News Fionnan Sheahan

Wednesday 17 September 2014

Fionnan Sheahan: The €1bn savings will be achieved either by reform or direct pay cuts

Published 14/01/2013 | 05:00

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Despite the frequent sniping from some on the Fine Gael backbenches, the Government is persevering with the Croke Park Agreement.

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The deal wasn't actually negotiated by Fine Gael and the Labour Party, and Eamon Gilmore was pretty ambiguous in his initial support for the agreement.

But when the Coalition took office there was no effort to try to renegotiate the deal, even though it not only guaranteed the protection of core pay but also increments.

Paying €250m a year in pay rises – albeit through the increments that mainly benefit the lower paid public sector workers – has been difficult to justify.

The Government took a shot at examining the question of payment of allowances, but found most of these were long-term arrangements in lieu of pay rises and thereby qualified under the definition of core pay.

Public Spending Minister Brendan Howlin emerged bruised from the allowances affair but kept his eye on the bigger prize of retaining the trust of the public unions to extract greater savings from a renegotiation of the deal.

After taking the brickbats for not cutting the allowances and halting the increments, it's time for some payback.

Aside from reducing the public sector pay bill, Croke Park also serves the purpose of delivering reform.

Some of these reforms are obviously necessary knock-on effects from the reducing the numbers employed in the public sector. But more of the changes are about making the public sector fit for purpose in the coming decades by removing the blockage areas and looking at work practices that were previously regarded as untouchable.

Arguably, many of these reforms were supposed to be in place during the discredited benchmarking process, but the failure of the then government to either demand or push through the requisite changes was a sign of the complacency of the Celtic Tiger era.

Ironically, the annual €1.1bn added to the public sector pay roll by benchmarking is a similar figure the Government is agonising over taking out in the Croke Park II deal.

What would be regarded as simple common sense measures in the private sector require protracted negotiations in the public.

The current arrangement where a worker whose job effectively no longer exists can refuse redeployment and voluntary redundancy will no longer remain.

With compulsory redundancies goes the concept of a guaranteed job for life. Mr Howlin has also spoken forcefully about the need to improve measurement of performance – with bad workers being dismissed and good workers being promoted.

Setting the target of €1bn in savings means the public sector workers have the choice of either going with the reforms option or the savings being achieved through a cut in pay. The result of this morning's talks is already decided. It's just a matter of how they get there.

Irish Independent

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