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The public sector pay deal: a time bomb for an alternative government

Read more about: Economy, Fianna Fail, Unemployment     Print This Post

One of the mysteries of the Irish economic crisis, which historians may eventually puzzle over, is the long-drawn out nature of it.  On March 30, 2010, we get decisions regarding the financial sector that other countries made 12-18 months ago.  And for all the disruption caused by the selective go-slows in the public sector, the actions never matched the doom-laden rhetoric of the union leadership.  And now, on the same day as double-digit billions of public funds are headed for the banks, we get an apparent breakthrough on public sector pay and productivity.   Much of the deal seems like a rehash of the discredited benchmarking institutions, with verification mechanisms that during 2002-2008 resulted in an everyone-has-won-and-all-shall-have-prizes mechanism for determining pay increases (and, yes, bigger prizes for those higher up the pay scale).   But there are some critical timelines nonetheless –

[Irish Times] However there will be a review of public sector pay in spring of next year and in each subsequent years. These will take account of “sustainable” savings generated as a result of the implementation of the reform programme and determine if there is any scope for the re-imbursement of pay cuts ..  The agreement says that in the event of “sufficient” savings being identified in the review to be carried out in early 2011 that priority will be given to public servants with pay rates of €35,000 or less .. The savings produced as a result of the implementation of the reform programme are to be independently verified by a new Implementation Body which is to be established .. The deal says that the issue of how pension increases for current staff and those who have already retired are determined – whether they will continue to be based on rises awarded to serving personnel – will be considered in the context of the review of pay policy next spring … In the meantime the current position whereby pay cuts introduced in the Budget are not counted in calculating pension entitlements will continue for another year.

 So during 2011, the then government will have to decide whether to provide some pay cut restoration, whether to break the pension-earnings link for current staff, whether to apply the existing pay cuts to the salary base for pension entitlements, and manage industrial relations when new staff are being recruited on radically different terms than incumbent staff.  But for the next year, no such decisions have to be made.

Ever wonder why no post-1932 non Fianna Fail government has ever lasted more than one term?  And on this potential future iteration of that trend, the public sector unions are along for the ride.

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6 Responses to “The public sector pay deal: a time bomb for an alternative government”

  1. # Comment by Veronica Mar 30th, 2010 16:03

    P,

    Isn’t it just as likely that this deal – if it’s accepted by union members – is actually a godsend to any government that may take over from the present one? They will have a template in place that guarantees industrial peace up to 2014 and mechanisms to negotiate on the implementation of the deal and its progress at set intervals. If an incoming government don’t like the deal then they can reject it on day one and go back to the drawing board to negotiate an entirely new one with the unions. I’d say there isn’t a snowball’s chance in hell of that happening or even the prospect of it and if the electorate got a sniff that such a plan was in train, any parties proposing that course of action would crash and burn at the polls anyway.

  2. # Comment by Queenie Mar 30th, 2010 17:03

    Sure. The new government rejects the deal and the unions take to the streets. Once its not FF its safe to be irresponsible.

  3. # Comment by EWI Mar 30th, 2010 23:03

    And for all the disruption caused by the selective go-slows in the public sector, the actions never matched the doom-laden rhetoric of the union leadership.

    Not a “go-slow”, but a work-to-rule. There is a very big difference.

    And the union leadership bent over backwards to avoid provoking confrontation withe the government in the past two years. I know that McLoone (i) presently has a vote of no confidence hanging over him and (ii) is due to retire later this year, so the supine union leaders of recent years shouldn’t be taken as a given if this deal turns out to be a turkey.

  4. # Comment by EddieL Apr 2nd, 2010 09:04

    Up all night to come up with the worst deal possible for the unions. I think they stayed up all night once too often!

  5. # Comment by John McDermott Apr 3rd, 2010 13:04

    My feeling is that Fianna Fail have bought themselves some votes for the next election.The public service unions must be relieved that they will not be specifically targeted for more pay cuts, as Lenehan turns the screw further during the next few years.
    Expect property and water charges and any other kind of stealth tax, Fianna Fail can dream up.
    The stealth taxes will continue to impinge on the lower paid;They may target VHI members.they will affect those unfortunates with no private health insurance.Ditto the unemployed.
    Importantly they will not insist on a cull of income of civil servants or quangoists, such as would be the case if the IMF arrived to lay down the law.
    Many Fianna Fail votes are still safe.The postponed reforms may- as P ONeill indicates- make the next coalition government a short lived one.
    The petty bickering of the two principal conservative parties will ensure that there will be no national unity government, to present a common front to the unpalatable pain which is yet to come.
    Once again the civil servants have been bought-this time with borrowed money!

  6. # Comment by EWI Apr 3rd, 2010 16:04

    Importantly they will not insist on a cull of income of civil servants or quangoists, such as would be the case if the IMF arrived to lay down the law.

    You may care to note that the “quangoists”, as you call them, are all FF and GP party members.

    The petty bickering of the two principal conservative parties will ensure that there will be no national unity government, to present a common front to the unpalatable pain which is yet to come.

    Pity that there’s no alternative to conservative politics here, isn’t it?

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