Public service pay deal: a fair attempt at compromise

The proposed new three-year public service pay agreement will inevitably attract criticism but, given the budgetary constraints, it represents a fair attempt at a compromise by the Government and the public service unions.

The bottom line is that 90 per cent of public servants will have their pay restored to pre-financial crisis levels while, as a quid pro quo, 70 per cent of them will be making a higher permanent contribution to their pensions. Minister for Public Expenditure Paschal Donohoe argued that the deal is fair to those who work in the public service, fair to those who depend on public services and fair to the taxpayers who will end up paying the bill.

Not all public service workers will agree and some of them have already made known their objections. They will have an opportunity to vote on the deal in the coming months but should consider all of the implications for both themselves and the State before they come to a decision.

Many may feel understandable disappointment that what was an emergency pension levy has now been transformed into a permanent increase in pension contributions. This applies particularly to those who joined before 2013 or those, like gardaí or Defence Forces personnel, who have accelerated provision. However, it needs to be borne in mind that the relatively generous pension entitlements for public servants are not adequately funded at present and action is required to ensure that they are put on a sounder footing in the long term interests of the beneficiaries as well as the taxpayer.

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Another thorny issue is that the emergency requirement for some public servants to work additional unpaid hours will remain in place although staff will be given the opportunity to revert back to their previous shorter working week on condition that they agree to a corresponding pay cut.

If many public servants have doubts about the deal on the basis that it does not give them enough, there are doubters on the other side who feel that it gives away too much scarce public money to those already in safe and well-paid jobs.

The cost of the deal to the exchequer next year will be around €180 million, which will amount to roughly one third of the leeway available to the Minister for Finance for the 2018 budget. It means there will be a further limitation on the money available for tax cuts or extra spending on public services.

There is also the worry that with the impact of Brexit likely to bite hard in the next three years, the current growth forecasts on which the pay deal is based may not materialise.

If circumstances change the deal may have to be revisited but, in the light of all the pressures and constraints facing the public purse it appears to be the best available option.