Political class must resist all greedy pay calls

It wouldn’t be Easter week without it.

We awoke last Monday to the fresh demands for more pay from our beloved public sector unions.

Unions representing hundreds of thousands of State employees are set to press for a mid-term review of the current public-service agreement which could open the way to higher or accelerated pay increases for staff, came the reports.

The acting secretary of the public services committee of the Irish Congress of Trade Unions (ICTU), Kevin Callinan, suggested a mid-term review of the existing public service agreement could now be put in place. The €900m deal is scheduled to run until the end of next year, we were told.

Callinan said such a review would be one of a set of possible measures that could help maintain the confidence of union members in the current agreement in the wake of the nurses’ dispute.

Callinan said that since the accord was negotiated two years ago, the country had seen economic growth and inflation on a level that had not been anticipated at the time.

So, unions for the most privileged workers in our country — whose jobs are immune from redundancy, whose pensions are among the most generous on offer to anyone — want to re-open a deal on pay they agreed to less than two years ago.

Before you start, this is not another piece taking a bash at the unions or public sector worker but rather seeking to raise the concern of our feckless and weak political class to resist such greedy calls.

Because that is what they are, greedy.

Unions, who in truth are speaking out of both sides of their mouths, continuously cry foul over the inequality for newer members hired since 2011 yet forget they themselves agreed to the creation of the two-tier system as opposed to allowing current members take greater cuts.

That is not spin, that is a fact.

To now demand that the contracts they willingly signed up to be changed is the height of hypocrisy.

It is also worth remembering that since the public pay bill began to rise again in 2014, it has swallowed up more than half of the total increase in government expenditure, as economist Dan O’Brien has recorded.

The rate of growth in the public pay bill has far outstripped the rate of non-pay government spending. It has not done so by a small margin or even at twice the rate.

It has risen at a rate of more than three times that of other spending (to be precise, 12.6% versus 4%), O’Brien said in a recent analysis.

According to CSO figures, in the public sector including semi-state, the average weekly wage went up 2.4% from €936.29 to €959.09 in the past year to June 2018. There was also an increase in average weekly earnings in the private sector of 3.6%, from €659.48 to €683.12 over the same period.

Also, the Oireachtas Parliamentary Budgetary Office concluded in a recent paper that the increase in the cost of the public sector pay bill continued even after tax revenues in Ireland collapsed a decade ago as a result of pro-cyclical policies. More alarmingly, it says such risks still exist now.

This illustrates the risks that have arisen in the past from a pro-cyclical pay policy and may arise again, especially in the context of reliance on potentially volatile sources of revenue. This is particularly important as reductions in the public pay bill played a significant role in the budgetary adjustment required during the economic and fiscal crisis,” it concluded.

Since 2016, the unwinding of the financial emergency legislation commenced with the Lansdowne Road Agreement (2016-18) and will be completed under the Public Service Stability Agreement (2018-20).

Under the Lansdowne Road Agreement, which cost €844m, the principal pay measures were:

• From January 1, 2016, annualised salaries up to €24,000 were increased by 2.5%; and annualised salaries from €24,001 to €31,000 rose by 1%
• From September 1, 2017, annualised salaries up to €65,000 were increased by €1,000

The Public Service Stability Agreement (2018-20) extended the terms of the Lansdowne Road Agreement. By the end of 2020, pay will be restored to all public servants earning up to €70,000 which equates to almost 90% of public servants.

Any outstanding amounts to be restored for high earners will be made by ministerial order.

The bottom line is that the campaign for so-called pay restoration is the acquiescence of a weak and feeble political class to stare down the almighty lobby of the public sector unions.

The drive to restore boom-time pay levels is an exercise in folly and hubris and will not address inequality but will, in fact, do the opposite.

Dating back to the ill-judged and outrageous benchmarking process in 2002, pay for public sector workers has outpaced growth in the private sector as well as skyrocketing in simple cash terms.

To continue this process means that those who are paid least in our society will continue to pay for those who are among the best paid and best protected in Ireland.

Despite this inequity, the political class have not challenged it, preferring to bend the knee to the unions.

Last week, Finance Minister Paschal Donohoe gave an important shot across the bow of the unions, telling them clearly, in his diplomatic language, that they have never had it so good. “The pursuit of unaffordable and unsustainable wage increases, beyond what has already been committed to, has an all-too-familiar ring to it; one which should be of grave concern.”

He said public servants in general benefit from two forms of pay adjustments, incremental progression up a salary scale, and also general annual pay increases negotiated through pay agreements. “This contrasts to the private sector where pay has moved towards more individualised arrangements, where some do very well but many don’t,” Donohoe warned.

The public service is a progressive employer when we consider annual leave, flexible working and the facilitation of work-life balance — as is right. Also, how many employees in the private sector enjoy full salary top-up on maternity and paternity leave?

“Finally, public servants have security of tenure that generally doesn’t exist in the private sector,” said the minister.

His calls clearly are being ignored by unions who can smell blood from this weakened administration which has already kicked important money issues like property tax and third-level fees to the long grass.

Can Donohoe’s fine words be backed up with action from this Government and the Dáil? I fear not.

So, beware of the calls for equality as is perfectly clear when it comes to our cosseted public sector, they simply prefer to be more equal and remain more equal than the rest of us.