Chambers warns pay deal could be reviewed if Irish economy contracts

The Government would seek to invoke the review clause of the proposed public sector pay deal in the event of a “significant contraction” in Ireland’s economy, Minister for Public Expenditure Jack Chambers has said.

The public sector strike planned for Thursday was called off after the sides agreed a €5.2 billion deal that will deliver pay increases of at least 10.75 per cent to more than 400,000 workers by the end of March 2029.

The deal includes a review clause which can be triggered by either side if economic conditions or inflation rates change “significantly”.

At a press conference on Wednesday, Chambers said that if there was “a big inflationary spike, obviously the unions would have a legitimate reason to seek review.”

When asked, he did not say whether Government would seek a review of the deal if inflation falls.

However, he said the Government would seek a review “if there was a significant contraction within our economy and it’s something we couldn’t sustain or afford, which would be clear to everybody.”

“I think Government needs that protection as well,” he explained, though noting the Department of Finance’s medium term projections for the economy were strong.

“If the economic circumstances change and predictions change, then the review is something that both sides have, and that’s the responsible approach”.

Chambers added that the approach was “understood on all sides in the context of the uncertain economic environment in which the world is in.”

He brushed aside any suggestion the deal reached was a capitulation to unions, insisting the agreement represented “a real balance”, that the Government has not changed its medium term fiscal plan, and the deal was “sustainable and affordable for the public finances.”

Some €1.2 billion had been earmarked for a deal in the budget for 2027 but there will be funding for the pay agreement from a €1.6 billion contingency fund also announced on budget day. The cost of the pay deal in 2027 will be just over €1.8 billion, Chambers said.

Put to him that the unions held a strong negotiating position given the strike threat coinciding with big European meetings in Dublin, and that this was his fault for not getting into the talks sooner, Chambers said: “We did try and get into talks and we didn’t get an outcome. We got a ballot for industrial action in June, and we tried to get engagement in September”.

“Ultimately, the objective assessment in budgetary terms is: have we stuck to the medium-term fiscal and structural plan which was agreed by Government?

“And you know, we haven’t undermined the budget for [2027].”

Chambers was asked how the Government would avoid having a weakened negotiating position for a successor deal given the proposed agreement is due to expire shortly before the local and European elections and, later, the general election, all expected in 2029.

He played down that potential saying his predecessor Paschal Donohoe agreed the last deal before the 2024 elections and that “was slightly shorter than this agreement, but it was at a similar percentage then as what we’ve agreed today.”

Earlier Chambers described the agreement as “balanced, fair and credible” saying “it prioritises the lower paid who I know are feeling the impact of the cost of living.”

Chambers denied a suggestion that he had “made a hames” of the talks by opening discussions with a derisory offer. There had been early “intensive” engagement with trade unions, he said.

[ Thursday’s public sector strikes called off as pay deal agreed in late-night talksOpens in new window ]

“Yes there were different starting points and offers made which is part of any negotiating process. And ultimately for me what I’ve been absolutely clear about from the start on this, I want to ensure ... the backbone of our societies, of our communities across our country, are public sector workers,” he told RTÉ Radio’s Today with David McCullagh show.

The new national pay agreement, concluded during talks at the Workplace Relations Commission at about 3.30am, will be considered by national executives of the 19 unions representing public sector workers over the coming days, with many of them due to meet on Wednesday.

Each are then expected to ballot their members on whether to accept the agreement.

An overall result of the ballots is expected during the second week of December.

Siptu deputy general secretary Adrian Kane said “one of the positives” of the agreement was that it was “unashamedly weighted towards the lower and the middle paid”.

Kane said “good agreements” had been made in areas such as artificial intelligence, and there were “sensible arrangements” with regard to hybrid working. Siptu and all the public sector unions would fight “very strongly” to prevent outsourcing of work, he added.

“We got a very progressive clause around public procurement, which had been absent from previous agreements. And they’re important things, and I think they’re value-for-money issues as well, because you can see most of the scandals around waste of Government money has been around the issue of public procurement.”

When asked what would happen if inflation runs higher than the agreed increases, Kane, who spoke on RTÉ Radio’s Morning Ireland and Newstalk Breakfast with Anton Savage, said: “another very strong part of the agreement is that there is a strong review clause, which allows either side to invoke a review if inflation gets to unexpected levels or [there are] other economic factors”.

With regard to strikes planned for Thursday, Kane said: “I can say with confidence every union who was at that meeting was agreed with the position that the strike would be suspended.”

Speaking after plans for the public sector strike were suspended, Kevin Callinan of the Fórsa trade union described the job of the Minister for Public Expenditure as “probably the toughest and the loneliest”.

“But I think the Government really need to seize the moment now to use the opportunities that are reflected in the agreement to create dialogue with its workforce. And that we try and collaborate more effectively on the challenges that are coming.

“I don’t think this deal is going to be accepted in a landslide. There are a lot of issues out there. But I think what we have done as a trade union movement is we’ve brought people together.

“But I think the real message I’d like to deliver this morning is that it’s going to require more than a pay offer from the Government to repair the relationship between public servants and the Government,” he told RTÉ Radio’s Today with David McCullagh show.

“It’s very clear to me that many, many public servants have felt that the Government was out of touch with their daily reality in terms of not just cost of living, but obviously, like every other worker, people are struggling with the cost of living.

“But one of the things that came really loud and clear on the picket lines was just how much people were under pressure at work, struggling with resourcing deficits in some cases and increased demand,” he said.

“And for young people, so many of them said that they felt that they were being forced to emigrate because of ... the struggle, not being able to pay rent, not being able to save to buy a house,” Callinan said.