Two days of Luas strikes inconvenienced the public over the weekend and more industrial unrest is now threatened across the transport sector. With the economy growing at a record rate, demands for wage rises are increasing across the economy. There is a feeling that the cuts made during the crisis should be reversed.
Part of the narrative of the financial crisis was that the pubic sector pay and pension cuts and increases in income tax and USC were “emergency” measures. The clear implication was that they would be reversed when the crisis was over. This may have been politically expedient ar the time, but it has created a challenge for whichever parties make up the next government. As the largest employer, the State has a key role in wage determination, and after the crisis there is no clear way for public pay to be determined.
The strength of recent economic data has also served to increase expectations. Wage rises are a normal part of the economic cycle. But the scale of expectations becoming evident are of concern, particularly as underlying economic growth is less than the headline figures suggest. There are private sector firms now making decent profits, but many are still in a recovery phase, while the national finances themselves remain vulnerable.
The Luas staff have rejected a plan which management say would have offered increases of eight to 18 per cent over the next three years. Even if the trade unions dispute the scale of the increase, it is clear that the company went a significant distance to meet their demands. While the proposal that new employees should, in some cases, be paid less is unwelcome, the decision to proceed with industrial action against the backdrop of the significant increases on offer was unwarranted. It will also undermine support from the travelling public, most of whom would be glad to get much more modest increases.
Of even greater concern is that the State company transport unions are now holding out the Luas offer as some kind of new benchmark. The Government underwrites the State transport companies and increases of this scale are simply unaffordable. Meanwhile industrial relations experts are warning that the Lansdowne Road deal, covering much of the civil and public service, due to run until 2018, could itself unravel as demands emerge for increases on a wider scale.
The next Government faces a huge job rebuilding public services. Employees deserve pay increases but there must also be scope to hire new public servants and invest in services. There is a difficult job of explanation and persuasion here for the next administration, and the need to develop a new approach to setting pay across the public service. Many private sector employers face the same challenge, particularly in sectors where there are skills shortages. The risk of more disputes and disruption is all too real.