Daniel McConnell: The Cabinet is divided, but Michael McGrath is keen to get a public sector pay deal

Minister for Finance Paschal Donohoe and Minister for Public Expenditure and Reform, Michael McGrath, at the media briefing on the July Jobs Stimulus in the Government Press Centre, Government Buildings. Picture: Julien Behal

With the Dáil returning early and the summer cut short, attention is already turning towards the budget in October and the other major issue facing the Government — what to do with public sector pay.

After a story appeared on the front page of the Irish Examiner in May which made clear that some minsters were not comfortable with the idea of continuing to grant pay increases to public sector workers at a time of a pandemic, Labour leader Alan Kelly picked up the scent.

He called on then taoiseach Leo Varadkar and Micheál Martin for their thoughts, and quickly thereafter came a statement committing both parties to paying the final 2% pay increases due in October under the current pay deal which is about to expire.

That was a €400m promise.

A change of Government has since ensued and no longer is Paschal Donohoe the sole man in Finance. Fianna Fáil’s Michael McGrath now has responsibility for navigating the troubled waters. 

It is clear that some Cabinet members have concerns about entering a new deal. They are worried about another deeply divisive debate emerging about the haves in the public sector and the have nots in the private sector at a time of deep recession.

It was one of the more painful and bitter legacies of the 2008-2012 crash.

The decision to enter into the Croke Park deal divided Brian Cowen, who favoured it, and his then finance minister Brian Lenihan who most certainly did not.

Mr McGrath, speaking to me this weekend, makes clear that he would prefer a deal.

“I believe the aim should be to agree a new public service pay deal if it is possible to do so. I don't for a moment underestimate the challenge in agreeing a new deal given the really difficult economic circumstances we are in as a result of the impact of the virus,” he said.

2010: Former Fianna Fail leader Brian Cowen with then Minister for Finance Brian Lenihan outside Government Buildings. Photo: Leon Farrell/RollingNews.ied

Acknowledging the changed circumstances in which the country finds itself, Mr McGrath knows he has some convincing to do as to the merits of such a deal, even among his own colleagues around the Cabinet table.

He believes that the certainty of a public sector pay deal is better than a free-for-all that would occur in its absence.

The threat of industrial unrest from public sector unions and their members is the major fear of any government, especially when the country has suffered such an economic reversal.

And Michael McGrath, like Brian Cowen before him, says some certainty is better than none.

“I also believe the certainty and stability that a new deal on public sector pay would bring could be an important ingredient in the recovery of our economy,” Mr McGrath said.

But real dangers do exist, and the concerns expressed by Mr McGrath’s colleagues are legitimate.

The potential for re-opening that public v private divide is real, and such bitterness is never far from the surface. Mr McGrath has good reason to see the danger that lies ahead and no course offers a trouble-free way through.