Ivan Yates on public sector reality

Slow learners need to take a crash course on Croke Park deal — fast

By Ivan Yates

Thursday, April 15, 2010

THE Croke Park accord is apparently heading up a cul de sac. Key public sector unions are coming out against the revised pay deal.

Last week the ASTI, TUI, Unite and IMPACT signalled they were advocating a ‘no’ vote. This latter union, representing 55,000 members, has surprised insiders by their negativity. This is not least because Peter McLoone, their retiring general secretary, led the ICTU side of the negotiations with the Government. This week the CPSU and INMO are poised to dismiss the terms. Only SIPTU seems to understand reality.

The offer looks superficially unattractive to public sector workers. This is because the context of the negotiations was based on a lack of realism.

Ever since budget day, when Brian Lenihan announced 5% pay cuts across the board, union bosses have been winding up a campaign of resistance. Early in the new year protests by way of work-to-rule were organised. All possible inaction was put in place, short of strikes. The Government turned a blind eye. No staff sanctions or suspensions were implemented. When the consequences of the backlog of 50,000 unprocessed passports erupted in Molesworth Street, this phony war could no longer be ignored.

Kevin Foley and Kieran Mulvey of the Labour Relations Commission were commandeered to broker a deal. These talks picked up where the negotiations broke down last December. At that point, transformational reorganisation from 2011 onwards was being brokered. This involved new rosters in the health service from 8am to 8pm, avoiding excess overtime costs. Previous demarcations, preventing redeployment of staff across grades, were open to reform. This would facilitate reducing public sector numbers, refocusing personnel and minimising public service reductions. The breakdown was due to the compulsory 13-day unpaid leave scheme. This was an interim measure for 2010 to contribute towards the €1.3bn savings.

Leaks of this abortive proposal caused public derision. The prospect of teachers having an even shorter school summer term was ridiculed. FF backbenchers reflected this hostility. Cowen crumbled and collapsed the talks. The war of words, post-budget, raised expectations amongst ordinary public sector workers. Jack O’Connor, ICTU president, previously suggested that one day public services would come to a halt indefinitely until the pay cuts were reversed. As you sow, you reap. This tough talk had the effect of leading their members to the top of the mountain. The details didn’t deliver on the rhetoric. The union leadership must hold its nerve.

The ICTU public services executive has negotiated the best and most pragmatic deal available. No one regards their negotiating team as a soft touch. They are experienced at extracting the last ounce. At a time of unprecedented economic uncertainty and job insecurity, they have obtained a commitment of no compulsory redundancies. They ensured the pay rates of their members will be insulated from further reduction and obtained protection of premium payments. Future pension entitlements will be calculated on (pre-cut) pay levels in 2009. They have retained the 20% increased public pay levels over the Celtic Tiger era. Benchmarking has not been reversed.

Who else in society has been offered the same deal? School-leavers and graduates are being told, through a recruitment embargo for the foreseeable future, the door is shut — even on low-paid public sector employment.

Emigration is now their best prospect. The most vulnerable in society, dependent on social welfare, are not being offered any opportunity to reverse their standard reduction of 5%. There is no pot of reorganisation savings from which they can benefit. The blind and disabled are being left out in the cold, relative to state employees.

Private sector workers are faced with further pay and job cuts. More than 200,000 have already been put on the dole. Continuous rounds of rationalisation and redundancy threaten. White-collar employment in banks and insurance is facing decimation. Well-paid professionals in services such as architecture, engineering, auctioneering, accountancy and legal services are being told they are surplus to requirements. Casual and full-time employees in the retail sector are dreading more closures on the high street. These are all the people and enterprises that pay the taxes to fund the €19bn public pay bill.

As ballots draw near in the coming weeks, the most disappointing aspect of the current round of rejection is the lack of leadership. Instead of asserting the financial realities of the situation, union leaders are sticking their finger in the air to detect the wind. They lack the courage to explain the facts.

This is classic “followership” syndrome — running with the hare and hunting with the hounds. It is the type of false populism that our politicians have displayed for a decade, resulting in ruin. Have they not realised that industrial war will terminate future prospects of social partnership?

The stark economic facts are: exchequer returns to date for 2010 show a continued decline; total tax take this year will be down more than €20bn on two years ago; VAT, stamp duty and employment receipts from construction and property are gone for the foreseeable future; extra borrowings of €20bn this year just to finance current expenditure and less than one-third of the Bord Snip cuts of €5.3bn have been implemented. The Government is spending €2bn more per month on current services than it is receiving in taxation. The difference is being funded by ratcheting up the national debt from €33bn to €75bn. (It is worse that that Ivan)Interest costs will devour future revenue.

ALL the justifiable anger over banking collapses, burst property bubbles and the corporate betrayal of trust is separate to the unsustainability of our public finances. This is because the Government has succeeded in ensuring that NAMA, the nationalisation of Anglo, INBS and EBS are being financed off balance sheet. Through the creative accountancy of SPVs and promissory notes, bank bailouts are not being funded from daily revenue.

Taxpayer liabilities and debts have doubled. If there was no credit crunch or banking bubble, public service costs would have to be reduced in line with declining taxes.

Irrespective of the prevailing macro economic conditions, the case for public service reform is undeniable. The multiplication of overlapping agencies is endemic. Top-heavy staffing levels in our bloated bureaucracies are self-evident. Efficiency, productivity and flexibility are long overdue. Value for money principles have not applied to public administration for a decade. The Croke Park agreement prevents outsourcing (competitive tendering and sub-contracting existing public services). If this deal is voted down, Dublin hospitals will not hesitate to press this button.

The Lisbon Treaty and the Croke Park deal have in common an inescapable logic. McLoone, Begg, Blair and Doran need to show courage. If our budget arithmetic falls apart, we will be viewed internationally as similar to Greece. The cost of credit will rise steeply. Any IMF or ECB bailout will limit sovereign control of our economic affairs. A ‘no’ vote may result in a repeat vote before the year end. Hopefully, the slow learners should get the message, sooner rather than later.

This story appeared in the printed version of the Irish Examiner Thursday, April 15, 2010