Public sector pay deal: What’s in it for workers and can we afford it?

This is In the News from the Irish Times, I'm Bernice Harrison. Today. Well, just first of all, I want to welcome the outcome of this extensive engagement over the last number of weeks for trade unions. It's a balanced, fair and credible deal for workers and it prioritizes the lower pay to, I know, our feeling, the impact of the cost of living. The public sector pay deal has been agreed, but what's in it for workers and can the government afford it to find out? I'm joined by Irish Times Work, our respondent, Emmett Malone. Emmett, thanks for joining me on the podcast. Hi, how are you? Now, Emmett, you have been awake all night covering the public sector pay negotiations at the workplace relations commission here in Dublin. When did word filter through that a deal had finally been made? I think, you know, if you go back at this a week or two ago, I was talking to some of the senior officials and it was very clear that money was a problem. Well, you know, the original offer put on the table by the government was a 7.75 percent, or a 7.75 percent, the unions were outraged, but it's, you know, thought it fell way short of their expectations, way short of their bottom line, never mind their ambitions, you know. But from the middle of last week, when that offer was improved and then subsequently, you know, over the course of Monday night, when it was tweaked and a couple of their unions concerns were addressed, I think the feeling was going into yesterday that a deal was going to be done. We went in there, you know, early yesterday, and really, I think, you know, that there was talk at the union, the wider union group of 19 public service unions would be gathered together by tea time, you know, to approve a deal. In the end, it took, you know, another 12 hours after that and it was close enough. But there was always a sense it was going to get done. It just kept proving elusive and over the course of the night spoke to a couple of the union officials coming out on breaks, and it was always a couple of hours away, but it always felt like we were going to get there in the end. Well, there was a bit of a deadline, wasn't there, because there was another public sector strike scheduled for tomorrow, Thursday, and that's a big day in Ireland, a big day in Dublin, particularly, because it's the same day as the EU leaders in 50 of them are scheduled to meet at the EU summit in Dublin, was the avoidance of this second strike, because there was a strike in October the 8th, we got a taste of what that would look like. So was the avoidance of a second strike, a key factor for the government going into these negotiations, concentrating everybody's minds on the timing. And because, you know, it would have caused a lot of disruption. Yeah, there's no doubt about that. You know, I think it was driving the sense of urgency on the government side, you know, normal circumstances, you can park these talks the last time they were done two years ago, they ran out of time before Christmas, they simply parked them up and came back three weeks later, four weeks later in January and restarted. This time, because of the threat of the strike tomorrow, there was definitely a sense of urgency on the government side. And I think we saw that on both sides, there was also a sense of urgency on the union side. What they were attempting tomorrow was kind of an ambitious enough thing to pull off. They were riding high on the success of their one day strike, pickets everywhere, a lot of enthusiasm, very mild day, a lot of young, young people participating in the first strike of their lives and kind of a slightly joyous atmosphere around it. I mean, it was a good day for the unions. And you have to remember that one of the reasons or one of the side benefits to unions in all of these things is people join unions during disputes and so the membership of all these public sector unions has gone up quite significantly in the weeks leading up to the first strike. People do not want to have to stay away from work if they're not covered by being officially part of a union strike. They don't want to pass their friends and go in on a picket. They don't want the bad feeling afterwards. So for a variety of reasons, people join unions and so that all went very well for them. What they were planning to do tomorrow is a very different ball game. They weren't going to picket their workplaces. What they were going to do instead was try to gather people in eight centers around the country, Dublin being the biggest one obviously, and stage demonstrations. And if tomorrow was a bad day, weather wise, and you know, very cold and wet, and there was going to be a lot of difficulty getting into the city center because of these EU events that everybody's talking about, then that was going to be a challenging scenario. And though the unions were making positive noises about how many people were signed up to it, I think they'd have been happy enough to avoid it themselves as well. What is the new pay agreement? OK. So the pay element of the pay agreement, which is supposed to be a far more broad reaching agreement with kind of, you know, some clauses on all sorts of things like work practices, mobility, changing, you