Friday 18 October 2019

Brendan Keenan: 'Public pay demands could destroy volatile economy'

Health protest: Psychiatric Nurses Association ambulance members Tina Martin from Donegal and Siobhán Kelleher from Cork prepare their posters before protesting outside Leinster House over their right to represent-ation by a trade union of their choice. Photo: Frank McGrath
Health protest: Psychiatric Nurses Association ambulance members Tina Martin from Donegal and Siobhán Kelleher from Cork prepare their posters before protesting outside Leinster House over their right to represent-ation by a trade union of their choice. Photo: Frank McGrath
Brendan Keenan

Brendan Keenan

It was said of the last Bourbon kings of France that they learnt nothing and forgot nothing. But at least they might make a few minor changes after an especially nasty rebellion or national bankruptcy. Not so the Irish public sector.

It would be almost laughable - if it were not so alarming - to see the way the same playbook is being opened and applied exactly as if nothing bad had happened in the last 20 years.

There is certainly no sense we have come through a national crisis from which many economists - including some in the minority who forecast the crash - thought we could not come through.

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For this Government, and one suspects any feasible government, there is an inability to fundamentally change the attitudes and actions of the past. For the public sector trade unions, the tried and trusted methods of extracting pay and privileges which are not available to other workers remain the methods of choice.

Start with the most vital service - health - and the inevitable concessions can be followed by other important services, such as policing, ending in a weary round of relativity payments for all, with only a passing nod to justification and none at all to equity.

At present we are in the early stages of the 2016 cycle. This follows the one whose start can be dated roughly to 1998, which in turn followed the 1979 round. There is a troubling symmetry here, especially since major public finance crises occurred some 10 years after those dates. Beware the mid-2020s.

The Government says things are different now: it has learnt the lessons of the past and will make sure nothing of the kind happens again. Its actions recall another king, Britain's Charles II, who never said a foolish thing nor ever did a wise one.

The Government playbook is not quite as repetitive as that of the unions. The 1980s were characterised by excessive borrowing. The 2000s were a case of excessive private borrowing, on whose shaky foundations Mr Ahern's governments built a mighty edifice of public spending.

Now the issue is existing debt, still around one year's entire economic output. The Government is not borrowing but it is spending in line with exceptionally rapid economic growth, and the even more exceptional revenues from multinational corporation tax. The question is to what extent it too is building on shaky foundations.

Our economy is a volatile one. Even normal downturns can be extreme. When one comes while the compounded spending increases are mounting up, the revenue gap has been large enough to bankrupt an apparently solvent country in a matter of months.

The common thread is the struggle - and failure - to keep the growth in public spending in general, and pay in particular, in line with any agreed estimate of the economy's long-run potential.

That kind of agreement on the limits of reality is the sort of approach other European countries call social partnership. Irish social partnership might best be described by GK Chesterton's definition of Christianity: It has not been tried and found wanting, it has been found difficult and not tried.

The unions are not short of sensible advice from friendly bodies such as the National Economic and Social Council and the Nevin Institute, but have found themselves unable to act upon it.

One reason is the failure of their membership, along with much of the rest of the public, to accept a great deal of the austerity they have suffered was caused by their own behaviours in the bubble. The lessons have not been learned but the pain has not been forgotten.

Faced with this, the Government response is also what it has always been; to stretch things out so the annual budgets meet their targets. A panoply of quangos to deal with specific issues and buy time has replaced social partnership.

This defer and delay strategy appears to be the reason for the threatened strikes by hospital support staff. They are tired of waiting for the rise they say was agreed in their job evaluation process.

The Government is looking to another piece of process which would postpone the inevitable payday.

There is a different relic of the bad old days in the paramedics' dispute - union recognition. These are not even amenable to pay rises, with Siptu likely to take action if the small Psychiatric Nurses Association gets the negotiating rights it currently holds. But pay rises will be part of any solution.

If 2010 did not do it, it is difficult to see how the cycle can be broken. All the signs are that any government which honestly presented the hard choices between pay, staffing, services and taxes would be hammered at the polls.

Any trade union leader who did the same would lose their job. Oddly, any campaigner for the poor, unemployed or lower income groups who complained they were being exploited by the public sector would probably suffer the same fate.

There are plenty of examples around Europe and the world of countries which have become trapped in cycles of destructive behaviour which they cannot break. One more spin on this particular roundabout and Ireland will undoubtedly have joined them.

Irish Independent

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