Failure to deliver €300m savings would represent climbdown by Government

The indications given yesterday by Minister of State Brian Hayes that the Government may not secure €300 million in savings it was seeking this year from the public service pay and pensions bill would represent a major climbdown if it comes to pass.

It would also beg the question where any shortfall would be made up.

Minister for Public Expenditure and Reform Brendan Howlin has consistently argued over recent months that the Government's budgetary arithmetic for this year is based on savings of €300 million being delivered on its pay and pensions bill.

Alternative proposals
As Mr Hayes set it out, the problem for the Government seems to be that some unions have now drawn up alternative proposals for making savings but some of these will not be realised in full until 2014 or 2015.

The Minister said the Government was still “rigidly sticking” to its target of generating €1 billion in savings on the pay and pensions bill by 2015, but indicated the figure for this year could slip a little.

Newspapers yesterday forecast actual savings in 2013 could be €250 million rather than the €300 million target set by the Government.

One of the main difficulties in assessing the scale of the savings is that no text has been published of the "agreements in principle" reached with various unions in talks at the Labour Relations Commission (LRC) over the last week or so. The only publicly-available information has come from bulletins issued by unions to their members.

However, what is certain is that some of the terms of these agreements in principle are far better that those on offer under the Croke Park II proposals rejected by union members last month.

For example, those earning between €65,000 and €100,000 would no longer face a three-year freeze on increments. Incremental pay increases would be paid, albeit after a six-month pause.

Similarly, gardaí and nurses would not see their premium payments for Sunday work reduced under the revised proposals. The Government has also agreed to a process with higher civil servants which could see bonus payments made to top-level personnel for their work during the EU presidency.

On the other side of the ledger, no figures have been published on precisely how much will be generated in additional savings from proposed changes to working practices to offset the cost of new concessions.

The fact that the LRC process is still under way – with engagement with teaching unions only commencing today – makes a precise estimate of the overall savings (and shortfall) very difficult to make.

Official position
The indications that the Government will now accept less than €300 million in savings this year – added to the range of concessions made over recent days – will also place in a difficult position those union leaders on the "yes" side of the Croke Park II debate who accepted the official position that there was no more on offer.

There have been fears raised that this would lead to leapfrogging claims for new concessions between different unions seeking to regain firm ground with their members.

With reports over the weekend of unhappiness among some Fine Gael backbenchers on the current negotiations with the unions, the Government, following any deal reached, should in the interest of transparency spell out the amount it expects to save in each part of the public service.