How can the public sector pay deal get over the line?

A unique aspect of the public sector pay talks that began on Monday, following the one-day strike on October 14th, is that there will be beneficiaries from any deal on both sides of the negotiating table.

Senior civil servants will directly benefit from whatever increases they concede to with the union negotiators by seeing their own wages increase as a consequence of any deal that is agreed.

On the other side, two of the four trade unions with people at the heart of the negotiation process, Fórsa and the Irish National Teachers’ Organisation, base their own salary scales on grades in the public service.

Other unions are onlookers in the talks but rely on them and will likely be influenced by them.

Pay was moved to the top of the agenda for the talks after an initial standoff. Unions insisted that agreeing a pay deal first amounted to a precondition.

[ ‘It’s not going to be smooth’: Government and unions start on long road to pay dealOpens in new window ]

The headline figures over the negotiations playing out behind closed doors at the Workplace Relations Commission are out there.

The unions want the Government to go beyond the €1.2 billion set aside in this month’s budget for a public sector pay deal. It has been suggested that the Coalition could stretch to €1.6 billion.

But the unions point to inflation that is now running at just over 4 per cent and have suggested inflation-proofing the wages of their members is essential. They have seized on the €2 billion figure that they say was floated by the Government side in advance of the talks.

In a briefing to his union’s members on issued on Friday, Kevin Callinan, general secretary of Fórsa, the biggest union in the public and civil service sector, described the talks so far as “slow and arduous” but suggested they would like conclude next week even if it was with no deal being agreed.

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Productivity has been highlighted as a key issue by the Taoiseach and Minister for Public Expenditure and Reform and, as part of that discussion, artificial intelligence and its impact on work, hybrid working and mobility are all likely to be the subject of talks.

The umbrella term “productivity” raises some hackles on the union side.

“You should bring them down to the Mater emergency department on a Saturday night if they want to see how hard people work,” says one union official who dismisses the suggestion that adoption of technology is a major issue.

Alan Eustace, assistant professor at the School of Law in Trinity College Dublin, suggests productivity is tricky to measure.

“What does it mean?” he asks. “If it means more teaching hours, that’s one thing,” he adds, offering a view of how it works in academia.

“If it means more students taught, that’s a very different thing. The term gets thrown about a lot, but many of the conventional metrics for productivity don’t really work. And to achieve others might require additional spending when funding of third level is already a huge issue.”

Previous deals were rooted in broad terms around co-operation with change in the workplace. The Government will have to show sceptics in negotiations something tangible around what this means to strengthen its hand in the many engagements to come.

That, suggests Colm McLaughlin, professor of employment relations at UCD’s School of Business, is the more likely goal on the Government’s side.

“The Government has explicitly stated it wants productivity improvements as part of any new agreement,” he says.

“I suspect what it may actually be looking for is greater union co-operation with its modernisation agenda, particularly around technological change and new working practices.”

Advances in AI technology since 2024 means it will have to form more than a vague paragraph in any agreement about the importance of Ireland adapting and the public sector playing a leading role.

“In terms of productivity, the appropriate adoption of things like AI would be a great benefit,” says Danny McCoy, chief executive of business representative group Ibec.

He sees benefits too in the “ability to reallocate people across the public service and to things we are valuing much more highly, which would include things like defence and security”.

“I think there should be an openness to move in that direction,” he says.

He adds that the “need for ongoing change is always a factor”.

“We’re in a world of change and so it’s important there is the willingness to change but I think that’s probably there,” he says.

Kevin Callinan made it clear in the run-up to the talks that hybrid working was an important issue for his members, which include many white-collar workers.

It remains to be seen if the Government seeks to make significant changes to an employment landscape as varied as the private sector that would affect very senior staff.

The unions will likely want evidence justifying any requirements for increased in-person working.

There has already been resistance to a move by the Department of Social Protection to the number of days some staff were required to attend in-office.

Employers have repeatedly held that they have the final say on the issue, but, in the context of the negotiations, it may prove difficult for the Government to shift the dial.

A repeat of the last deal’s clauses on outsourcing is likely to be sought and with management in the Health Service Executive (HSE) trying to reduce its heavy reliance on outside agency staff due to the added costs, the unions will have a case to make for holding what they have in key areas.

What could prove to be a major stumbling block in the negotiations is the issue raised by the union side of restoring trust in the public sector’s industrial relations processes.

They make no secret of the fact they think the Department of Public Expenditure has too much power and exercises it as though the country is still in the grips of the recession that led to its establishment in 2011 in the wake of the economic crash.

Union officials will face challenges persuading senior officials from that department that changes are required.

The announcement by Minister for Public Expenditure Jack Chambers in the budget of his intention to establish a new agency to evaluate spending and ensure value for money suggests movement in the opposite direction.

The Government side is bound, in any case, to insist that there be no further strikes and no clauses involving cost-increasing claims. A handful of currently unresolved disputes will normally be excluded so that separate processes can be completed. Nine were excluded in the last pay deal.

Overall, the negotiation process is far from perfect and both sides are aware of its limitations.

Much of the final language will likely be vague with dispute resolution mechanisms laid out and possibly a review process.

In the end, says TCD law professor Eustace, “the process works until it doesn’t but it has previously resulted in deals. They have contributed to prolonged periods of industrial peace.”

There are good reasons for both sides, he suggests, to want to agree another pay deal. However, the October 14th strike – and the significant recruitment to the unions around it – is a reminder why it is good, from the perspective of the unions, to be seen to pick a fight from time to time.

“Getting public sector pay index-linked now might be viewed as a major achievement,” says Eustace, of a potential measure that ties pay rises to inflation.

“But then people would take that for granted; the unions wouldn’t be seen to have a role in it.

“It’s like the State pension – a lot of politicians go around telling constituents: ‘I got you that tenner.’ The unions need to be able to point to what they got for their members.”

The unions have pushed for some mechanism to be established to ensure members are not caught out again by any spike in the rate of inflation.

McCoy of Ibec believes indexation should be a red line for the Government.

“It’s a reasonable expectation for any workers to be getting cost-of-living increases. It’s also a reasonable expectation for the Government, as the employer, to ensure they get productivity to justify any future price or wage increases,” he says.

“In that conundrum, it is never a good idea for a society to have a public sector that has index-linked wages to inflation.

“Once inflation is 15 per cent but your wages grow by 15 per cent you don’t care. But the public sector is only a subset of society and them saying: ‘I’m all right, Jack’ is not a good look for those on the outside.”

McCoy argues that the reasonable expectation is for a pay increase at or close to inflation but he believes linking inflation to wages would be “a kernel mistake”.

“Despite the strike, which was about the unions demonstrating the power they have, though, I don’t think any of this should all be dramatised too much,” he says.

“It’s a regular enough pay round in my view. And we have a functioning public service, which a lot of societies don’t have right now because of issues with their public finances.

“Ours could be better, of course, but ensuring a continuation of what we have, ensuring it doesn’t slide backwards, is an important starting point for this process.”