Public sector pay talks will fail if the Government does not fully address the challenges posed by inflation this year, the ICTU president has warned.
Formal negotiations began on Monday and will continue on Thursday, and while Tánaiste Leo Varadkar said after the Cabinet met on Tuesday that he is “optimistic” the talks will succeed, ICTU representatives have warned members this afternoon that negotiating an extension of the existing deal will be “impossible” if the issue of inflation is not addressed.
Kevin Callinan, chairman of the ICTU Public Services Committee, wrote to members on Tuesday and said that “while no figures have yet been tabled by either side in the public service talks, the real-term shortfall between the modest pay increases in the current agreement and current living costs is substantial and could yet grow”.
“In 2021, the gap between annualised Building Momentum increases and annualised inflation was 2.15 per cent. If inflation averages 7 per cent this year — and it could be higher — the 2022 gap would be 6.75 per cent.”
He confirmed that while members of the committee had agreed at the Government’s request “to discuss an extension of Building Momentum into 2023, we have been equally clear that this cannot be a substitute for addressing the 2021-2022 living standards deficit”.
“The current talks will fail if this deficit is not adequately addressed. We are working in good faith to avoid such an outcome, which would fundamentally destabilise Building Momentum and make impossible an extension of the agreement into 2023.”
He said the talks were focused on “addressing the deficit between the modest pay increases set out in the Building Momentum agreement and the current shortfall in living standards caused by unexpectedly high and persistent inflation”.
This led to unions triggering the review clause which paved the way for the formal talks.
He said the talks are also focused on extending the existing pay agreement into 2023.
“This was tabled by the Department of Public Expenditure and Reform after the Minister indicated that the Government wanted certainty over the public service pay bill at a time of economic and geopolitical volatility. For this reason, the Minister has said that he would prefer to conclude an agreement in advance of October’s Budget.”
Mr Callinan said the committee officers have indicated “a willingness to try to achieve this, though we have said that the timetable for negotiations and ballots is challenging”.
On Tuesday, The Irish Times reported that the Coalition is braced for demands for substantial pay increases across the public sector, but may support smaller increases alongside greater State supports to tackle inflation.
Government sources say they expect unions to seek substantial pay increases to match inflation, which is at a 38-year high. One source said they believe a “landing zone” can be found which may involve a lower pay-increase figure but concessions on the “social wage”, which is State spending on welfare supports and public services. This could involve measures to reduce the cost of childcare, healthcare and education through the next budget.
In his update to members, Mr Callinan said that the current talks taking place at the Workplace Relations Commission are not discussing wider cost-of-living measures or tax and benefit changes, and that these would be discussed in a separate process involving Ictu, Ibec and the Government in the Labour-Employer Economic Forum (LEEF).
“We have received an explicit acceptance from the Government side that the current public service talks are entirely separate from the LEEF process, where little concrete progress has so far been made. Ictu intends to table specific proposals in the coming days, and the Government and employer response will give us a more informed sense of whether there is any potential to reach agreement on an improved ‘social wage’ in the short and/or medium term.
“The Ictu position is that improvements to the social wage will require increased short-term and medium-term spending in areas like health, education, childcare, housing and public transport. We do not believe that significant cuts in tax are compatible with this, and congress is not in any negotiations about tax cuts.”
All parties are due to meet again on Thursday. Under the current agreement public sector workers received a 1 per cent pay increase last year, with a further 1 per cent due in October. The deal is due to expire at the end of this year.
