Saturday 19 October 2019

Public pay rises - or USC cuts? It's Fine Gael versus Labour

Brendan Howlin
Brendan Howlin
John Downing

John Downing

MANY political decisions make themselves when a government has no money. So here's the downside of having some money to spend in the run-in to a general election.

If a coalition government gives something to one crowd, it's odds-on they will alienate the others. That reality is sharpened by eight solid years of falling incomes and increasing taxes across all sectors of the nation.

If you add the Government parties' need to address diverging support bases - Fine Gael's business people and Labour's public sector workers - then you have the makings of a right old pre-election dust-up.

The outcome of this one will be carefully monitored as all parties now prepare for a general election, due in April 2016 at the latest.

Fine Gael's signals, from the Taoiseach downwards, have for some months raised hopes that the vicious Universal Social Charge (USC) will be eased for the self-employed.

On March 4, Mr Kenny told an IBEC conference self-employed people deserve better treatment in the tax system as they have a key role in driving economic recovery.

He signalled USC changes to the situation where some self-employed people can pay 3pc more than a PAYE employee on the same money.

"The discriminatory tax treatment of self-employed people, inherited by this Government, can no longer be justified," Mr Kenny said.

These remarks were in keeping with other Fine Gael ministers' comments and also chime with news today of a Fine Gael working group findings on the issue.

Labour is not necessarily against that. It's just that it has different plans for the same scarce money. The junior coalition partner, still fighting for its very existence in a tightening market, knows it has to get back the lower-paid public sector workers, a segment of the electorate over which it used to scrap with Fianna Fáil going back over the generations.

In the Dáil last month, Public Expenditure Minister Brendan Howlin, of Labour, said he was "acutely conscious" that 2015 was the seventh consecutive year of no pay rises for public servants. Against that, there had been an unprecedented two or three cuts in nominal wages, depending on pay grade.

"We are moving forward, thank God the day will come when there will no longer be an emergency," Mr Howlin said. Being his usual cautious self, Mr Howlin said there would have to be a negotiated wind-down of emergency pay provisions with no "big bang" which would jeopardise the gains made.

There is no doubt that both groupings need a break and can justify their case. And both groupings have expectations.

Some will argue that the self-employed people will do better for the economy as a whole.

But too much emphasis on that risks devaluing the contribution of public service workers who struggled to keep services going.

And realpolitik tells us this will be sorted by which one blinks first: Fine Gael or Labour.

Irish Independent

Today's news headlines, directly to your inbox every morning.

Don't Miss