Report warns that public service unions must curb pay expectations

The findings of a consultants’ report on what is known as ‘parallel’ benchmarking – a pay system that covers local authority and health service craftworkers and general operatives – suggests that public sector trade unions may need to lower their pay expectations. This comes in advance of a major public service pay benchmarking exercise due later this year, which will cover around 250,000 public servants.

A consultants’ review on the ‘parallel’ pay benchmarking exercise, which was reported on exclusively by the weekly journal, Industrial Relations News (IRN), is currently being considered by the Department of Finance (An Roinn Airgeadais). Although parallel benchmarking covers only craftworkers and local authority employees, it could have ramifications for the larger pay benchmarking exercise currently being carried out by the Public Service Benchmarking Body (PSBB). This is because the issues considered by the parallel exercise are similar to those currently being examined by the PSBB, such as pensions, job tenure and job size.

Parallel benchmarking pay review

Like the main benchmarking exercise, the parallel benchmarking pay review is based on the principle of comparing private sector pay movements to determine public sector pay levels. The review covers approximately 50,000 craftworkers and general operatives and related grades in the local authorities and health service, including linked grades.

An informed source told IRN that, if the full spectrum of pay, pensions, job tenure and job size are taken into account in the parallel benchmarking process, the expectation on the government and employer side is that trade unions and their members in local authorities and the health service would ‘mark time’ in pay terms. In other words, little or even no pay increase will be awarded to these workers.

The consultants of the parallel exercise identify the emergence of a 2.4% pay gap between the public sector and the private sector. In addition, they have identified a 10% variance in job size – that is, private sector jobs are deemed to be 10% larger than public service jobs. This is even before elements such as job tenure and pensions are included in the comparison. The implications, according to the consultants’ calculations, are that the totality of public service pay and pay conditions is better than in the private sector.

Aim of parallel benchmarking

The group of workers covered by the parallel benchmarking pay exercise have a long-standing analogue arrangement which pre-dates the main PSBB. Indeed, what is known as a ‘craft analogue’ pay system has been around since 1979. However, when benchmarking for the rest of the public service began at the beginning of this decade, this analogue review became known as ‘parallel benchmarking’.

According to the employers, namely the Local Government Management Services Board (LGMSB), the Health Service Executive (Feidhmeannacht na Seirbhíse Sláinte, HSE) and the Department of Finance, ‘parallel benchmarking is designed to “mirror” the work of the PSBB and in doing so it is essential that the comparative exercise for craftworkers is in line with the PSBB process’.

Outlook for trade union pay expectations

A clear message is being sent out by the Department of Finance and public service employers that unions cannot expect anywhere near the kind of pay rises that they reaped from the first parallel benchmarking exercise in 2003. The 2003 exercise yielded pay increases in the region of 17%, on top of national agreements. The larger benchmarking process, also the first of its kind, yielded an average pay increase of 9% on top of national pay agreements, leaving some groups more content than others.

Challenges of benchmarking process

Overall, the benchmarking process this time around is expected to pose a major challenge for trade unions, employers and the new Fianna Fail (FF)-Green Party-Progressive Democrat (PD) coalition government, in terms of managing the expectations of workers. The previous FF-PD coalition was able to bring a dispute by 40,000 nurses to an end just before the May 2007 general election. The nurses, represented by the Irish Nurses Organisation (INO) and the Psychiatric Nurses Association (PNA), failed to breach the benchmarking system with their separate pay claim (IE0705039I).

The new coalition government will be hoping that the main benchmarking report, when PSBB issues it later this year, can do enough to satisfy the public service trade unions, while keeping pay rises within the limits of what the state can afford.

Brian Sheehan, IRN Publishing