Budget bounce for Cowen in pay deal
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THE Government last night emerged as the big winner in the new national pay deal.
It will have more than half a billion euro extra to play with on Budget day after securing an 11-month public sector pay pause.
The country's two million workers -- and their employers -- will now be looking to the Budget for relief after the deal left neither side fully satisfied.
Employees are facing reductions in the real value of their take-home pay because the pay deal falls short of the rate of inflation.
Meanwhile, employers will be praying for a variety of reliefs for their businesses after smaller enterprises issued dire warnings over the affordability of pay rises.
There is likely to be deep anger among public servants over the the 11-month pause, as workers in the private sector will be subject to a pay pause of just three months.
The agreement, reached after marathon talks, will mean:
l Private sector workers: three-month pay pause, followed by a 3.5pc increase over six months, and a further 2.5pc for the remaining 12 months of the deal.
l Public sector workers: an 11-month pay pause, followed by a 3.5pc rise for the next nine months (commencing September 1, 2009), and a further 2.5pc for the remaining month.
l There will be an extra 0.5pc increase at the end of the agreement for workers earning less than €430.49 per week.
Establishing when exactly a worker in the private sector is entitled to the first increase is complex, because previous pay agreements expired at different times.
The new deal will typically see:
l A staff nurse currently earning a starting salary of €31,098 getting a 6pc pay increase over the course of the deal, bringing annual pay to €32,964.
l A civil service clerical officer at the lowest grade on €23,174, getting a €1,390 increase.
l The salary of a garda earning €41,596 rising to €44,092.
There were claims last night that, given the worsening economic situation, many employers would be unable to pay.
"It looks like an agreement at any cost, and, unfortunately, the cost will be jobs," claimed Mark Fielding of ISME, which represents small and medium enterprises.
Six months ago, IBEC called for a six-month pay pause and offered a 5pc carrot, he said. Instead, they had settled for a three-month pause and a 6pc hike for most workers.
Irish Congress of Trade Unions chief David Begg said he was confident the pay deal would be passed by members.
But across the trade union movement, the reaction was generally muted.
Opposition parties roundly criticised the deal, accusing the Government of squandering an opportunity to introduce both an anti-inflationary package and a HSE redundancy package.
Any potential pay gains for workers will be swallowed up by rising inflation, increased prices and the faltering economy, Fine Gael's Richard Bruton said.
The total pay rise for public sector workers will cost taxpayers at least €1.2bn a year, when fully implemented.
In securing an 11-month pay pause, the Government has ensured it will only need to find an extra €235m for next year for its own employees, when it announces its budget on October 14.
Taoiseach Brian Cowen has effectively postponed the pain of a massive pay bill until after the European and local elections next June, in the hope that the public finances will improve by late next year.
- Senan Molony and Aine Kerr
