Over the coming weeks, many public service unions will hold their annual conferences and debate issues of importance to their members. This is a healthy process of engagement and dialogue in our society which I fully support.
This year’s conferences take place against a backdrop of an economy that is doing well but for which the projected growth figures for the coming years have, just this week, been revised downward. This is largely in light of the uncertainties that exist in the external environment: Brexit, a slowdown in EU growth and geopolitical tension.
Rising expectations are, of course, a natural byproduct of an economy that is doing well. However, the pursuit of unaffordable and unsustainable wage increases, beyond what has already been committed to, has an all-too-familiar ring to it; one which should be of grave concern.
This Government's preference is to deliver pay stability but through negotiated agreement, allowing public servants and the State to plan accordingly for the future
Last weekend I attended the International Monetary Fund spring meetings in Washington DC, where a strong sense prevailed that global economic conditions have deteriorated since last autumn.
Closer to home, the more immediate threat of Brexit lingers. From the perspective of the public finances, our priority must be to ensure we can withstand shocks, if and when they come.
It is worth remembering that almost one-third of current expenditure (€18.7 billion) by Government goes towards paying the more than 330,000 public servants the State employs.
So the choices we make really matter.
Government has sought to strike the right balance between the many competing priorities that exist; investing in homes, schools and better public transport for our people; increasing State payments and reducing taxes to ensure a better standard of living for all; and getting our economic house in order by paying down debt and preparing for the future so that we are better equipped for the years ahead to continue to provide for society’s needs.
Industrial peace
In the case of public pay policy, affordable and sustainable improvements brokered through negotiation with the public service trade unions have been our preferred approach.
Our system of pay agreements in the public service are designed to deliver industrial peace, stable pay growth and continuity of services to the public.
The current accord is called the Public Service Stability Agreement for a reason. It is designed to bring stability to this crucial area of the public finances. We know from the bitter experience of the recent crisis we have lived through just how important this is – and we cannot lose sight of it.
In some other jurisdictions, pay adjustments are decided by governments alongside all other priorities in the annual budget process based on what can be afforded year to year. This Government’s preference is to deliver pay stability but through negotiated agreement, allowing public servants and the State to plan accordingly for the future.
Public servants have a security of tenure that generally doesn't exist in the private sector
This approach also ensures that those with muscle don’t crowd out those in a less strong (but no less deserving) bargaining position.
I hope that the debates taking place in the coming weeks acknowledge these important benefits and give attention to how unions can support this model to continue to work for both parties into the future.
The value of the public service employment offering in the round also merits acknowledgment – being the product of mutually beneficial collective bargaining over decades.
Public service employment offers terms and conditions that are, in truth, beyond what is available in many parts of the private sector.
Occupational pension coverage in the private sector in 2017 stood at just under 30 per cent. Virtually all public servants enjoy membership of a pension scheme. Public servants benefit from defined-benefit pension arrangements compared to the defined-contribution schemes which dominate in the private sector, where they even exist.
Salary scale
Public servants in general benefit from two forms of pay adjustments, incremental progression up a salary scale and also general annual pay increases negotiated through pay agreements. This contrasts to the private sector where pay has moved towards more individualised arrangements, where some do very well but many don’t.
The public service is a progressive employer when we consider annual leave, flexible working and the facilitation of work-life balance – as is right. A recent report by Aviva Insurance found that only 30 per cent of Irish employers offer flexible working hours. Also, how many employees in the private sector enjoy full salary top up on maternity and paternity leave?
Finally, public servants have a security of tenure that generally doesn’t exist in the private sector.
None of this is to suggest that such benefits are not deserved. Of course they are and this Government remains committed to being a good employer.
Furthermore, the Government is committed to our system of collective pay agreements. However, their future viability is in the hands of both parties and will depend on whether there is a will to continue to accept the fundamental bargain that exists at the heart of these agreements – affordable improvements in pay in return for a full commitment to ensuring industrial peace and co-operation with change and reform.
Paschal Donohoe is Minister for Finance and Public Expenditure and Reform