Sunday 26 February 2017

Watchdog and unions lock horns over 'empty pot' for pay rises claim

Anne-Marie Walsh

Public Expenditure Minister Paschal Donohoe has not ruled out pay rises. Photo: Tony Gavin
Public Expenditure Minister Paschal Donohoe has not ruled out pay rises. Photo: Tony Gavin

The State's budgetary watchdog has rejected union claims that the Government will be able to afford pay rises without hiking taxes or slashing public services.

A submission by public service union leaders - including Impact and Siptu - contradicts the Irish Fiscal Advisory Council's latest report.

The council has argued that the Government will have limited wriggle room in the next few years.

It said any hike in spending on public sector pay next year would have to be funded by increased taxes or cuts in other areas of spending.

But a submission by the Irish Congress of Trade Unions' public services committee to the new Public Service Pay Commission argues that the country's fiscal position will improve.

"In 2017 the Government had an additional €1.2bn of 'fiscal space' available," said the public sector union leaders.

"In 2018, 2019 and 2020 the Government's 'fiscal space' is expected to be even greater.

"In short, there is, and will be, significant capacity to tackle the consequences of FEMPI [Financial Emergency Measures in the Public Interest] legislation and related measures in the coming period."

However, the chief economist of the Fiscal Advisory Council, Thomas Conefrey, said the €1.2bn fiscal space for next year had already been used up by Budget measures.

Read more: Public pay rises will force cuts to services or new taxes - says budget watchdog

He did not agree with the assessment that there would be more than €1.2bn available in 2018.

He said the effect of October's Budget would reduce the available spend in 2018 to less than €600m.

Some of the Budget measures, including a €5 increase in weekly social welfare rates, will cost more in 2018 than they will next year.

This is because they are being introduced later in 2017, but will be in place for the whole of 2018.

"There was €1.2bn for next year, but the Budget divvied that out," he said.

Unwinding

The unions' submission was sent to the pay commission to inform a report on the unwinding of the FEMPI legislation that cut public servants' pay.

It will inform talks that are scheduled to begin early next summer on negotiating a successor to the Lansdowne Road Agreement.

The Government has also committed to another set of talks to end in January on the implications of a €50m pay package offered to gardaí.

Public Expenditure and Reform Minister Paschal Donohoe has not ruled out pay rises as a result of the talks.

Meanwhile, private sector unions put forward a series of claims about why their workers deserve pay rises of 4pc next year.

Company profits have soared past pre-crisis highs, wages are stagnant and the cost of living is on the rise, according to the unions.

A document circulated by the Irish Congress of Trade Unions (Ictu) stated that there was "considerable scope for increasing pay" in the private sector.

Ictu's private sector committee advised unions to seek pay rises of at least €1,000 annually, or 4pc, whichever figure is higher, next year.

"Achieving the rate of increase suggested will protect the living standards of workers, increase their spending power and give them a fairer return for increased productivity," said an Ictu private sector bulletin yesterday.

It added that while some progress had been made in recouping earnings lost during the financial crisis, "there was still some considerable ground to be made up".

Irish Independent

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