know, moving within one workplace or another service delivery adoption of AI, so many things. But of course, what, you know, 99% of the people want to know is what's in it for us. And so what is it for those workers is 10.75% of their gross pay over 33 months. It's a slightly odd kind of number. Yeah, why is it 33 months instead of 36, which would make sense, for example? The government ultimately, when they, when they improved the deal last week, wanted to move from what was going to be a 30 month deal to 1/2 years to a 36 month deal, three years. And the unions didn't feel that they were improving the kind of bottom line number by enough to do that. And so the number got tweaked slightly from 10.5% up to 10.75. The term of the deal got moved back slightly from 36 months, three years to 33 months. So it will now expire on the 31st of March, 2029 instead of the end of June. Just one of those things that, you know, when heads are being knocked together, late at night in the room, that, you know, people spit the difference, I think, you know, so that's what's happened. Now this applies to 400,000 workers. Yeah. Do all workers get the same 10.75% increase? Mostly. Well, no. Sorry. Yes, mostly, but no. What happens is that, yeah, the majority of them will get the, say, the 9.75, right? Because there is a 1% here for local bargaining and local bargaining is a quite kind of peculiar thing to the civil service. What you have is 19 unions here negotiating on behalf of 4,000, 400,000, often very, very different types of workers. It's a very disparate workforce, obviously, it's by far the largest in the state. You have consultant doctors at one end, you have, you know, SNAs in schools and another, you have caretakers, you have council workers, you've all sorts of things. So there is 1% as there was in the last agreement to solve local problems that have evolved over the years. How was that being? Well, it can be anything. If you take the INTO, for instance, the primary school teacher's union, they wanted to bring back a number of allowances that were done away after the crash. So particular allowances to help teachers with additional costs associated with living on an island, for instance, off the West Coast of Ireland or living in a gale-talked area, remote areas, this sort of thing. That's just one example, you know. In other areas, you had simply grades that were, you know, they shorten to the grade. So the nurses, for instance, felt that their biggest issues on pay were for very young nurses and very experienced nurses. And so they tweaked the pay levels at the lowest and highest levels. And so you had all those sorts of things. In many cases, what happens in those situations is that members of the union more broadly sacrificed their own 1% to bolster the fund to address those issues and they might benefit from them somewhere down the line, but they don't get the money in the term of the pay agreement. And so, you know, the unions don't like to count that 1% as part of the deal. And if you exclude that, this is a 9.75% deal, not a 10.75% one. So everybody, nearly everybody gets the 9.75% but what they've also done is they've moved to address lower paid workers. And so these increases will be paid over 9 installments over the two years and 9 months of the deal. One of those is local bargaining, a 1% in 2029, I think. But what also happens is that there will be minimum cash levels on 5 of those increases. So I mean, the most obvious example is right now in the coming weeks, if this deal is voted on by all of the union's members and a majority have them across the 19 unions vote in favor of it, there will be a 2% pay increase that will have taken effect from September 1st. So the money will be back dated. Public service notorious for how long it takes to implement some of these deals, so it could be well into spring by the time some people get it. But some of you should get it at the end of January. So they'll get it back to the end of January or the start of September, rather. But it's a 2% deal for most people, but there's a minimum pay level of that of 1200 euro a year. And if anybody under earning under 60,000 euro a year will benefit to a greater extent in percentage terms. And I mean, maybe a way of illustration this would be that over the course of the deal, including local bargaining, assuming people get that, somebody on 80,000 a year will get 10.75%. Somebody on 35,000 a year, and I like, if you take the, you know, something like a clerical officer in a civil service, they're the most numerous group in the civil service by 14,000 of the 50,000 are clerical officers. Their scales go from about 31,000 to about 49,000. If you're on 35,000 a year just, you know, taking that as a broad example, a person working at that level of the civil service would benefit to the tune of about 16% over the course of this deal. So that was a big priority for the unions, particularly probably for CIP2 who, you know, have about 70,000 public sector members and would probably have a higher proportion of them in lower paid roles than 4, which is the biggest public sector union, but also includes a lot of white collar workers and who would earn more. at 60,000 you've got June your nurses, junior teachers, and an awful lot of white collar office