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Andrew Lynch: Three good reasons why today's pay deal could yet be blown out of the water

AT last -- a bit of good news for a change. This morning's announcement of a deal between the government and trade union officials on public sector pay provides the perfect backdrop for this evening's financial announcements and raises the hope that the threat of mass national strikes can still be avoided.

As always, however, the devil is in the detail -- and until we see how this deal is received by ordinary workers, Brian Cowen would be well advised not to get too carried away just yet.

Considering what a weak hand the unions had going into these negotiations, this looks at first glance to be an exceptionally good deal for them.


The key element is a guarantee from the government that there will be no more cuts in public sector wages until 2014 at the earliest. In return, they promise to implement extensive reforms in their work practices and move immediately to halt the industrial action that's already underway.

Even better from the unions' point of view, there will be an annual Spring review of the "sustainable savings" that are made by these reforms -- and any money that's generated will go straight back into their pockets. That doesn't amount to a guarantee that the pay cuts in last December's budget will be reversed, but it's the next best thing. In a country that will shortly have to borrow €250m a month just to pay its social welfare bill, it's way above what any reasonable public sector worker could have expected.

Despite all this, there are three very good reasons why this deal could yet be blown out of the water.

The first is that the union leaders who negotiated it may not be in control of the more extreme elements of their organisations.

As the angry scenes at last weekend's CPSU conference showed, many low-paid civil servants are so angry at recent developments that they are determined to strike at almost any cost.

Now they will be asked to vote for an agreement that falls some way short of their demands -- and given their current mood, that vote cannot be taken for granted.

The second reason is that the private sector may well see this as the government caving in to the unions yet again. After all, their 12-day unpaid leave proposal on the eve of last December's budget was hastily abandoned precisely because the public reacted so violently against it.

It should also be remembered that while Brian Cowen is a big fan of social partnership and is clearly desperate to get it back up and running again, Brian Lenihan takes a very different view -- which has created a split at the very heart of government that cannot be allowed to go on forever.

The third reason is very simple. The deal contains a clause which says that its implementation is subject to there being no unforeseen deterioration in the government's finances.

Since the Department of Finance's projection have recently proved to be about as reliable as the racing pundits' tips for Cheltenham, this effectively means that all bets could soon be off.


It's also impossible to fully assess this deal until we hear the opposition's reaction. Barring a political miracle, Fine Gael and Labour will be running the economy in two years' time at the most.

This means that Richard Bruton and Joan Burton must reveal whether they are also willing to have their hands tied on public sector pay until 2014 -- and if not, what is their alternative?

This morning's deal has, at the very least, bought the government and the unions some valuable time. They need to use it wisely -- or today's good news story might very well develop into tomorrow's disaster.