The report of the Public Service Pay Commission published yesterday sets out the basis for serious negotiations between the Government and the public service unions about a successor to the Lansdowne Road Agreement.
One of the reasons the State was able to work its way back from the brink of financial ruin was the maintenance of industrial peace through the worst years of the crisis. The bulk of the trade union movement and successive governments deserve credit for putting sectoral interests aside in pursuit of the common good. It is to be hoped that a similar spirit will prevail in the next round of talks.
The commisison’s report should be helpful in establishing a base line for the negotiators and it should also inform the public debate. Expectations of a complete restoration of the various pay and pension cuts implemented under the Financial Emergency Measures in the Public Interest (Fempi) legislation have been encouraged by strong economic growth. Such expectations are overly optimistic given the negative impact of Brexit in the years ahead. The slowdown in tax revenue this year could be an early warning sign.
There are strong arguments for continuing prudence in the approach to public service pay which accounts for 35 per cent of all government spending. Two issues in particular need to be taken into account. One is the higher rates of pay for middle and lower ranking public servants relative to the private sector and the other is the value of public service pensions for those employed before 2013.
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The commission found that public servants employed before 2013 hold a distinct pensions advantage over their private sector counterparts. This is particularly the case for those like gardaí, army officers and TDs who are in fast accrual schemes which allow them to retire on full pension after considerably less than 40 years service. The commission suggested that the current pension levy should form part of the negotiations with the implication that it might be retained in some form to bring contribution levels for public servants close to those that apply in the private sector.
Crucially, the commission accepted the need to maintain sustainable national finances and competitiveness as well as acknowledging that the Government has other spending priorities. It also referred to the importance of the public service reform agenda, linking future pay rises to continuous improvements in productivity.
Minister for Public Expenditure and Reform Paschal Donohoe welcomed the commission's acceptance of the risks to the fiscal and economic environment in considering how best to unwind Fempi legislation and the State's ability to pay. It is expected that the talks will begin before the end of this month. Hopefully the commission's report will have laid the foundation for a successful outcome. But a sense of realism will be crucial.