Not much room to manoeuvre

Like a state opening of parliament yesterday’s plenary meeting of the parties to the Croke Park agreement was more ceremonious than substantive.

It allowed the Minister for Public Expenditure and Reform Brendan Howlin make a speech from the throne by way of circulating an agenda for talks. After what one trade union leader described as the shock and awe of “Blitzkrieg Brendan’s” opening statement, the real business starts today.

The Government’s overriding priority is exiting the current bailout programme. If successful, we couldre-establish the degree of economic sovereignty possible for a small economy within the EU. Extending the Croke Park agreement and securing a further €1bn in savings over three years is one step to achieving an end to our dependency on the troika.

So too is securing agreement on our bank debt, beginning with the payment of the promissory note payable on the back of the Anglo Irish Bank debacle and due in March.

That is about when the Government hopes that there will be a Croke Park extension, which has to be voted on by public servants.

The Government has bet its bottom dollar on achieving a deal on the €3bn promissory note. In opening talks now for an extension of Croke Park, not to be confused with a Croke Park 2, it has politically rolled the dice in a game of double or quits.

Either we get an extra billion out of a Croke Park extension, and we get a bank deal, so that we can sustainably fund our still large deficit on the open financial markets or we can’t. If we can’t, it will not only be an Armageddon for the Government, it will mean a second bailout agreement for Ireland.

Lest you imagine that is fanciful remember that Leo Varadkar was once so indiscreet as to publicly speculate on it being a possibility.

A second bailout would mean that what the parties to the Croke Park agreement think about anything is of limited importance. Mostly their opinion will be given to them by the troika in return for the loans that will pay the salaries and pensions that keep the system going. It’s a system called put up or shut up.

Today talks begin in earnest in what the Government hopes is one arm of a grand bargain. It will secure major further savings for the exchequer at home and significant relief from abroad on our debts arising from the banking fiasco.

In politics timing is everything. And the coincidence of the timing of the two issues is that failure by the Government to deliver promised expectations on the promissory note would likely make securing an extension to Croke Park much more difficult. On the other hand if a deal, or the semblance of one, can be done on bank debt a Croke Park extension can be portrayed as the last major step, bar a couple of hairshirt budgets, between here and Nirvana.

The obstacles to a Croke Park extension are, however, significant. It is, if at all, an “extension” because it is premised on the construct of the original. This includes no compulsory redundancies and no cuts in core pay.

Of course this is a negotiating chimera as these are precisely the objectives of the Government side.

Union members in the public service may be well short of having what it takes to man a barricade but they are deeply disgruntled. The great mass at the lower ranks feel at best badly led and at worse betrayed by the officer corp. Those at the top haven’ttaken the degree of pain felt down the ranks.

The deal done with assistant secretaries by the previous government in Dec 2009 that allowed them massage a 12% pay cut down to 3% by claiming performances bonuses as core pay, deeply rankles.

Contrary to the impression one might garner these talks are effectively led and managed by senior civil servants and not ministers.

Mr Howlin may have opened the show and he is certainly in charge of it. But the detailed sectoral negotiations are conducted on his behalf by the officials perceived by the rank and file to have suffered least. As those down the ranks see it, senior grades judge and advocate in their own case.

This alienation is accentuated by a view in some quarters that a budget levy on those earning over €100,000 was aborted because those in the room making the decisions would have been most affected. In fact, the latter was a political decision.

But if much is made of the public/ private sector divide, the success or failure of these talks will rest on the capacity to bridge a divide within the ranks of public servants that is as wide and getting wider.

Going into the real business today there is talk of cuts to core pay for higher earners, increments and bonus payments as well as additional working hours. The latter would reduce the hourly rates of pay and reduce overtime.

While all of these are as laudatory as they will be difficult, there are only two ways of coming within an ass’s roar of a billion euro. One is to reduce the headcount and the other is to reduce pay across the board.

However, crowd pleasing it may be to reduce pay at the top it won’t deliver enough money. If reducing core pay is difficult the only mechanism available to achieving the same end is to increase the public service pension levy. Compulsory redundancies must surely be the ultimate red line for public service unions. In that context cutting the headcount and doing it strategically will be extraordinarily difficult, if not impossible.

Ultimately a deal will come down to a call by union leaders as to whether they want a deal and if they can sell it to their members. The answer to the first question is probably yes. The answer to the second is that I don’t know. However, if public servants walk out of the tent it will be their first unsupervised safari in a generation.