Wednesday 13 December 2017

Unlikely balancing act struck as deal hammered out in unconventional way

Public Expenditure Minister Paschal Donohoe Photo: Tom Burke
Public Expenditure Minister Paschal Donohoe Photo: Tom Burke
Kevin Doyle

Kevin Doyle

Easy money is hard to come by. That's the message Paschal Donohoe is hoping trade unions will take back to their members after the latest round of pay talks ended without any notable rancour.

The country's 250,000 State employees were only getting up for work yesterday when news filtered through that they are in line for a pay rise averaging between 6.2pc and 7.4pc over the next three years.

It must have felt like something of an anti-climax because pay talks tend to follow a familiar script.

Both sides talk up their positions in advance. The Government will stress how the public purse is under pressure from all quarters and there simply isn't enough to go around.

The unions argue that workers have played their part and deserve to share in the fruits of the country's success. Their members are overburdened and under-resourced.

When they all gather around the table, both sides initially adopt a radio silence. Day after day they walk in with stacks of documents and give brief soundbites about how 'nothing is agreed until everything is agreed'.

As the discussions drag on, they begin sitting late into the night. Journalists camp outside waiting for any snippet of news, texting sources inside in the room in the hope they'll give a hint of what's going on.

And then there's a big moment. Somebody walks out in a huff, declaring that the offer on the table is simply an insult and they would never consider putting it to their members.

A few days of posturing follows before another all night session that ultimately leads to a breakthrough.

In this case, the usual sequence of events was followed in the initial stages up until the point of the expected bust-up.

Instead, it appears, on the surface at least, that Mr Donohoe and his officials have managed to perform an unlikely 'balancing act'.

He has managed to turn the so-called 'Croke Park hours' into the 'norm'. As a compromise, workers - such as teachers and nurses - can opt out of the extra 27 minutes a day they were required to work for free - but if they do, their income will drop. In other words, they are no longer 'unpaid hours'.

Mr Donohoe has turned the emergency 'pension levy', which was brought in as the economy collapsed, into a permanent 'superannuation contribution'.

One department source described the pension changes as the "big, big prize for the Exchequer". It will be worth €550m a year.

On the flip side, the unions get to tell 90pc of their members that by 2020 their pay rates will be back at pre-crisis levels or higher.

Ultimately both sides will be able to claim that the Financial Emergency Measures in the Public Interest (Fempi) are dead.

Mr Donohoe described the deal as affordable, saying "we are not going back to wage levels or total compensation levels that ultimately proved unaffordable to everybody".

It seems €887m is a "fair" price for industrial peace.

But many in the private sector will now be anxiously awaiting the Government's Summer Economic Statement (SES) - which is due later this month or early July, depending on how quickly the new finance minister, who may well be Mr Donohoe, digs into their brief.

The SES will set out how much money is available for fresh tax cuts and spending increases in 2018.

Expectations are high but anybody thinking there will be another €5 top-up for pensioners and carers might find themselves wildly disappointed.

The reality is that there will be little more than €500m to play around with and €180m of this is now off the table. As a result of the pay deal Budget 2018 is going to be an even more delicate balancing act.

Irish Independent

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