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Analysis/Comment Last Updated: Sep 23, 2010 - 5:07:55 PM


Irish Public Service Agreement 2010-2014: It could work or may not; "It's déjà vu all over again"
By Michael Hennigan, Founder and Editor of Finfacts
Mar 31, 2010 - 3:41:09 AM

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Ministers attend a Cabinet Meeting at Government Buildings, Dublin, March 23, 2010. In 1872, English statesman Benjamin Disraeli, commented on William Ewart Gladstone's Liberal Party government: "As I sat opposite the Treasury bench, the ministers reminded me of one of those marine landscapes not very unusual on the coast of South America. You behold a range of exhausted volcanoes. Not a flame flickers on a single pallid crest. But the situation is still dangerous. There are occasional earthquakes, and ever and anon the dark rumbling of the sea.…"

Irish Public Service Agreement 2010-2014: The agreement between the Government and trade unions on public sector reform could work but to paraphrase the writer George Bernard Shaw, Christianity could be a good thing if anyone ever tried it. Put simply, only a fool could bank full confidence on this hastily cobbled-together deal and to quote the renowned American baseball player, Yogi Berra: "It's déjà vu all over again."

If union members approve the agreement, there is the prospect of workplace peace until 2014; some reduction in payroll numbers; improvements in workplace practices; a less balkanised service with more flexibility for staff transfers across the service but the devil is in the details and there are none. Besides, a floundering government and a deeply conservative male trade union leadership inspire almost zero hope or optimism.

The Bord Snip/Colm McCarthy report had recommended head count cuts of 17,000 and also changes in a raft of special allowances and other sweetheart deals. In the current agreement, there will be no compulsory redundancies and no further pay cuts and basically job security will continue to be guaranteed. There will however, be an impact on overtime payments  as a result of the redefining working day hours.

The document states that to "facilitate the necessary reduction in numbers of public servants, the moratorium on recruitment to and promotion in the public service and other employment numbers control mechanisms will continue to apply until numbers in each sector have fallen to the appropriate level specified in the Employment Control Framework for that sector. In addition, where the circumstances require it, the Government may offer voluntary mechanisms to exit the public service, whether generally or in specific sectors, bodies, locations or services."

Just this month, Taoiseach Brian Cowen, endorsed the aspirational Innovation Taskforce Report, which would require about €3bn in public funds allocated to research - - equivalent to 10% of annual tax revenues. The number of full-time equivalent researchers currently on the public payroll is 7,000 and this number would surge if the taskforce  recommendations are implemented. In the UK, an estimated 55% of the output of IT firms goes to the public sector. So what would the net savings be in Ireland? 

The document says on pensions:"as announced in Budget 2010, the Government has decided to introduce a new single pension scheme for all new entrants to the public service. Consultations on the new scheme have started between the parties and it is agreed that these consultations will conclude in time for legislation to be enacted to allow for the introduction of the scheme on 1 January 2011.

Discussions will take place on the method of determining pension increases for existing public service pensioners and current public servants in the context of the review of pay policy in Spring 2011. There will be an extension of the period by a year within which the January 2010 pay reductions will be disregarded for the purposes of calculating public service pension entitlements."

Back to Yoggi Berra! 

The First Benchmarking Body Report, which was published in July 2002, recommended an average special increase of 8.9% for ministers, TDs, other public staff and all public service pensioners. It "strongly" recommended that 75% of the payment be withheld until agreement was reached on how "real outputs" would be delivered. It also recommended that an "appropriate validation process" be established to ensure that agreements on issues such as adaptability, change, flexibility and modernisation were implemented in accordance with their terms.

In November 2003, Finance Minister Charlie McCreevy said in a speech: "while the Government is committed to honouring benchmarking, I would like to stress that the payments are dependent on compliance with the terms of the agreement. If the conditions are not met in any sector, grade or organisation then the payments will not be made in that area."

It was the bluster of a paper tiger and the money was paid with no strings  - - billions of it.

Now, the pay cuts implemented in last December's Budget, may be reversed if reform measures produce significant savings.

Public Service Agreement 2010-2014

Finfacts article, March 2010: Could the Irish public sector benchmarking fiasco provide a case for the DPP?

No further pay cuts until at least 2014:

  • There will be significant cost-saving reform measures implemented across all parts of the public service
  • Review of amount of savings achieved to be held in Spring 2011 to determine if scope for any reimbursement of pay cuts
  • Similar reviews to be carried out in subsequent years
  • Substantial cut in public service numbers in year ahead
  • No compulsory redundancies but flexible re-deployment arrangements necessary
  • Unified public service labour market to be created
  • Merit-based promotion to be the norm
  • Promotion and incremental progression based on performance
  • Industrial peace clause to be put in place

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