Much will depend on the outcome of these public sector pension talks.
Overall, Mr Donohoe said he expects the upcoming negotiations to be “exceptionally difficult”. That is a typical piece of understatement, as he faces a defining few weeks in his