Public sector pay talks: Link deal to work reform and pensions

PUBLIC sector pay talks open this week and the unions hope to reverse some of the pay cuts, reforms, and pension levies forced upon us all.

This subject has become so divisive, so very angry, that it is almost impossible to have a rational, evidence-based discussion on the issue.

Despite that, the outcome of this high-wire auction will influence how very many people vote in the looming election.

This reality weighs heavily on the mind of Government, especially as their quandry will be exploited by their opponents. Basically, the talks are a political and social minefield, an economic one too, especially as there are so very few precedents that satisfied all stakeholders.

The fact that we still borrow something just short of €10bn a year to run this country must have, or at least it should have, a huge bearing.

That so many social services are well below acceptable standards imposes demands on the public purse that may preclude the kind of pay rises expected by some public servants.

That the counting-unhatched-chickens recovery is still so concentrated and tentative must be recognised too.

The sense of entitlement expressed by some public sector unions and employees — this is especially vitrolic online — is matched by the sense of injustice and outrage felt by some of their counterparts in the private sector at the prospect of a return to the kind of insider deals that saw public sector pay and pensions bill rise by 59% between 2001 and 2006.

This period was so very rewarding for public servants that the pay talks — and the benchmarking fiasco — were described as an ATM. In slightly different circumstance that process partially provoked the phrase “economic treason”.

It would be dishonest and unfair, though, not to recognise that some private sector workers have enjoyed pay rises but they are by far in the minority and concentrated in certain sectors.

It would be socially dishonest not to recognise that lower-paid public servants, and some new recruits to the public sector, have had a particularly grim few years. No-one could object to measures to improve their situation.

However, pensions remain sensitive and terribly divisive. The public sector scheme has been changed for new recruits.

Their pension will be based on average career salary, but the majority of established public servants can expect a pension based on end-of-career salary.

The OECD has argued that pension rules covering entrants should be introduced for existing staff. This would mean established public servants hold on to what they have paid for but that, in future, accrued entitlements would be covered by the new regime.

However, it is expected that the pension levy will be cut to boost wages without any talk of pension reform.

This can only exacerbate an already fraught situation where one set of workers enjoy protections and rewards unimaginable for so many of their private sector counterparts. The talks will highlight the gap between what the unions want and what is affordable.

The Government should represent the interests of all citizens and insist that pay increases be linked to reform, not restoration. How else will real change come about?

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