workers, and, you know, more general workers in local government, perhaps people working in outdoors or whatever. You got a lot of people are going to benefit to some extent to that, but it's a sliding scale depending on how much you're in the first place. So does that mean that low paid workers are the winners here? Yeah, I think to some extent, yeah, I mean, you had, we were all standing outside the WRC at half-treat this morning, and the unions are attempting for the first or second time of many times that they will do it over the coming weeks to sell that deal, you know. And people were talking about this is going to help, you know, young workers to buy homes. Well, you know, these are the sort of percentages that turn, you know, somebody who previously couldn't afford to live independently and buy a house in this country into people who can. Sure. That's that 35,000 earning civil servant will in two years and nine months earn 40, just over 40,000. But in percentage terms, that's a bit of a jump that they should feel the benefit of that over the course of the year. For many of the other workers, for the higher earners, the question mark here is, I mean, they will only really judge this deal with the benefit of hindsight, they'll look back and wonder whether it covered inflation for the period because if you look at the most optimistic predictions, then this covers inflation and gives the union member a couple of percent on top. But as is widely acknowledged, the situation is very volatile on international politics, the oil situation, all of these factors. So nobody's really sure where that's going to land. If it lands disastrously, there's a review clause. But, you know, and when might that review cost? Well, it would take effect, it would or it could be a vote on the union side in the instance where there's a very substantial spike in inflation and they feel that this is an exceptional circumstance that they need to go back. But the government is also free to invoke it if there is another kind of crash situation. So in the normal course of events, if this deal runs its course, I think what you're going to find is that people will look back and go, "Okay, did I do slightly better or slightly worse?" For higher paid earners, I don't think it's going to make a huge amount of difference but it will hopefully insulate them against inflation, maybe give them a tiny bit more than that. For lower paid workers, I think hopefully they will feel the benefit of that in some sort of significant way over the next couple of years. Well, one figure that will be concentrating the mind on government is the figure of 5.2 billion euro to be spent over the next 33 months. That's what this is costing. Sure. What is that going to mean for taxes, can the country afford it, is the country imagining that it will be able to afford that in the year and a half, two years' time? Was that part of the discussion? I'm sure it had to be a part of the discussion from the government side because it's a lot of money. They didn't set aside enough money in the budget to cover those sort of increases. It was well short of that. And that was something that set the alarm bells ringing on the union side when the budget was announced. On the other hand, you have to pay people to do jobs. There are recruitment problems and retention problems in great many areas of the public service. There's probably not enough flexibility on pay to address those recruitment and retention in key areas where pay perhaps should be higher. And then in other areas of the public and civil service, there are people who are pretty well paid and you wouldn't have to worry too much about the size of the increase because they're not going anywhere. So it's a mixed landscape and this is one of the flaws of negotiation one deal for more than 400,000 people. So there are problems there. Basically you have to give them pay increases from a political perspective. They're all also voters as their partners are, as in their wider families are. I mean, I heard an Orchie vox pop during the early part of this dispute and he went to schooling cork and it was remarkable the extent of the support amongst the parents for the teachers to do or about to take strike action at the time. But it turned out when they asked the mother is mainly what their views were, whatever. Almost every one of them was either a public servant themselves or had a family member, a close family member who was a public servant. So they were predisposed to to being supportive and that's the nature of these things when you have such a high proportion of the population with a close connection to people there. So you have to pay that money. But we can only afford it really when you get down to brass tax because of the country's wider financial situation, which continues to be heavily dependent on the tech sector and the American companies, the foreign direct investment and the corporation taxes that are paid here. If that dried up tomorrow and this is a warning to go around over and over again in connection goals or suspending that we have here, it is not impossible to see a situation where you'd have a repeat of the sort of impact we had in the post crash area in this country where the government had no choice but to go back and say to