Social partners' body asked to address public service pay problem

In early November 1998, Ireland's Prime Minister, Bertie Ahern, asked the broadly-based National Economic and Social Council, which has played a key role in underpinning successive national agreements between the social partners, to examine the relationship between public service pay and performance.

The National Economic and Social Council (NESC), which has underpinned successive agreements between the social partners, was asked by the Taoiseach (Prime Minister), Bertie Ahern, in early November 1998 to examine the link between public service pay and performance. The exercise will take place as part of NESC's forthcoming three-year strategy report on the Irish economy, which is due to be published by the middle of 1999.

The Taoiseach was also due to meet with the public services committee of the Irish Congress of Trade Unions (ICTU) in December to discuss how to prevent public service pay from spiraling out of control in the short term.

The NESC helped to underpin the first of Ireland's national agreements of the past decade - the Programme for National Recovery (PNR), 1987-90 - with the publication in 1986 of its report on the best strategy for the Irish economy, entitled, A strategy for development. This was followed by similar NESC reports prior to the agreements on: the Programme for Economic and Social Progress (PESP), 1991-3; the Programme for Competitiveness and Work (PCW),1994-6; and the current Partnership 2000 (P2000), 1997-2000 (IE9702103F).

The established social partners, who are all represented on the NESC, agreed a shared analysis in each of its three-year reports. Ironically, the authors of the 1986 report - the first of its type - did not actually set out to draw up the basis for a tripartite national agreement. It was only later that they used the main tenets of the 1986 report to anchor key targets and goals enshrined in the PNR. In that sense, the 1986 report was pivotal. Now, Mr Ahern obviously hopes that by asking NESC to pay special attention to public sector pay, a broad consensus can be concluded about how to tackle the thorny pay issues which have proved extremely difficult for various governments to untangle.

Preventing more knock-on claims

Meanwhile, current public service pay difficulties, for example, in relation to the country's 30,000 nurses (IE9702104N) and its 12,000-strong police force (IE9808256N), must be resolved without sparking off a fresh round of "knock-on" wage claims. The application of basic pay increases under the various agreements has not been a problem. The difficulty lies in the room allowed under the PCW and P2000 for what is known as "local bargaining", where a specific percentage of the overall payroll cost of a particular category of employee (3% under PCW and 2% under P2000), is set aside to enable "pay restructuring" to take place. Such restructuring can, for example, include changes in grading systems allowing for more promotion opportunities, enabling some employees to receive considerably more than the 3% "payroll" limit provided for under PCW. However, some of the agreements which have been concluded have resulted in higher increases than are technically allowable under the PCW. This has led to "catch-up" or "special" pay demands from other employees. Complicating the situation still further is the fact that groups like nurses and the police are now looking for additional increases under PCW, before agreeing to move on to local bargaining talks on the 2% payroll limit provided for under P2000.

The best that Mr Ahern can hope, therefore, at least in the short-term, is to persuade the public service unions finally to conclude pay talks on the local bargaining element of the PCW, and then examine any fresh claims in the context of the current agreement, P2000. In tandem with that, Mr Ahern hopes that the NESC can come up with a solution which would allow for local bargaining increases in future agreements to be linked to performance-related pay.

Mr Ahern told the NESC that pay and reward systems which "encourage innovation, flexibility and lifelong learning" should be examined, and that there must be a move away from the old ways of establishing rounds of "special" increases designed to maintain traditional relativities. What is needed is a "fundamental look at how pay bargaining and pay management are approached in the public service, beyond Partnership 2000". He said he believed in the need to consider how public pay policy can, by more closely relating pay to performance, meet the aspirations of public servants, "while maintaining the unavoidable limits on public spending".

The task is urgent

In a direct reference to current difficulties surrounding public service pay claims, Mr Ahern noted that events in 1998 have made reform of public sector pay more urgent: "We need to work on how to bridge the gap between aspirations and limited public spending, and do so in a way which delivers top-class responses to the customers and clients of our various public services." According to the Prime Minister, the focus must be on the factors necessary to deliver top-class performance, and it will have to recognise the need for - and develop the specifics of - the changes necessary to achieve a closer relationship between pay and performance. However, he warned that such changes cannot be achieved overnight.

In asking the NESC to prepare its next three-year strategy report on the Irish economy, Mr Ahern said that the Council would have to consider a number of key questions:

• where do we wish to see Ireland positioned as a society and an economy 10 years from now?

• what underpinning is required for sustainable development?

• what are the implications of these issues for developments over both 10-year and three-year timescales?

The Taoiseach stressed the importance of key issues such as the globalisation of the world economy, the deepening of Ireland's engagement with the process of European integration and the need to modernise national systems to ensure sustainable growth and social inclusion. NESC's great strength is that the process of preparing its reports, by the involvement of the social partners, is in itself a key factor in securing their validity and their prospects for implementation, Mr Ahern said.

Commentary

Over the past 12 months, while there has been a higher degree of pay drift in the private sector than that which occurred during the PNR, PESP and PCW, though such above-average increases have been generally linked to performance-related criteria (IE9810262N). The difficulty is that this sort of pay restructuring - which has generally been in harmony with the needs of individual enterprises - has been largely non-existent in the public service.

The spate of so-called public service pay "specials", secured on foot of the PCW local bargaining clause, have been agreed without major performance or productivity concessions. Mr Ahern's request to the NESC is a bid to link local bargaining in the public sector to real change in future years. The only way for the Government to do that, it seems, is to devise a system which restructures pay along lines evident in the private sector while, in the interim, bridging the gap between what remains of the PCW and P2000 local bargaining, before moving to secure a new three-year national agreement in 2000. (Brian Sheehan, IRN and John Geary, UCD)