Minister told trouble lies ahead on public sector pay
The Government faces the threat of both industrial and legal action as public servants seek pay rises to match private sector workers, Public Expenditure Minister Paschal Donohoe has been warned.
Senior civil servants have told Mr Donohoe that industrial relations in the public service face a "new and uncertain phase" as the economic recovery takes hold.
Briefing documents also say the Government will need to decide whether to begin linking future increases in public service pensions with inflation, rather than salaries.
The warnings have emerged as Mr Donohoe prepares to meet with union leaders in the coming weeks to discuss pay and conditions.
However, a senior Government source insisted last night that there would be "no unravelling" of the Lansdowne Road Agreement. "We cannot be more categorical on Lansdowne Road. It will and must be honoured," the source told the Irish Independent.
In the briefing documents, Mr Donohoe is told that the risk of legal challenges will rise as the financial crisis recedes, because the pay and pension cuts of the last seven years were imposed through emergency legislation.
"Over the next few years, the area of pay and industrial relations in the public service will be very challenging for government," says the document.
"Expectations of current and retired public servants for the restoration of the emergency cuts are being raised by the economic recovery.
"Equally, pay increases in the private sector will create pressure for similar increases in the public service.
"As a consequence, and despite the existence of the public service agreement which provides for industrial peace, industrial relations in the public service are entering a new and uncertain phase, with the Government under pressure to make decisions to further increase pay and pension rates.
"Managing this within the context of the available fiscal space will be challenging."
Despite the warning, recent developments have given fresh impetus to public servants seeking pay increases. Luas drivers won a pay rise of up to 4pc a year for the next four years, while a deal worth roughly the same increase is currently being balloted on at the ESB.
Yet employers' groups in the private sector have predicted average increases of 2pc this year.
The briefing documents note that the Lansdowne Road Agreement provides for a partial restoration of pay cuts to the end of next year. "The pace of restoration after that has yet to be determined," it adds.
A total of €1.4bn of the €2bn cuts remains to be restored following the Lansdowne Road deal.