Give Me a Crash Course In . . . the rise in public service pay

What are these public-service pay talks all about? Since 2009 the Government has cut public-service pay and pensions to the value of more than €2 billion. To do so it introduced financial emergency legislation, essentially to allow it to break agreed terms and conditions. But this legislation was based on the premise that there was a financial emergency. Given that the Government has declared austerity to be over, it fears that a court could strike down the cuts on the basis that there is no longer an emergency, leaving it facing an immediate €2.2 billion hole in its accounts. So the Government wants to unwind gradually the financial emergency legislation.

Will this mean pay rises for public service workers? The purpose of forthcoming talks is to give more money to public servants. But it will be described as pay restoration rather than as a pay rise. Most public servants have had two reductions in their earnings since 2009; some have had three. The cuts will not be reversed in one go, however.

What did we learn this week? The Irish Times reported that the Government was set to allocate between €250 million and €300 million for pay restoration. On average this would see public servants earn between €800 and €1,000 more, gross, each year. Any deal is likely to be targeted at low earners in particular. Unions are expected to press for a flat-rate increase that would be more beneficial to the lower-paid. The public service pension levy – which currently averages about 7 per cent – may also be tweaked to boost earnings.

What does this mean for private sector workers? A significant number of private companies have already reached deals with their staff over the past year or so. These increases have generally averaged between 2 and 3 per cent. A public-service pay deal would have no impact on them. Minister for Health Leo Varadkar warned on Thursday, however, that the Government has a limited pot of money to fund public-service increases. These resources also have to pay for the development of public services and promised tax and universal social charge cuts. Any large-scale increase for the public service could, in theory, reduce the Government's scope to provide tax cuts that benefit all workers.

What about additional productivity in return for pay rises? Some Fine Gael Ministers have urged that pay restoration be made conditional on increased productivity. Varadkar has spoken about the need for hospitals to provide more services, such as scans and operations, at weekends and at night. Although he suggested that workers would be paid extra for this, any such developments would affect staff rosters. Unions have rejected any such conditionality. They say that public servants have already given significant extra productivity. Some unions also want to roll back some of these changes. The Government will likely want to maintain the productivity measures, such as a longer working week, set out in the Croke Park and Haddington Road agreements.

Is this all about pre-election politics? The Government says it has to begin the gradual unwinding of the financial emergency legislation that underpinned the pay and pension cuts. But the Haddington Road agreement does not expire until the sumer of 2016. It could just be coincidence, but, by entering talks now, any pay increases for 300,000 public servants will more than likely come into effect early next year, just weeks before the scheduled date of the general election.