Irish Independent

Paschal’s gamble on public pay peace deal

- Anne-Marie Walsh

A MAJOR new report to advise the Government on its strategy at public sector pay talks has been criticised for dodging a number of key issues on wages and conditions.

The Public Service Pay Commission has offered Expenditur­e Minister Paschal Donohoe a blueprint for buying industrial peace, with pay hikes and protection of final pensions.

Mr Donohoe is likely to agree to pay rises, which have been slated at around 2pc a year, as part of the new deal to extend the Lansdowne Road Agreement. The public sector pay bill is worth over a third of Government spending, and stands at €16.4bn – so a 1pc pay rise would cost €164m.

Many public sector workers are also expected to face an increased employee contributi­on to retain lucrative pension benefits worth between 12pc and 18pc of salary.

But the commission failed to tackle the key issue of job security enjoyed by public servants – noting that it “has value”, but failed to specify what that is.

Business groups also criticised it for failing to provide more specific figures on the gap between public sector workers’ and private sector employees’ pay.

Mr Donohoe is now expected to use the report as the pathway to a deal at talks due to begin shortly. He insisted that this would not represent the opening of an “ATM”.

A MAJOR new report to advise the Government on its strategy at public sector pay talks has been criticised for dodging a number of key issues on wages and conditions.

The Public Service Pay Commission has offered Expenditur­e Minister Paschal Donohoe a blueprint for buying industrial peace, with pay hikes and protection of final pensions.

Mr Donohoe is likely to agree to pay rises, which have been slated at around 2pc per year, as part of the new deal to extend the Lansdowne Road Agreement. The public sector pay bill is worth over a third of Government spending, and stands at €16.4bn, so a 1pc pay rise would cost €164m.

Many public sector workers are also expected to face an increased employee contributi­on to retain lucrative pension benefits worth between 12pc and 18pc of salary.

But the commission fails to tackle the key issue of job security enjoyed by public servants – noting that it “has value” but failing to specify what that is.

The commission said it had not identified “any satisfacto­ry scientific evidence which could reasonably be used for assigning a specific monetary value to security of tenure in Ireland”.

Business groups also criticised it for failing to provide more specific figures on the gap between public sector and private sector pay.

It concluded that “methodolog­ical difference­s in data” make it difficult to draw definitive conclusion­s on internatio­nal earnings comparison­s.

However, it said that pay trends in the wider economy meant there is justificat­ion for a new pay deal, noting that private sector pay went up by 2pc last year.

Mr Donohoe is expected to use the report as the pathway to a deal at talks due to begin shortly. He said it would not be the opening of an “ATM”, and that he expects the negotiatio­n process to be “very challengin­g”, adding that it will affect over 300,000 public servants.

Resources

“The demands upon available resources in the State are very, very, very large,” Mr Donohoe said. He is expected to issue an invitation to unions to talks on a new deal within days.

It is expected that a deal may be brokered in early June, to give unions time to ballot their members.

But business groups warned that the difference­s in pensions between the private and public sector must not go unaddresse­d.

The Small Firms’ Associatio­n warned that the gap of up to 18pc between public and private sector workers’ pensions must be reflected at the talks.

The commission does recommend that workers on gold-plated benefits pay a higher contributi­on towards their retirement­s.

This would include 23,000 staff, including gardaí, politician­s and judges, on lucrative schemes whose benefits accrue at a faster rate than most public servants. It suggested this should be done by converting a pension levy – worth an average 5pc of wages – into a higher contributi­on on top of existing contributi­ons.

However, acting director of the Small Firms’ Associatio­n Linda Barry said this additional contributi­on would not go far enough. “Right now it’s not sustainabl­e. It has to be remembered that the private sector funds the bill,” she said. “Employees and businesses pay through increased taxes. Instead of providing more nurses, and better roads and broadband, they are sucked into this unsustaina­ble pension bill.”

She said job security is so beneficial it had to be part of any negotiatio­n. “I did expect it to be more conclusive,” she said.

The chief executive of business representa­tive body Ibec, Danny McCoy, said the conversion of the levy into a higher contributi­on would be a “start”.

However, he said cuts to pension benefits should also be considered to make the pensions bill sustainabl­e for taxpayers.

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