Varadkar and Martin promise to honour pay deal in bid to get Labour on board

Fianna Fáil and Fine Gael have made a major commitment to honour the public sector pay deal in a letter sent to the Labour Party on Tuesday.

In the joint letter from Taoiseach Leo Varadkar and Fianna Fáil leader Micheál Martin to Labour leader Alan Kelly, both say they will honour all pay agreements entered into by the last government.

The commitment will be received as a big concession to Labour on a core issue for the party, which draws much of its support from public sector workers.

The letter was written in response to a series of questions put by Mr Kelly to both leaders, arising from the joint framework document agreed by Fianna Fáil and Fine Gael. Some of the key questions related to borrowing, taxation proposals, social welfare and public sector pay and conditions.

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At a Fine Gael parliamentary party meeting last week, Mr Varadkar said he would still like to form as broad a coalition as possible, involving not only the Green Party but also Labour or the Social Democrats. In a separate letter written to the Social Democrats, Mr Varadkar and Mr Martin promised ringfenced funding for one of that party’s main policy planks, the Sláintecare blueprint to restructure the health services.

Pay commission

In response to the question on the current public sector pay deal, Mr Varadkar and Mr Martin also promise to establish an independent pay commission to consider the pay and conditions of the Defence Forces, and to ensure they are attractive.

On future agreements, they state: “It will be guided by requests from the negotiating partners, the State’s financial position and outlook, challenges in relation to recruitment and retention, and conditions within the broader labour market.”

We have committed to not raising income tax or USC. We also do not believe it is wise... to increase corporation tax

However, the two leaders give no guarantees on the continuation of the €350-a-week Covid-19 Pandemic Unemployment Payment into the future, saying it cannot continue indefinitely.

“Maintaining it would be divisive as it would create two different forms of unemployment payment. We do not believe that this is fair and sustainable into the long term. It will need to be reformed by the new government.”

Borrowing

Asked about the extent of borrowing over the next three years, Fianna Fáil and Fine Gael say it is “impossible” to predict the level with any reasonable degree of accuracy. The parties also say that they do not believe the country should tax its way out of the crisis.

“We have committed to not raising income tax or USC. We also do not believe it is wise... to increase corporation tax.”

Mr Varadkar and Mr Martin invite Labour “to participate in such a government and to help shape it”, adding it would prefer to be involved in direct talks with Mr Kelly and his party, rather than correspondence.

Labour has already stated it will not be going into coalition with Fine Gael and Fianna Fáil. The party is expected to study the proposals over the coming days before responding to the joint letter.