Editorials

The Irish Times view on public service pay: Prudence vital for public finances

Public spending is coming under increasing pressure – caution is urgently required

Minister for Finance, Paschal Donohoe– has warned the cabinet about spending pressures. TD Photograph: Dara Mac Dónaill / The Irish Times

Sat May 4 2019 - 00:05

The annual conferences of the public service unions have highlighted the pressure building on Government in relation to public sector pay. There are demands that specific issues be dealt with, pressure for an early pay review and a clear signalling of pay demands once the current public sector deal runs out. With a general election likely in the next year to 18 months, the trade unions will aim to use their leverage to maximum effect.

Pay is now on the increase in many parts of the private sector and there is – of course – a case for further public service increases in the next agreement. But it needs to b e based on realism. The unions argue that all that will be achieved by the current agreement is pay restoration – a return to 2008 pay levels and a reversal of the emergency cuts.

But this is not a reasonable starting point for talks. The public pay bill has been on the rise now for some time, with higher numbers and pay increases, along with the payment of increments. On many criterion – flexibility, pensions, security – the public sector remains a comparatively good place to work. As it should be.

The concern now for the Government is that a range of special deals with different groups – either concluded or signalled – are quickly adding up to a substantial sum, before any consideration is given to the new pay round. There is a deal done with the nurses, an offer to general practitioners, the commitment of further talks with teachers and pressure in other areas such as the defence forces.

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Minister for Finance Paschal Donohoe has warned that special claims could undermine the whole edifice of collective bargaining. On a wider scale, he is warning his cabinet colleagues about the risks of a breakdown in spending discipline. Whether they are listening is, of course, another matter entirely. Is the Minister now a lone voice, or has he got wider support?

Sustainability in the public finances is vital, particularly given the likelihood that growth is slowing and in light of the risks facing the economy, including Brexit. There is a risk, now, of a push on pay and spending more generally at the very top of the economic cycle, based on tax revenue growth which may not be sustained. With a general election likely in the not-too-distant future, the question is whether the Government can hold the line.

Recent developments give cause for concern that a number of senior ministers are now only paying lip-service to the idea of sustainablility in the public finances. Perhaps they have already forgotten what happened before the crash, when spending based on transient tax revenues was a key factor leading to the crash.

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