‘Perfect storm’ on pay could derail budget

Finance Minister Paschal Donohoe is facing into a “perfect storm” of pay demands from teachers, doctors and nurses, which is threatening to derail his €3.2bn giveaway budget in October.

‘Perfect storm’ on pay could derail budget

Despite the express wish of some ministers for the pay of new entrant teachers to be restored, the Department of Finance is holding a hard line, saying “no side deals” will occur.

Government sources, speaking to the Irish Examiner, have said that a complex public sector pay deal, which is less than a year old, cannot and will not be re-opened and there will be no exceleration of the agreed rate of pay restoration.

Such a refusal to bend has heightened the chances of an autumn election with one minister saying he and his colleagues are already on “a war footing” and readying to face the people.

Mr Donohoe is facing increased opposition from unions and from some of his fellow ministers to his hard line.

Speaking yesterday, Disabilities Minister Finian McGrath said the restoration of pay will be a priority issue for him in the next budget and that he will be speaking to Mr Donohoe about this next Wednesday.

“They have gone 75% of the way on pay restoration and I think we need to make this a priority issue,” he said.

“I had young teachers into my clinic a few weeks ago and they were very strong, they want fairness, they want to be able to afford to rent and want to have pay restored.”

Mr McGrath said he had never supported the “two-tier system”, adding” “Paschal would be aware of my view.”

Asked if he would withdraw support of a budget on the basis of a lack of progress, Mr McGrath said: “If there isn’t major progress on this, it’s something that I would have to look at.”

However, Mr Donohoe and his department are insistant that there can be no revision of the national pay deal that was signed last year.

“The unions had the chance to make new entrants pay a core demand last year, they didn’t. They had the choice to fix that issue, they didn’t. It is a bit rich for them to be squealing about it now,” said one senior Government figure.

The Government is also under fire from opposition TDs to restore the austerity cuts.

Social Democrats co-leader Róisín Shortall called on the Government to wake up to the crisis in general practice and set out a timetable to reverse austerity cuts which are harming GP practices and patients.

“The Government must wake up to the impact on patients and GPs alike of the austerity cuts which are having a massively damaging effect on medical practices up and down the country,” she said.

“As yet, the Government has not provided any definite reassurance about the timescale for reversing these cuts and this is urgently required.”

In a speech in Dublin yesterday, Mr McGrath warned that progress on pay restoration may be jeopardised given the increased chances of an early election this year.

He said it is now clear that Fianna Fáil are preparing for a general election, especially after the reshuffle of their frontbench and the appointment of Dara Calleary as deputy leader.

“They seem to be on a war footing, but the reality is we are also on a war footing,” he said.

However, he warned that it would be detrimental to bring down a government or to call an election in the coming months.

“I would be of the clear position that it would be absolute madness,” said Mr McGrath.

“Fianna Fáil would find themselves in a bad position if they call an election.”

The “vast majority” of people he speaks to are not in favour of holding a general election at this point, he added.

Mr McGrath encouraged Fianna Fáil to stick to their three-budget confidence and supply agreement.

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