Saturday 21 January 2017

Kenny to cave to unions over early pay talks

'Genie is out of the bottle' over offer to gardai

Philip Ryan, Mark O'Regan and Wayne O'Connor

Published 13/11/2016 | 02:30

Giving in: Enda Kenny will 'bring forward' pay talks Photo: Steve Humphreys
Giving in: Enda Kenny will 'bring forward' pay talks Photo: Steve Humphreys

Taoiseach Enda Kenny is preparing to capitulate to the demands of the public sector unions and bring forward talks on a renegotiated pay deal, the Sunday Independent has learned.

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Two senior Cabinet ministers this weekend said it is inevitable that public sector pay talks will begin soon.

Major industrial unrest was signalled last week after Siptu president Jack O'Connor threatened to ballot his 60,000 members if the Government did not pledge to start talks by February.

The Lansdowne Road Agreement is not due to expire until September 2018 and it was expected that talks on a new deal would not begin until late next year at the earliest.

However, unions are angry at what they saw as a breach of the agreement after ministers accepted a Labour Court recommendation securing a €50m pay deal for gardai.

Read more: Unions cannot put gun to Government's head over strikes - Ibec chief

Last night, a senior minister warned "the genie is out of the bottle" and said the Government was reluctant to "go to war" with the public sector unions given the fragility of the administration.

Another minister said it was time to "accelerate" negotiations so as to appease the demands of the unions.

"I don't know if talks will begin in exactly February but it's about sitting down and agreeing parameters and the process," the minister said.

New talks raise the prospect of the Lansdowne Road Agreement expiring early and being replaced by more significant pay hikes for public sector workers.

Public Expenditure and Reform Minister Paschal Donohoe will this week bring a memo to Cabinet on a possible timeline for the new pay talks. He told the Sunday Independent he was working on a timeline that will deliver the best outcome for "those working in the public service and those who need them".

Read more: It's a free-for-all in public sector - and who shouts loudest gets the most money

He added: "We must be fair to everybody."

Yesterday, O'Connor said high-earning PAYE workers should not face tax hikes to cover the cost of a wave of pending pay claims in the public sector. The leader of the country's largest trade union insisted the focus should be on the allocation of existing cash resources available to the Government. Asked if those earning above €100,000 a year should pay more, he said no new taxes on labour should be introduced at this time.

He said: "There isn't really any need for tax increases. What we're talking about is renegotiating the terms of the Lansdowne Road Agreement to reflect the fact the economy has recovered more rapidly than was envisaged when the agreement was negotiated.

It's about restoration of pay that was cut, rather than increases in the traditional sense."

He rejected any suggestion that the precarious nature of the minority Government should influence pay talks.

"We are governed to all practical intents by a coalition of Fine Gael and Fianna Fail," he said. "It's not a formal coalition but it's coalition in practice. I think they obviously have an understanding."

Read more: Generals of the ASTI will find it hard to march the troops up the hill again

Meanwhile, employers were growing concerned over the likelihood of public sector pay rises, and said they could not afford for expenses to rise again on the back of Brexit uncertainty and Donald Trump's election as US president.

There were fears that wage increases could have a devastating effect on export and construction businesses.

Food exports have already been hit by tumbling sterling prices since the Brexit vote in June, despite the currency recovering in recent days.

Some firm fear wage rises on the back of public sector disquiet could threaten jobs and growth in the private sector.

Read more: Siptu to ballot community service workers on strike action

Neil McDonnell, chief executive of the Irish Small and Medium Enterprises Association, said the public sector must not hold ministers to ransom over pay increases.

He said: "There is an expectation in the public sector for pay increases that are totally out of line with what is available to pay in the private sector and there is a real danger that if a free-for-all starts and if the Government gives into it, we'll take the Government finances back to where they were during the crash."

He added some employers will be forced to cut employee pay next year, and the Government should look at reducing the cost of living instead of giving in to pay demands.

Sunday Independent

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