Ireland: Public sector pay restoration talks look set to succeed
Public service trade unions have concluded a ‘pay restoration’ agreement with the government, costing €566 million over a three-year period. The average gross payment per employee will be €2,000, to be paid out between January 2016 and September 2017. Individual unions are balloting on the proposed agreement, with most commentators predicting a comfortable ‘yes’ vote.
The proposed Lansdowne Road Agreement (LRA) will be implemented through a combination of downward adjustments to a special emergency public service pension levy, introduced as a result of the crisis in 2009, and a partial reversal of the public service pay cuts, made in 2010.
The adjustments were introduced using the FEMPI Act, which is emergency legislation allowing the government to make cuts in public service pay and pensions if the state is faced with a fiscal crisis.
The agreement was negotiated between the Department of Public Expenditure and Reform (representing the Irish government) and the Public Services Committee (PSC) of the Irish Congress of Trade Unions (Congress), assisted by the Labour Relations Commission. The new agreement will benefit lower-paid public servants by using a flat-rate pay adjustment. The LRA will take the place of the existing Haddington Road Agreement (HRA).
Phases of agreement
The first two phases of the agreement on basic pay will be implemented in 2016.
Phase one will be introduced on 1 January.
- The pension levy threshold (the salary amount above which the levy is payable) will increase to €24,750 (from the current threshold of €15,000).
- Annualised salaries up to €24,000 will increase by 2.5% through a partial reversal of the 2010 public service pay cut.
- Annualised salaries between €24,001 and €31,000 will increase by 1% via the same mechanism.
Phase two will be introduced on 1 September.
- The pension levy threshold will increase from €24,750 to €28,750.
The combination of these measures in 2016 will improve all public service full-time incomes by around €1,000 per annum.
Phase three will be introduced on 1 September, 2017.
- Annual salaries up to €65,000 will increase by €1,000 per annum.
The agreement confirms that existing agreed dates for pay restoration for staff earning more than €65,000, which was negotiated as part of the HRA agreement in 2013, will apply, as agreed, starting on 1 April 2017 and concluding on 1 January 2018.
Tighter measures on dispute resolution
The proposed LRA agreement will also involve a tightening up of oversight measures and dispute resolution, contained in the HRA, which were originally introduced in the Croke Park Agreement, the first of these crisis-led arrangements. Key additional provisions for trade unions include protection against the outsourcing of government jobs and stricter requirements for publicly funded agencies to adhere closely to the procedures laid down by the state’s formal dispute resolution agencies, the Labour Court and the Labour Relations Commission. In return, the trade unions promise to maintain and enhance productivity, although no new changes to specific terms and conditions are included in the LRA.
The HRA, for example, resulted in extra working hours for many groups that were operating below the standard 39-hour week and overtime rates were reduced. These measures will stay in place under the LRA, and the government regards these types of changes as permanent. Some unions, in particular two higher-level teacher unions, the Association of Secondary Teachers in Ireland (ASTI) and the Teachers Union of Ireland (TUI), and the union representing lower-paid civil servants, the Civil and Public Services Union (CPSU), have tried but failed to get a reversion to pre-HRA working hours.
Individual unions are balloting on the proposed agreement, which will be ratified if an aggregate majority of unions that make up the Public Services Committee (PSC) of Congress approve it. In early June, the executives of most of the larger unions had recommended a ‘yes’ vote to their members, with most commentators forecasting a comfortable ‘yes’ result.
Separately, the issue of rolling back some of the pension deductions for existing retired public service pensioners, also introduced during the height of the crisis, was addressed in what was described as a ‘parallel’ set of talks between the government and the Alliance of Retired Public Servants (ARPS), assisted by Congress.
About 90,000 public service pensioners (of a total of 140,000) will benefit to some degree from the concession, with 65,000 escaping the levy entirely by 2018. Typically, beneficiaries will receive €900 over the first two years of the arrangement, rising to €1,680 in total in year three.
Hopes for industrial peace
The Minister for Public Expenditure and Reform, Brendan Howlin, said the LRA strikes the right balance ‘between the legitimate aspirations of public servants for pay recovery and sustaining our improving public finances’. He also predicted it would secure peaceful industrial relations until September 2018.
The minister said the LRA also reinforces the continuing commitment of public servants to the wider reform agenda in the public service and begins the process of unwinding the FEMPI legislation in a ‘prudent and sustainable fashion thereby reducing the risk to the sustainability of the public finances’.
The vast majority of public servants will gain from the LRA, a fact that is expected to help to assure its passage. This means that the coalition government will have the agreement in place for its final budget (in 2016) before the General Election, which must be called before April 2016.
The formula used to trigger pay restoration involves a combination of easing the widely unpopular 2009 pension levy and pay increases for the lower paid, in order to ensure they secure the maximum benefit from the agreement. The result appears to be weighted against higher earners. This has led to criticism from unions representing higher-level civil servants and hospital consultants but, in a break with recent practice, the union representing clerical and administrative grades in the Civil Service, the CPSU, has advised members to back it.
The speed with which the agreement was concluded took critics of the process by surprise, and may also explain the rather muted criticism from commentators who have tended to blame the public sector for helping precipitate the fiscal crisis in the mid-2000s. No deal would have been possible without a key group of individuals from both sides preparing the groundwork for an agreement.
The LRA will clearly mark out public service pay and pension costs for the next three years, which should provide certainty for the post-2016 election government. It should also ensure continued industrial peace in the public sector, an achievement that has often gone unremarked since the first of these agreements was negotiated in 2010.
The attendant system for dispute resolution with its binding powers should continue to work well for management and trade unions. For example, health sector management has faced, and continues to face, enormous pressures and constraints, but it has to accept binding industrial relations decisions. This encourages more astute management in a sector that has often demonstrated an inability to secure enhanced productivity from existing resources.
Unions and management across the public service also took the opportunity during the negotiations to conclude stand-alone ‘local’ deals on particular issues, such as:
- flexitime leave carryover in the civil service;
- working hours of nurses and midwives;
- banking hours in the Revenue (the tax and customs agency);
- access to an independent and effective civilian watchdog body by Garda employees (including access to the Labour Court on issues under the HRA/LRA).
These so-called ‘side deals’ will generally be welcomed by trade unions. The overall cost involved is believed to be minimal and they will assist in the smooth passage of the agreement.