Pay talks between Government representatives and the public sector trade unions adjourned without agreement this week, after the unions rejected an initial offer of an 8.5 per cent increase in pay, staggered over two and a half years. The unions had sought a 12.5 per cent increase, and their leaders insisted that the State’s offer was nowhere near good enough to take back to their members.
The rhetoric places the two sides further apart that the maths does. Minister for Public Expenditure Paschal Donohoe insisted that the offer was “very, very significant”, and while he was careful not to rule out an improved offer in the future, he also wanted to make clear that big pay increases for public servants would risk stoking inflation and impact the public finances in a way that means there would be less money available for investment in public services. If you hike the pay of teachers and gardaí and nurses, there will be less money available to hire more teachers and gardaí and nurses. The cost to the public purse of the offer for the State’s 385,000 public servants, Donohoe said, was some €2.9 billion.
But lead trade union negotiator Kevin Callinan, who heads the Forsa union, said the Government’s offer “lacks credibility”, and it is clear that Callinan and his fellow negotiators will not conclude a deal that they must then sell to their members at anything around the level that Donohoe’s offer is pitched. The Government will have to improve its offer, or there will be no deal. Talks are expected to resume next week.
No Government wants to see a rash of strikes in the public sector at any time; in the year before a general election, the motivation to cut a deal and avert an industrial relations war is especially strong. The healthy state of the public finances provides the Government with the means as well as the motivation to do a deal.
There are other political considerations, too. Donohoe’s Fine Gael party is likely to run largely on its economic record when that election comes, and caving into public sector pressure would undermine that message. There are 385,000 public servants; but there are more two million people who work in the private sector. Many of them are acutely aware – and, perhaps, a little jealous – of the pay, conditions, job security and pensions enjoyed by many public servants. Public servants deserve to get a pay rise, but not one that is clearly out of line with the private sector.
So while Donohoe will certainly want to conclude a deal, he will not want one at any price. And that, broadly, is where the national interest lies. A compromise that avoids a wave of strikes but does not sell out to the public sector unions, that achieves affordable stability and leaves room for continued investment in public services should be achievable with give and take on both sides. The coming week will be crucial.