Comment: Great expectations weigh heavily on pay debate

The public sector is demanding its pound of flesh for recession

The 2016 Industrial Relations News annual conference in UCD last week was entitled ‘Great Expectations’.

That was appropriate, because public-sector employees want their pound of flesh and they want it now.

The general secretary of the Public Services Executive Union, Tom Geraghty, said the public sector had “borne a disproportionate share of the fiscal adjustment” since the recession.

His members “feel dumped upon, betrayed”.

Public service union leaders are under pressure from the ranks to break out of the binds imposed by the three post-crisis public-pay agreements: Croke Park, Haddington Road, and Lansdowne Road.

The pressure to restore the pre-financial emergency status quo is considerable.

But this sense of having been unfairly targeted is not fully grounded in reality.

After all, a quarter of a million people lost their jobs, the great majority of them in the private sector.

Countless more swallowed pay cuts, and lost bonuses and overtime. Thousands of businesses went under.

But the sense of grievance among public servants is real, and many frontline public servants and managers have been forced to deliver much greater output, on a per-capita basis, while absorbing cuts under the FEMPI (financial emergency) Act.

Younger public servants find themselves on less beneficial contracts, yet are faced with boom-time housing costs.

The big question is whether there exists sufficient ‘fiscal space’ for the demands to be met in full, or at least in large part.

First, there is the question of just how deep, widespread, and sustainable is the recovery. The level of recorded economic growth in Ireland, on the surface, at least, appears little short of spectacular. However, as always, Irish economic data needs to be taken with a few large sprinklings of salt.

While the recovery is spreading, Irish output statistics have benefitted from the equivalent of several Botox injections, arising from a rebound in the country’s pharmaceutical sector, which accounts for a disproportionate share of recorded activity.

There is always a large swing-door element to the pharma data, with large financial transfers overseas coming hot on the heels of income generation in Ireland.

Then, of course, there is the darkening, global economic outlook. Mr Draghi’s latest actions suggest that the eurozone’s top policymakers are more than a little concerned.

While Mr Geraghty believes that current public-pay arrangements cannot last if the recovery is sustained, he appears to accept that this is by no means a given. But does his membership, and that of other unions, operate on this basis?

There are other factors pointing to a narrower pathway towards full pay recovery. There is growing evidence that the appalling state of many A&E departments, and the cumulative effect of cutbacks across health and education, are impacting on the ability of these organisations to attract and retain key staff. One young academic expressed the view, privately, that too much emphasis is being placed in the media on pay concerns. In his view, high pupil-teacher ratios are driving some colleagues to exit the country in search of opportunities overseas.

Already, there is an acute shortage of IT expertise at third-level, and, indeed, across much of the public sector, a shortage exacerbated by soaring demand for technology skills.

Academics are being driven to distraction, in some cases, by in-house computer systems which are no longer fit-for-purpose.

Frustration among medics, at the lack of decision-making powers and at a general lack of planning, could be another reason why Ireland is suffering from a flight of talent.

These shortcomings cannot be redressed without large infusions of cash, though there is surely scope for greater efficiencies, born of imagination, as well.

Low morale is not linked simply to low pay. Some unions have cottoned on to this. The trade unions, in turn, need to take on board some realities. Arguably, the most pressing relates to the handling of its younger membership, a group that has borne the brunt of the post-2008 readjustment in pay and conditions.

One trade unionist frankly conceded that the movement gives more attention to the needs of senior members, who are much more likely to vote in elections than their younger counterparts.

However, if the unions wish to remain relevant in the 21st century, this imbalance needs to be addressed.

At the other end of the scale, there is evidence of growing difficulty in filling key posts at the top of the public sector.

Many are, it seems, being put off by the growth in accountability, and by the pressure to be out there explaining their decisions at sometimes hostile public fora. Viewed in this light, the situation in the private sector, when it comes to pay-bargaining, appears to be calmer.

A survey by IRN and the CIPD states that 54% of firms increased pay in 2015, as against just 45% who planned to do so. However, the actual increase in basic pay was a relatively modest 2.7%, while almost half of those paying the increase linked it to higher profits and/or improved performance.

This year, 50% plan another increase, with 23% looking to maintain the status quo, and 23% having made no decision.

The average increase planned is 2.8% — ranging from 4.3%, in the case of SMEs employing 50 or under, to just 2.5% in the case of larger firms. One speaker, Brendan McGinty, a former head of IR at Ibec, said that he had “an intake of breath” when he heard about the findings, adding that it represents “a considerable leap from where we have been.”

While the survey sample is quite large, there are always question marks over how reflective it is of what is happening on the ground.

The recent crisis at the Cadburys plant, in Coolock, in north Dublin, also serves as a reminder that plenty of manufacturers and companies are experiencing the full impact of low-cost competition from overseas, and survival, not enjoyment of the fruits of recovery, is the issue.