Truce is called on public sector pay

The last sentence of the speech by the ICTU general secretary, Mr Peter Cassells, to yesterday's general review of Partnership…

The last sentence of the speech by the ICTU general secretary, Mr Peter Cassells, to yesterday's general review of Partnership 2000 in Dublin Castle said it all.

"Congress is recommending that new methods of pay rewards for public servants, which will not automatically result in knock-on claims, should be developed between the Government and public service unions as a matter of urgency."

In one breath, he had transformed the threatened summer of discontent on the public sector pay front into an armed truce, and a fairly amicable one at that.

The public service unions were willing to abandon the arid land of relativity claims to enter the promised land of productivity and performance-related pay. All the Taoiseach, Mr Ahern, had to do was deliver on his promises.

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It would be wrong, however, to see events of the past nine days since the INTO general secretary, Mr Joe O'Toole, demanded a "second bite" at the public service pay deal for teachers as simply an elaborate display of shadowboxing.

He gave voice to rising discontent within public service unions, not just at the preferential treatment the Garda Representative Association received under the Programme for Competitiveness and Work, but wider issues, such as inflation and tax reform.

As Mr O'Toole put it yesterday, the INTO had "given a focus to the meeting". Mr Ahern had now "acknowledged there were difficulties, and that we needed imaginative ways of managing public service pay and pay bargaining. This is the wedge of opportunity we needed to progress from a very difficult position."

Whether it will be enough of a wedge to placate public service workers remains to be seen. Both sides will sit down in September to review the situation. By then the Garda pay dispute will, hopefully, be resolved; along with other unfinished business under the PCW involving groups such as firefighters and PDFORRA.

The Government has succeeded in staving off any new claims under the PCW with a promise that the concerns of public service workers will be addressed, albeit in whatever national agreement follows Partnership.

Mr Ahern has bought time with commitments to target tax cuts in the next Budget at low- and middle-income earners, phase in the national minimum wage on schedule and take immediate steps to curb profiteering.

"I don't want to go back to the era of price controls," he said, "but there is no justification for some price increases. That's why we moved so swiftly on the Bacon report [on housing], even though it upset so many people in the investment market."

He said he would be looking at the ICTU's proposals for price monitoring.

At one level, Mr Ahern had an easy job on his hands in winning round the public service unions. By listing the achievements of social partnership since the Programme for National Recovery in 1987, he reminded not only trade unions but employers, farmers and other social partners of how much they stood to lose if the system collapsed.

The 1987 Budget deficit of £1.4 billion had been transformed into a surplus of £604 million. The Exchequer borrowing requirement was £235 million in 1997, compared with £2.1 billion 10 years ago.

Unemployment had almost halved, down from 17.5 per cent to 9 per cent. GDP had grown by 6.7 per cent last year, compared with the EU average of 2.3 per cent. Mr Ahern said it would be foolish to let all that unravel, and no one contradicted him.

Some of the leaders of the largest public service unions, such as the IMPACT general secretary, Mr Peter McLoone, and the CPSU general secretary, Mr Blair Horan, had signalled to Mr Ahern that their priority was to maintain growth in real incomes rather than engage in a futile chase after pay relativities. They have felt as frustrated as the Government and public service management at the failure of the restructuring clause of the PCW to provide an escape route from relativity claims.

The acid test of Mr Ahern's initiative yesterday will come in the autumn when both sides see if it is possible to develop an alternative model.

Yet even if they succeed, plenty of challenges remain. The private sector unions will not live with a social partnership arrangement which fails to resolve the problem of union recognition and, in the short term, this Government will be judged by whether it lives up to its commitments in the Budget.