Public pay could undermine the major gains since 2011

Enda Kenny does not want to be remembered as the Taoiseach who presided over an economic recovery but who then went on to undermine the economy by striking an agreement that will burden all of us for a long time to come, writes Paul Mills

We know the plans of Enda Kenny to step down as leader of Fine Gael and as Taoiseach. What we also know is that he does not want to be remembered as the Taoiseach who presided over an economic recovery but who then went on to undermine the economy by striking an agreement that will burden all of us for a long time to come.

As we now all know or believe, the collapse of our economy had many fathers, some international and some home grown, some unavoidable and some entirely avoidable.

The most avoidable features of the disaster were the Government’s overt support for bankers, builders and developers. The benchmarking process that helped make our public servants among the most highly paid in Europe, if not the world, also played a big part. Their pay, terms of employment, security and pensions are still envied by their private sector colleagues.

Supposedly we could afford to pay those pay rates given the considerable stamp duty and Vat receipts flooding into the exchequer.

Unfortunately, the terms of the Lansdowne Agreement are coming to an end in the not too distant future. The unions are adamant that a renegotiation should happen long before the sell-by date. The unions’ view is simple: They want pay restored to the levels that were before austerity and many of them also want more.

Fortunately, as it turned out, this and the previous Coalition stuck largely to the belated policies of the last Fianna Fáil Government to ensure we avoided an even deeper crisis. However, as politicians do, Mr Kenny and his colleagues, to gain electoral support, have overstated the upswing. The unions have clambered to get back on the gravy train.

The gardaí faced down the Government and unfortunately for taxpayers, the Government rolled over and asked for its tummy to be tickled. The unions were emboldened further. Unfortunately for the folk who have to pick up the tab, the unions naturally want to maximise pay and improve terms and conditions while at the same time resisting any increase in efficiency.

With an election forever just looming around the corner, the Government cannot be relied on to hold the line. The Government established the Public Service Pay Commission to help establish future pay policy and comparative pay levels. Given that Government has jumped the gun by encouraging the unions to believe that there is plenty of money to go around, the commission’s findings will probably be of no value to anyone.

Setting up the commission might have seemed like a good idea to bring some rigour to comparisons between private and public sector salaries. After all, the last thing we really want to do is to create even greater divisions between the private and public sectors, while at the same time undermining an economy that people have paid heavily to put right.

During the dark days of austerity, governments cut a deal to secure pay cuts from public sector workers. Part of that deal was to reduce the pay of new entrants to various roles in the public sector. In effect, it meant that staff doing the same job and delivering the same results were paid different rates. This was meant to be a temporary measure.

Younger workers were to be left behind in any new public sector pay deal on the basis that there was no problem in hiring people for entry-level positions even with the current reduced entry level salaries. These are some of the problems that can be fixed but not at the cost of threatening the economy.