PUBLIC Expenditure Minister Brendan Howlin has signalled pay rises for public sector workers who took a hit during the recession - but warned there is "no bonanza in store".
Senior Government sources confirmed last night that they are willing to restore "some, but not all" of the cuts made to public sector pay since the 2008 crash, if the economy remains on track.
This will set Mr Howlin on a collision course with public sector unions - who have already demanded a full reinstatement of the cuts made during the financial emergency.
Reversing all the public sector pay cuts would cost the taxpayer almost €2.2bn - the equivalent of an entire Budget adjustment.
Writing in today's Irish Independent, Mr Howlin says these cuts cannot be restored in one swoop - but he does offer some fresh hope of pay hikes for workers.
Mr Howlin says: "There is no bonanza in store for public sector workers. But nor should they be excluded from the general improvements in remuneration in the wider economy."
His comments come as Finance Minister Michael Noonan confirmed he has begun discussions to explore a new "Social Dialogue" between the unions and employers.
Mr Noonan ruled out a return to social partnership, but said the Government is open to holding discussions with unions and employer groups on pay deals.
He said the talks may not only focus on pay deals, but also taxation changes, "if we can move beyond dialogue into some type of quasi-negotiation where pay and tax relief could be in the one package and there would be a quid pro quo between one and the other," he said.
Mr Noonan said it was "insufficient" to ask people their opinions every five years through general elections and he wanted more public discussion on Government decisions.
"If you want a fully participating democracy you need other ways of having policy involvement by the people and probably the best way to do that is through the organisations that represent the people outside of Government," he added.
"Rather than having a re-establishment of social partnership, which at the end was a failure, I'd like to see something where people had a way of inputting between elections." he added.
Mr Howlin also said talks may not be confined to pay negotiations but could be "anchored in a broader infrastructure of tax."
He also said any new arrangements would include an input from elected representatives.
The minister said one of the problems with social partnership was the exclusion of members of the Oireachtas, and he hoped future talks would include elected representatives.
Tanaiste Joan Burton also said she believed there was scope for what she described as "social dialogue" ahead of future pay deals.
"Nobody envisages going back to old-style social partnership," she said.
"But there is an absolute role for social dialogue, meetings between Government, employers and trade unions with a view in particular to getting people back to work and assisting the economy to grow."
Sources last night said Mr Howlin and Mr Noonan are attempting to manage expectations ahead of the next Budget and ahead of the next general election, and their comments are a sign of how far they are willing to go.
Mr Howlin has revealed that he will wait until the end of March before extending an invitation to unions to begin talks.
He still wants to see how the public finances are shaping up after the first quarter.
He also admits that he expects the pay talks to be concluded in time for the "2016 budgetary year".
Mr Howlin said the legality of the Government's financial emergency legislation (FEMPI) is predicated on there being a financial emergency.
He said: "If the economic recovery continues apace, the task of justifying all the reductions would be harder to sustain on the facts."
But were the €2.2bn a year in FEMPI cuts to be undone, Mr Howlin said such a move would again "propel the State's finances into an emergency by itself".
He also criticised the Opposition and some analysts who said his comments last year about the ending of FEMPI were electioneering.
He criticised Fianna Fail for suggesting he committed to restore the full €2.2bn a year in cuts.
"Those suggesting I was engaged in profligacy or making election promises simply misunderstand the nature of the legislation that governs the pay reductions in the public services," he said.
The General Secretary of the ICTU has said that he would be "positive" about moves to re-establish a dialogue.
David Begg said that while he was aware that Cabinet had discussed the possibility of re-opening talks with the unions and employers about pay and conditions, there had been no contact from the Government to the ICTU on the issue as yet.
Social partnership, which was forged in the 1980s, collapsed in 2009 as the country battled through the depths of the recession.
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