the unions, we cannot afford this. We have to lose bodies, we have to cut pensions, we have to cut pay, we have to change working conditions and ask people to work more. And so that's always on the horizon. And so can we can afford this as long as the time stay good, but we are certainly the public sector pay bill which we will run to over 35 billion a year now is only one part of a wider landscape that probably I think economists would say we are living beyond our means because we are so dependent on income that is not dependable. Coming up, the deal is done, but will union members vote for it? Let's talk about what happens next, the deal was struck in the early hours of the morning. Jack Chambers, minister of public expenditure, Kim Radney said he welcomes the pay deal. I think next step for the unions is, and there's 19 unions involved, they have to meet, they have to analyse the agreement, and then they have to put the agreement to their members. Did you get a sense that there's a generally positive mood among union members? Is it most likely that it's just all going to be voted through? Yeah, I think it is going to be voted through. I think in these situations, what the unions agree and then set out to sell to their members as the best they could do in the circumstances tends to be voted through often by very, very high numbers, surprising the high numbers in some cases. In this instance, you have 19 unions, as you say, very different unions. You have a couple that would be seen as generally speaking more militant, you know, for lack of a better word, probably with a small M, than other unions. So you have the ASTI and the teachers union would tend to be more critical of these sorts of deals than the TUI and INTO. So we could have some of those unions actually rejecting it, but they are signed up to an aggregate ballot. There'll be more than 300,000 union members. They will all have a vote. And what you tend to find is that the big unions sip to force the three teachers unions accepting the ASTI, just some extent from there, and the IMO, the nurses, I mean, you have between those unions there about 250,000 of the public sector workers, several of those were represented in the room last night. Their leaders have done this deal, their experienced trade union, they will have been very conscious of what they could come out of that building last night and sell to their members and to the other unions. And the unions met at half three, four o'clock this morning. They're pre-meeting, meeting to them. Well, they had a post deal meeting, but the word was that the response from those 19 unions was broadly positive. So, yeah, look, I mean, we have Kevin Callanan, the head of four is today the biggest public sector union saying that, oh, you know, he expects it to be close. I mean, it suits his purposes at this stage, not to say that the unions have done too well, but when he's speaking to members, he'll be saying, this is absolute, we didn't leave anything on the table. This is the best we could have done. And I'd be really, really, very surprised if it isn't passed by substantial margin. Okay. Government versus unions, who won? Do you know what? I think it's a bit of a score draw, and I think it will be interesting to see what happens with inflation over the next couple of years. At the moment, it's a compromise. The government may be slightly overpaying in terms of covering inflation. The unions might find themselves slightly on the wrong side of it, too. They've covered their lower paid workers more effectively, and I think they'll be pleased about that. For the rest of people, you know, for higher paid earners, they probably settle for being insured against inflation. So it's an okay deal. For the government, they've paid more than they set out to, but I think realistically what they initially, you know, floated as the cost of the deal was probably on realistic. The 3.8% that I think the deal average is outside per year over the course of the agreement, it's at the higher end of the middle ranking of what we are seeing in the private sector at the moment. So it's kind of okay, and obviously the public sector differs in many ways. And for instance, one of the things you would get that's not taken into account in percentage terms in a lot of private sector firms would be those tax free vouchers that people get at Christmas, and they don't exist in the public sector. So often, if you, that's used by employers to tweak a deal, give a few quid that's not going to be taxed and helps, helps, you know, grease the wheels a bit. That wasn't available to the government here. So it's a complicated landscape. I don't think the, I don't think either side is, as one particularly, I think the government can be pleased with extending the deal slightly and the relative certainty that it gives them. They'll be hoping that we don't get into the sort of extreme that forces review. But yeah, yeah, we're going to see over the next couple of years how that actually pans out for everybody. Thanks very much, Emma. Thank you. That's it for today. To keep up to date with all the latest on the public sector, paydeal, see irishtimes.com. I'm Bernice Harrison. This episode is produced by Suzanne Brennan. In the news, we'll be back tomorrow. (upbeat music)