What is in the new public sector pay deal?

Trade unions have agreed on a new draft pay deal with the Government, suspending plans for a public sector strike tomorrow.

The proposals will deliver pay increases of 10.75% over two years and nine months in a deal that will run to March 2029.

Talks concluded at the Workplace Relations Commission (WRC) at around 3.30am this morning.

Economics and Public Affairs Editor David Murphy breaks down the details of the draft pay deal.

Who is covered by the new pay deal?

The new agreement covers public sector workers. That includes the civil service, Defence Forces, An Garda Síochána, teachers, doctors, nurses and a wide range of public sector workers.

Why has a pay deal been necessary?

Every few years the Government negotiates a new agreement with unions representing public sector workers because their wages do not automatically rise with inflation.

The last deal expired on 30 June of this year. It contained a 10.25% pay rise over two and a half years at a cost of €3.6 billion.

What is in the new deal?

The new agreement contains a pay rise of 10.75% over a period of two years and nine months.

There are also a series of measures to support lower paid workers. This deal will cost the taxpayer €5.2 billion.

What does it mean for lower paid workers?

The Government has given a few examples of how lower paid workers would benefit over the lifetime of the deal.

Starting pay for a cleaner would rise by 18.3%, starting pay for a special needs assistant would rise by 17.2%, starting pay for a garda would increase by 14.6% and for a primary or secondary teacher it would rise by 13.1% or 12.8% respectively.

When will workers get pay rises?

This year there will be a pay increase of 2% or €1,200, whichever is greater, backdated to 1 September 2026.

Next year there will be a 1% rise in April, an increase of 1% or €600, whichever is greater, on 1 August and 1.5% or €900, whichever is greater, on 1 November.

In 2028 there will be a rise of 1% on 1 March, a further 1% or €600, whichever is greater, on 1 June and 1% on 1 October.

In 2029 there will be a rise of 1.25% or €750, whichever is greater, on 2 March. There will also be a local bargaining installment of 1% on 1 March 2029.

Does this mean there won't be any more strikes?

Usually, any public sector wage agreement includes restrictions on industrial action.

In other words, by agreeing to the pay deal unions undertake not to hold strikes seeking pay rises. That is included in this agreement.

The agreement said, "The delivery of industrial peace is an essential requirement of this Agreement."

"All forms of industrial action are precluded in respect of any matters relating to remuneration or to any matter covered by this Agreement," it added.

What happens now?

Now the unions have agreed to recommend the deal to members, it will now be up to the members to approve or reject the agreement.

That usually happens with each union holding a national ballot.

Will the agreement keep pace with inflation?

There has been a surge in inflation over the past number of years.

Ensuring workers' wages keep pace with the rise in the cost of living is critical to the success of the deal from the point of view of workers.

The Central Bank has forecast inflation will be an average of 3.4% this year, 3.1% next year and 2% in 2028. Inflation is currently running at 4.3% but expected to fall later this year.

The pay increases in the deal published today work out at around 3.9% annually.

If those forecasts for inflation are accurate, the deal would give workers a pay increase which would be ahead of inflation.

But forecasts can be wrong. Few predicted the wars in Ukraine and Iran which have had a huge impact on energy prices.

What happens if inflation exceeds pay increases?

The agreement says if basic assumptions regarding inflation or other economic matters change, either the Government or unions can trigger a review clause.

A review would "be engaged upon jointly as soon as possible and in any event will be concluded within six weeks," it says.

What does the agreement say on productivity?

Quite a lot. Much of it relates to the introduction of AI into the public sector.

There are plenty of caveats about everything being done with agreement of unions and Government.

Some of the commitments are quite vague and there is a notable absence of specific productivity gains or deadlines.

But the draft deal says AI roll out will include "redesign of workflows, work practices and organisational structures".

What does the agreement say on remote or hybrid working?

Many private sector workers have faced a reduction in working-from-home days.

But the pay agreement says existing arrangements remain in place for the public sector.

"Remote and blended working arrangements will remain subject to ongoing review to ensure they align with organisational priorities, service delivery requirements and relevant legislative provisions," it added.

Have previous pay agreements protected workers from the rising cost of living?

Yes, and no. It depends on the time period in question.

From January 2021 until June 2026, the rise in the cost of living was 27.2% according to the Central Statistics Office - that was particularly driven by a burst in inflation of 8.2% in 2022 following the outbreak of the war in Ukraine.

Over that time frame wages rose by 23% for civil servants, 28% for Defence Forces, 36% for gardaí, 21% for education workers and 25% for healthcare workers.

Over that period, certainly most categories of public sector workers fell behind.

However, looking at the most recent pay agreement from January 2024 until June 2026, most pay packages in the public service beat inflation.

Total gross earnings in the civil service rose 9%, for Defence Forces it was 14%, it was 17% for gardaí, education 12% and health 7%. Over that period, inflation rose by 8%.

What does agreement say about mileage?

Clearly the higher cost of driving because of higher petrol and diesel prices increases have been raised in pay talks.

The agreement commits the Government to "promptly commencing a review of Civil Service Mileage Rates through established structures which will take account of the full range of current cost factors".

What does the agreement say on outsourcing?

There is a vague aspiration to use less agency workers which has been a significant issue in the health service.

The agreement says it aims "to reduce reliance on overtime and agency staffing through improved rostering, mobility and the effective use of available technologies."