Public sector pay talks stall as unions reject 5% increase over two years

The Government’s offer of a 5 per cent pay increase over two years for thousands of public sector workers has been rejected by unions for falling “far short” of inflation.

Talks on the new public sector pay deal stalled after finishing without agreement in the early hours of Friday morning.

The Government, represented by officials from the Department of Public Expenditure, argued that the offer of a 2.5 per cent pay increase this year and a further 2.5 per cent next year came on top of a 2 per cent pay increase for public servants this year.

This would have amounted to 7 per cent over two years, costing the exchequer an additional €1.2 billion.

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However, unions said they could not recommend the deal to their members at a time when inflation was running at a considerably higher rate than the Government’s offer.

Senior officials say that contacts between the Workplace Relations Commission (WRC) and the two sides are likely next week in a bid to rescue the deal. Failure to reach a new agreement would raise the prospect of industrial unrest in the public sector.

Government sources insisted the offer of an additional 5 per cent over the next 18 months was a substantial one, and would bring the cost of the existing Building Momentum agreement to €2.3 billion in public sector pay increases.

Kevin Callinan, chair of the Irish Congress of Trade Union (Ictu)’s public services committee, said the Government pay offers fell “far short” of projected inflation and could not credibly be put to union members to vote on.

“The real-term shortfall between the modest pay increases in the current public service agreement and rising living costs is huge and could yet grow,” he said

Mr Callinan said workers were facing inflation rates of 7 per cent that could get worse next year.

“Against this background, the Government’s proposals would leave low- and middle-income public servants struggling to pay essential bills. And it would send a message to employers across the economy that workers alone must pick up the tab for out-of-control price hikes,” he said.

Mr Callinan said if the WRC saw “value” in further engagements unions would be available to continue to negotiate.

“We worked in good faith to avoid this breakdown, but the proposals we were presented with overnight could not credibly be put to union members, who rightly decide whether we enter or extend any agreement. The Government now needs to return with a more realistic offer,” he said.

In a statement Minister for Public Expenditure Michael McGrath said: “While it is disappointing that the talks have not yet delivered an agreed outcome, I understand the WRC have asked all sides to reflect on their positions and will continue to engage with the parties.”

Mr McGrath said there were “obviously limits” to what the Government could do given the “many expenditure pressures” it was facing.

Earlier on Friday members of Ictu’s negotiating team briefed officials from some 20 unions representing roughly 95 per cent of public sector workers, including members of the Defence Forces, to provide detail of how the talks stalled.

Government sources were glum about the prospects for a new deal, insisting that they could not be seen to be “chasing inflation”.

Minister for Finance Paschal Donohoe has also warned recently about the deteriorating economic environment internationally, with Ireland under pressure from interest rate hikes, high levels of debt and continued uncertainty about the inflationary pressures.

The Coalition is also under pressure for further measures to counter the cost of living, with Government backbenchers particularly vocal about fuel costs.