Easter could see another rising

Pay will dominate the union agenda as conference season nears, writes Kyran Fitzgerald

WE ARE heading into the union conference season — a period which many top officials tend to dread, the moment when they come face-to-face with the people who pay their salaries.

This year, the public sector membership, in particular, is likely to be in particularly frisky form.

Put simply, they want their old pay levels fully restored the very minute the Haddington Road Agreement runs its course in 2016, if not before.

The Government has been talking up the economy in recent months and there are indeed some ‘green shoots’ beginning to emerge — more fellows in white vans, house prices and rents on the up, crowded restaurants, at least in the more prosperous parts of Dublin.

Ahead of the local elections, ministers have been dangling the prospect of tax cuts. But some in the Cabinet are clearly concerned that we may be getting ahead of ourselves, concerned that expectations are being fanned beyond acceptable levels.

Enterprise Minister Richard Bruton spoke last Thursday at the annual IRN conference, going out of his way to point out that we are still only part of the way through a “very difficult transition”.

“In no way are we through this (the economic crisis). The transition will be continuing in three to four years’ time. There is no silver bullet.”

The job of restoring employment to pre-crisis levels will require a thousand different activation measures, he added.

Certainly, the ‘hit’ taken by public sector workers has been considerable. Some interesting data was provided by Oonagh Buckley, head of pay and pensions at the Department of Public Expenditure and Reform.

Since a peak in 2008, the total Exchequer pay bill has fallen from just over €20bn to just under €16.5bn as measures under the Financial Emergency Measures in the Public Interest Acts have taken effect.

It is worth noting that the total pay bill in 2004 was €13.92bn, so despite the cutbacks, the public pay outlay is still higher than it was a decade ago.

At the same time, the annual public pensions bill rose from €1.12bn in 2004 to €2.56bn in 2009 and €3.1bn in 2012 before falling back in €2.87bn as reductions came into effect.

Pay rates have also fallen considerably from their peak. One of the hardest hit is the Taoiseach — pay to this office holder is down from €285,000 to €168,000.

An assistant principal offer has seen their remuneration drop by 19% to €72,700 while that of an ordinary official is down 10% to €35,357.

Numbers employed are down, over six years, by 21,000 to 289,000 in 2014, though still slightly ahead of where they were in 2004, when they catered for a smaller overall population.

Restoring total pay and numbers to 2008 levels would cost north of €4bn and extending those increases to pensioners would add hundreds of millions more to an already burgeoning bill.

Private sector interests point out that many in business have been all but wiped out in the recession, while private pension pots have been battered out of recognition.

They contend public servants should be more than happy to have pretty reasonable, if no longer completely iron-clad job security, together with the promise of defined benefit pensions (now as rare as hen’s teeth in private industry).

Ibec and, one suspects, the IDA are pressing for tax cuts aimed at raising the point at which people enter the top tax rate in this country (around €32,000 to €33,000 in many cases).

The argument is that people, particularly young single people with portable skills, are in increasing demand around the globe.

It makes little sense for Ireland to market itself as a location for high-skills jobs if its tax rates are way out of line with those in competitor countries.

Some unions have a decent share of higher-paid members, but lower-paid public servants faced with rising rent bills and crippling boom-era mortgages are not buying into this proposition, For them, restoration is the name of the game. Managing this process will not be easy.

The generally pragmatic INTO general secretary Sheila Nunan has made it clear that pay restoration is critical. Time is not on people’s side, however.

The Haddington Road Agreement is due to conclude in July 2016 — this means that changes to pay rates will be rooted in the budget due in October 2015. Discussions between the parties will be going down to the wire next summer and if some kind of agreement cannot be cobbled together, then get ready for another Easter Rising in 2016.!

In the private sector, “the train has already left the station,” according to senior SIPTU official Gerry McCormack, who pointed out that his union has completed around 200 pay agreements since 2010 involving modest, but real increases.

IN reality, significant segments of the economy have survived the recession intact and across a wider span of workplaces, a sense of recovery is in the air.

Michael McDonnell, managing director of CIPD in Ireland, the body representing HR professionals, has released the results of a jobs and pay survey to which around 500 firms of differing sizes responded.

According to Mr McDonnell, just over 40% of companies expect to increase employment in 2014 with another 35% holding employment at current levels; 13.5% expect to shed jobs, with the remainder not having made that decision.

Last year, 35% said they increased their pay, with 60% maintaining existing levels and 5% cutting back.

The average increase recorded by 211 firms handing out rises was 2.9% — hardly inflation-busting but a rise in real terms.

This year just over 40% are planning an increase averaging 2.5% while just eight firms expect to squeeze pay packets further.

Interestingly, 61% of firms do not recognise a trade union, but among the 39% who do, there is a higher concentration among larger firms. The message is clear. Out in the private sector, partnership approaches are definitely being pursued despite high-profile difficulties between workers and management in firms such as Liebherr and the now departing Lufthansa Technic.

The main area of unresolved conflict is pensions. The feeling among employees and former employees, ‘deferred members’ that their accrued pension rights are being undermined is clearly a major theme in Irish industrial relations.

In this regard, it is interesting that Transport Minister Leo Varadkar chose to criticise Aer Lingus for its decision to take personal proceedings against SIPTU official Dermot O’Loughlin, seeking compensation for business lost in the run-up to the threatened St Patrick’s weekend strike.

At the IRN conference, there was little evidence of clamour for a return to the days of national-level social partnership.

In a thoughtful address, former general secretary of the Congress of Trade Unions, Peter Cassells argued that while some form of pay and incomes policy is to be desired, he would not advocate a return to social partnership. He favours partnership “when it is actually creating change”.

He favours the establishment of a forum where the parties could come together to develop a shared understanding of the challenges.

In his view, a degree of complacency grew up around the social partnership model around 1997. Partnership was at its most productive from 1987 to 1999 when unions and management got together to trade off pay discipline for tax cuts and job creation. Now, the room for manoeuvre is more limited.

Mr Cassells believes employers and unions must work together to regain public trust and he considers that people will not chase pay increases that may undermine their own jobs. The problem is that among the lower paid in the public sector, the imperative to seek restoration of pay may trump all other considerations. If this is followed by industrial unrest, it may lead to public alienation and pressure to outsource services. There are those in the departments of Finance and Public Expenditure and Reform who may be happy with such an outcome.