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