Key decisions on public sector facing Government and unions

ANALYSIS: Public sector reform is based on a "more for less" principle at a time of increasing demand on services

IN A speech to the Irish Congress of Trade Unions conference in Tralee last month, Brian Cowen spelled out that the principle behind the Government’s proposals for public sector reform was that more would have to be delivered with less.

He said that with expenditure constrained, the Government would have to go about improving public services through radical change.

What the Taoiseach did not say, and what the Government will have to decide when it returns after the summer break, is precisely how it wants this to be achieved.

However, it is quite clear, and has been even before the McCarthy report, that one key element in the future will be significantly fewer people on the State payroll than the 300,000 or so there at the moment.

Under the proposals put forward by Colm McCarthy’s group, over 17,000 posts would be eliminated. But even before formally deciding on the implementation of the report, the Government has already started reducing public sector numbers through the moratorium on employment introduced at the end of March and by incentivised early retirement and career break schemes introduced at the start of the summer. If levels of services for the public are to be maintained it will inevitably involve significant levels of change for the staff who remain.

Traditionally, the provision of additional money has been the grease on the wheels of change in the public sector.

However, on this occasion not only is this not on offer but the possibility or real prospect – depending on who you talk to – of further reductions in take-home pay for civil and public servants remains in the background.

The Review Body on Higher Remuneration is expected to report next month on its examination of top-level pay – which on this occasion will be based on international comparisons.

If this body recommends cuts in pay for top public servants – and in so doing, lowers the headroom or differential between their salary scales and those of the grades immediately below them – the pressure is likely to intensify for a wholesale review of pay levels in the public sector, a reverse benchmarking process, so to speak.

How the Government intends to achieve its more-for-less objectives remains to be seen in detail.

However, it seems certain that widespread redeployment and greater flexibility will be at the heart of this reform if services are to be maintained.

As senior trade union leaders have pointed out in recent months, unlike a private sector company that decides to shed staff because of falling demand, the Government is planning to cut personnel at a time when demands for some of its services such as social welfare and health are increasing.

In his speech in Tralee, the Taoiseach stressed “the need for flexibility, redeployment of resources to priority areas, mobility across organisational boundaries and best practice – and for an approach to change which is facilitated on a timely basis in the context of an agreed, time-bound approach to the industrial relations issues which arise”.

This declaration, in essence, summarised the content of a confidential draft Department of Finance memo revealed by The Irish Times in late June. This proposed a major redeployment of staff within Civil Service departments and, if necessary, between non- commercial State bodies and the Civil Service.

Under these proposals civil servants could be selected for compulsory redeployment on the basis of last-in first-out if there were insufficient volunteers to move from one department to another.

The memo also suggested that the Department of Finance would, having consulted other departments, determine appropriate numbers for each grade in that department. “Posts in excess of that number will be liable to be redeployed,” it said.

The cross-boundary movement mooted by the Taoiseach in Tralee could also mean the end of the traditional divisions between administrative civil servants, local authority workers and healthcare staff on the State payroll and the effective creation of a common public sector employee. All of these proposals for change are being closely watched by the powerful public sector trade unions.

The Taoiseach says he wants to work through the social partnership process. However, to date there has been silence on the proposal put forward by the largest public sector union, Impact, of a trade off between co-operation with flexibility in return for Government guarantees on pay, pensions (including the current tax-free status of retirement lump sums) and a framework for dealing with future employment levels.

In effect, the flexibility proposed by Impact would more than likely involve co-operation with redeployment proposals and greater productivity.

In the absence of any Government response to this proposed deal or any indication of how it wants to proceed, public sector unions have warned that they are prepared to resist the imposition of change.

At the same time, union leaders have been trying to prepare their members for change.

Asked at the MacGill summer school last month as to what this would mean, the general secretary of Impact Peter McLoone said: “Let me put it as starkly as I can. The initial challenge is to maintain services at the same level whilst reducing costs. Next, it requires us to improve and expand services, whilst continuing to reduce costs. Then, it demands that we better integrate services, again with fewer resources.”

Over the summer break both the Government and public sector unions know that key decisions on the nature of public sector reform and how this is to be achieved will have to be taken in the very near future.

The Government’s ultimate blueprint for change is likely to be influenced by a number of factors, including the take-up of the early retirement/career break schemes, its view of the McCarthy recommendations, the findings of the review body on top-level pay and even the Taxation Commission’s proposals on retirement lump sums.

The Taoiseach’s natural inclination would appear to be to seek to achieve change through negotiations with the social partners. However, whether this can succeed and change be implemented without serious strife in the public sector remains to be seen.

Martin Wall is Industry Correspondent of The Irish Times