Friday 23 February 2018

Giving in to unrealistic pay demands will mean less investment in public services

2016 saw the unprecedented threat of an all-out Garda strike. Stock photo: PA
2016 saw the unprecedented threat of an all-out Garda strike. Stock photo: PA

Maeve McElwee

When it comes to pay, public and private sector employees are facing the same challenges posed by domestic and international economic uncertainties.

We do not live in separate bubbles - we must be aware of the potential for contagion effects arising from headline pay deals done whatever the sector, and the subsequent unrealistic expectations they may create.

Since late autumn, Ireland has hovered on the brink of a 'winter of discontent' with threats of industrial action in multiple parts of the public sector, including Dublin Bus drivers, secondary teachers, as well as nursing and support staff in the health services.

The end of 2016 saw the previously unheard of prospect of an all-out Garda strike. The decision by the Government to allow the representative associations access to the dispute resolution processes of the Workplace Relations Commission, and the subsequent recommendation by the Labour Court on Garda pay, quickly became the next crisis issue for the continued operation of the Lansdowne Road Agreement.

In January, to maintain industrial peace, the Government agreed to bring forward the next phase of the agreement to April 1 - with an approximate additional payroll cost to the exchequer of €120m on top of the €50m cost of the Garda pay recommendation. However, industrial peace in the public service remains elusive with strikes threatened or pending in nursing, transport and the ongoing dispute in secondary education. All of us want to see smooth provision of public services without disruption. The framework for discussions about pay and conditions of employment in the public sector should be based on solid fact, analysis and a realistic assessment of the world around us.

The fact is that public service workers are already getting a good deal. The public service pay increase in 2017 at 3.7pc is ahead of private sector pay growth by 1.5pc. This is in addition to enhanced job security and an existing pay and pensions premium. Therefore, there should be no public service pay acceleration above that which has already been agreed.

In the private sector we know that 71pc of employers plan to increase pay rates again this year. The increase expected for 2017 is broadly in line with the steady trend as the economy has recovered. However, it is clear that wage expectations are on the rise in elements of the private sector and while the average increase remains at approximately 2.5pc, the skills gap emerging for employers in areas such as engineering and IT/software development is driving up wage costs.

The headline pay awards seen in the public sector have also had a resonance for employee expectations in the private sector and are often used in an effort to support higher - and unrealistic - pay claims.

Brexit feeds into the concerns around labour market competitiveness. Firms most affected by sterling depreciation are in the food and services industries where the majority of exports go to the UK. This will not just affect exporters. This fall in sterling will also mean increased competition on Irish shelves from British products. It may reduce tourism and is already driving retail activity across the Border and online.

For all of us, our wages must reflect emerging productivity and competitive pressures. The recession surely taught us that.

Pay is not the key factor when it comes to job satisfaction, engagement and retention. With a tight public budget the choice is between escalating pay awards and investment in our public services. In a competitive environment, stable and modest income growth, a focus on increasing employment and investment in the 'liveability' factors of housing, transport networks and childcare are the way forward.

Maeve McElwee is director of employer relations at Ibec

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business