Standing up for the public sector

THE FRIDAY INTERVIEW:Shay Cody, incoming secretary general, Impact

AN INTERVIEW with the secretary general designate of Impact Shay Cody is peppered with digs at the media.

As a longtime trade union official and a member of the executive of the Irish Congress of Trade Unions (Ictu) since 1996, he believes the viewpoint from the left was “squeezed out” of the national debate during the boom years, courtesy of the media.

Likewise, he believes the debate taking place through the media now on how to deal with the downturn is similarly skewed.

Impact has more than 65,000 members, most of whom work in the public and civil service. Members are “mystified” as to how a debate that began when the downturn suddenly arrived, started out being about how property developers and the banks had all but destroyed the Irish economy but quickly morphed into an offensive against the public sector.

He is particularly galled that “stockbroker economists”, cheerleaders for the policies that brought the State close to ruin, are now back on the airwaves, and in the national press, complaining about public sector workers.

Such people, he says, are "part of the public relations bill of their particular employers". Yet they appear on RTÉ Radio's Morning Irelandprogramme morning after morning, setting the media agenda for the rest of the day.

Cody (53) is general secretary designate of Impact and will take over from Peter McLoone in August. He has been working for the union since the early 1980s and has been a member of the National Competitiveness Council (NCC) since 2006.

The union’s annual conference closes in Kilkenny today and the overarching item for the gathering is pay, pensions and the Croke Park deal. Members, he says, are “very battered and very bruised. Very angry.”

Pension levies and pay cuts have hurt, as has the way the public debate has turned on the public sector.

There is no debate, he says, about the need to return order to the public finances. “Reducing the deficit in steps is a given.” Ictu had wanted the Government to set a longer timeframe and that is now probably going to happen, he says.

What has caused anger is the Government’s switch from a policy based on tax increases and expenditure cuts, to a policy based on cuts only. He believes that more taxation of those on incomes in excess of €100,000 per year is needed, for leadership reasons alone.

He is also an advocate for increasing taxes outside the labour and consumption areas. “Every other country in the world has taxes on property but we don’t.”

Cody believes the decision by the Government and the Minister for Finance, Brian Lenihan, to switch from a tax/cuts package to a cuts only package, was the result of “naked political considerations”.

“The attack on the public sector worker courted favour from the private sector. It also moved the debate away from places where the Government was exposed. The people who had been cheering the bubble then re-emerged as critics of the public sector.”

He does not agree with the argument that because Ireland priced itself out of the international marketplace during the bubble, there must now be a generalised reduction in wages in order to restore competitiveness.

What is required is the reduction of non-wage costs that affect competitiveness, he says.

The media, including RTÉ and The Irish Times, have had to introduce pay cuts because their income has been severely affected by the downturn. This has introduced a media bias in favour of more generalised cuts, but the argument does not necessarily follow, he says.

Many companies are trading well despite the downturn and do not require wage cuts. Ireland’s export performance during the downturn has been better than most OECD economies, and ironically we have increased our market share.

"There haven't been widespread wage cuts in the private sector. There has been some high profile wage cuts, in the media, for instance. RTÉ, The Irish Times, the ( Irish) Independent. Which feeds into this view that everybody should take a pay cut. 'I've taken a pay cut, so what are you people whingeing about'."

The important point for the State in terms of international competitiveness, is “unit labour costs”, Cody says, and he refers to the NCC’s most recent report. Irish pay and income levels are “moderate when compared with other developed, high income economies”, he says, reading from the report. “We are in a better place than the public debate would maintain,” he adds.

The problem is broader businesses costs, he says, and he refers to last week's report in The Irish Timesthat legal firm Arthur Cox was one of the largest in Europe.

A review of the 2009 NCC report shows concern being expressed about wage rates, but supports Cody’s argument that the main emphasis is on costs in the sheltered or non-traded sectors. Rents and other charges are mentioned, along with professional fees. It notes that the National Assets Management Agency will spend up to €2.6 billion on professional services and says the Government needs to use its considerable purchasing power to apply downward pressure on professional fees.

Yet while the union and many of its members feel the public sector is being unfairly targeted, Cody appears to agree with the suggestion that the union feels people don’t have the stomach for protracted industrial action. “There is an element of that,” he says.

The union executive was initially opposed to the Croke Park deal but has changed its stance. A ballot is under way.

The deal at least provides an assurance that no further pay cuts will be imposed, and creates a potential platform for the restoration of former pay levels. Cody believes there is a potential to achieve significant efficiencies in the public service without services to the public being adversely affected.

The membership, he says, is aware of wider developments such as what is happening with Greece and the euro zone generally. “So does the Government have the freedom to do anything further than what is in the Croke Park model? Probably not.”

As a member of the Ictu executive, Cody was involved in the partnership negotiations. He does not accept the criticism that trade unions, by way of their involvement in the various partnership agreements of the Bertie Ahern years, were contributors to the difficulties in which the State now finds itself.

Interestingly, he says the Government cleverly inserted into the agreements whole chapters that came straight from the various programmes for Government. Although these elements of the eventual final documents had nothing to do with the partnership negotiations, they created a false impression that there was a national consensus on the issues concerned.

“Remember the talks were chaired and facilitated by the Taoiseach’s department. They had a lot of headroom to write the non-essential script.” This gave the Government something to hide behind when it was subjected to political criticism, he says.

Defending the role of the unions in the boom years, he says the Ictu has just made a submission to the banking inquiry pointing out the positions it held over the years on light regulation and low tax, which were largely ignored.

“Dissenting from the consensus was almost treated as if it was national treachery. I recall Dave Begg and Paul Sweeney, for example, being rounded on by opinion formers when congress complained to the EU about property tax reliefs being rolled over. There were editorials accusing them of economic treason.”

During the early part of the boom congress, he says, was highly critical of the Government’s policies on housing and land, pointing out that increased property prices put pressure on wages. “We were rubbished and ignored.”

Congress argued against increased reliance on transaction taxes, was against Charlie McCreevy’s reductions of the top rate of income tax, and his halving of the Capital Gains Tax rate.

It also supported the view of the National Competitiveness Council that there should be a European type property tax rather than the stamp duty transaction tax.

All of these proposals and views were ignored by Government and ignored or criticised by the media, he says.

Then, from about 2000 onwards, there was internal upheavals within the trade union movement as members sought to maximise wage increases so as to keep pace with increasing property prices. “It was housing prices that led to the wage demands from 2000 onwards. Every union experienced these waves of demand for wage increases because the members could not buy houses. People had to be able to get on with their lives.”

On the record

Name:Shay Cody

Age:53

From:Drumcondra, Dublin.

Family details:None of your business.

Why is he in the news?:He is the incoming secretary general of Impact, the State's largest public sector union, which held its annual conference this week.

Something you might expect:He feels the Government's strategy towards public sector cuts is unfair and and that there is scope for further increases in tax revenue.

Something you might not expect:He is critical of how the Government has consistently ignored the reports of the National Competiveness Council. High costs such as professional fees and other charges are more damaging to Irish competitiveness than its wage rates.