Public service pay talks to 'intensify' in next fortnight

Michael McGrath, the public expenditure minister, says negotiations will be 'difficult' given the backdrop of very high inflation. Picture: Damien Storan

Talks aimed at finalising a new public service pay agreement are expected to “intensify” over the next fortnight as the Government seeks to nail a deal down in advance of the next budget.

Wednesday morning saw the first formal discussions between unions and the Department of Public Expenditure and Reform (DPER) after weeks of shadow boxing about what shape a new deal would take.

The first day of talks between the sides at the Workplace Relations Commission were held amid the ongoing cost of living crisis – a fact highlighted by both the Government and unions as likely to be the key variable in any deal.

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While little substantive progress was made on Wednesday, sources close to the deliberations suggested that pay issues, as opposed to sectoral matters or working conditions, will be the focus of the deliberations.

“It’s kicked off and the talks will intensify if not next week, then the week after,” a source close to the discussion said. 

It’s likely to be more rapid than in previous years – we're dealing with a very tight package at the moment

Government preference is believed to be for an extension of the current Building Momentum deal, which was agreed on a short-term basis in December 2020 at the height of the pandemic.

Fórsa general secretary Kevin Callinan: At the union’s conference in Killarney in May, Mr Callinan moved a motion, which passed unanimously, that tackling the cost-of-living challenges would be its number one priority. Picture: Maxwewlls

Michael McGrath, the public expenditure minister, has previously signalled his willingness to address the cost-of living-issue, stating that “we are prepared to go beyond the pay terms of the current agreement”, albeit with any increase “balanced against the risk of doing any long-term damage to the economy”.

On Wednesday, Mr McGrath said the negotiations would be “difficult” given the backdrop of very high inflation.

"Renewed global economic uncertainty and many pressures on the expenditure side mean we have to strike the right balance and achieve a deal that is fair and affordable to both taxpayers generally and the public servants who we employ and who are represented by the unions"

A DPER spokesperson described Wednesday's talks as “ongoing exploratory discussions between the parties” regarding Building Momentum.

Inflation

It has long been acknowledged by both sides that the inflationary pressures being seen globally far outstrip anything that had been allowed for within the old agreement, rendering a rapid conclusion to the pay talks all the more desirable.

While some members of Fórsa, the country’s largest public sector union, have advocated for pay hikes of more than 10% in any new deal, neither side has been willing to commit to the size of an increase likely to be agreed.

At the union’s conference in Killarney in May, Fórsa general secretary Kevin Callinan moved a motion, which passed unanimously, that tackling the cost-of-living challenges would be its number one priority going forward, something he said the union would pursue “with a single-minded determination”.

Building Momentum had factored in pay hikes of 0.25% across 2021, with inflation for the year standing at 2.4%. That figure is currently more than 6% and rising, far outstripping previous EU predictions for Irish inflation across 2022, which had stressed 4.6% as the likely peak.

The next round of talks at the WRC are now slated for June 10.