It’s a great pleasure to be here with you this morning.
Perhaps unsurprisingly but in the two years and ten months that I have been Minister for Public Expenditure and Reform, I have become an avid reader of the IRN.
I think this reflects both the quality of the IRN – any publication that survives 40 years does so on its reputation – and how crucial the Industrial Relations environment remains both within the public service and the wider economy.
Responding to the challenge posed by Brexit
I want to open by making a single, but deeply important observation on Brexit –
There is no Brexit scenario that is the same as our present. This will have profound public policy consequences. Ireland wants the closest possible relationship between the EU and the UK, including trade, in order to minimise the impact on our economy. At the same time, it is vital to our economic interests that the EU’s Single Market is fully protected.
A No Deal Brexit is the worst possible outcome and it would not be in the interests of the UK, Ireland or the EU. That is why our focus remains on securing the deal that has been reached. Brexit will have negative consequences in all scenarios, but our key protection from whatever Brexit brings will be our status as a Member of the EU, with all the stability and solidarity that brings.
We welcome and share the UK Parliament’s ambition to avoid a No Deal scenario. However, we will continue our preparations for all outcomes, including for a no deal scenario. While we do not want this to happen, we are doing all we can to be prepared both at home and in co-operation with our EU partners.
The Brexit Omnibus Bill that passed all stages in the Dáil this week forms a key element of that preparation, and intensive work is continuing across Departments and Agencies to implement the Contingency Action Plan published by the Government in December.
Future of collective agreements in the public service
The backdrop of Brexit has to also inform our approach to managing public pay at this current time.
Now is a time for stability and order in all fiscal matters, including pay.
I would also like to contribute my own reflections on the question Kevin Callinan has just addressed – the one size fits all public service model: is it fit for purpose.
I think this is a very timely and topical question, not least in light of recent industrial unrest that everyone in this room will be familiar with.
At its core, this challenges the continued viability of the model of public service agreements that has served us well in the past.
The questions for me are;
Can the centre hold? Can collective agreements continue to deliver for both Government as employer, public servants and their representatives?
I have gone on record many times in support of our system of public service pay agreements.
I think they served the country extremely well during the very difficult economic crisis we have lived through.
They have also provided the means for us to manage the unwinding of the crisis pay measures in a fair, balanced and affordable way.
The core benefits for Government of a collective approach to pay and industrial relations in the public service are stability and certainty for the Exchequer and the taxpayer in terms of pay costs and continuity of service delivery through industrial peace.
The benefits for employees are; certainty over pay movements to help them plan in their personal lives and fairness of approach ensuring that those who shout loudest don’t crowd out those in a less strong – but no less deserving – bargaining position.
I think if these fundamental tenets break down for either side, the model itself comes under threat.
In the absence of a collective agreement, public service pay changes would have to be decided by Government in each Budget and be considered in the context of what is affordable when all the many other spending priorities are taken into account.
This is of course one possible alternative and a model that other jurisdictions follow.
However – to be clear – it is not the preferred approach of this Government. We believe that a consensus based approach is better for everyone concerned. But it has to be workable and deliverable.
If this is to be the case as we move forward, I believe all parties need to reflect on recent developments and what steps can be taken to ensure the viability of collective agreements into the future.
We need to safeguard this framework for the future so that we can continue to manage pay and industrial relations in a way that is fair and that works for all parties.
Recent developments
I will offer my own reflections on these matters, albeit with the caveat that these are my own interpretations as someone who is outside the trade union movement, although someone who engages closely with them as valued stakeholders in our society.
First, I do not think trade unions, or their members want to go on strike.
Public servants are, in general, highly motivated and committed to helping everyone who relies on public services, for their education, for their pension payments, for their health and for their security.
I think this was true in the case of the recent strike by nurses and midwives, where there was a strong sense that nurses would have been far happier in the hospitals, hospices and community settings looking after their patients and providing vital older persons and intellectual disability services.
Second, it is important to acknowledge the support that nurses had from the public. However, I would at least question whether the public’s support for strike action would be maintained if public services were to be subjected to more regular or continual disruption from industrial action.
A consensual approach that delivers benefits to members without the need to go on strike is clearly preferable. But this takes a level of restraint and realism from all parties.
I am sure there may be times where stepping outside the collective agreement and taking industrial action to extract an additional short term gain may be tempting.
I would caution however that everyone take a deep breath and realise that, in the medium to long term, the benefits of adhering to a collective agreement far outweigh the alternative where pay awards are made on whatever temporary mix of strategic importance, industrial action and public support exists at any one time.
Avoiding mistakes of the past
As a Government we have negotiated in good faith on public pay. We have committed over €1.1bn to the PSSA and a further €200m to resolving the remaining new entrant issues.
Nevertheless, both in recent times the Public Service Stability Agreement and previously, the Lansdowne Road Agreement, have been stretched to address additional pay pressures generated from strategically and vitally important health and public safety sectors of the public service.
My experience of the public service industrial relations environment suggests to me that this is because people become very focused on relative gains for groups of public servants.
Yet the relative position versus the private sector is largely discounted and the absolute gains that a collective agreement can deliver is dismissed.
We must learn from what happened before. In the run up to the financial crisis the pay bill doubled between 2000 and 2008 from €8bn to €16bn.
Ultimately these increases were unsustainable – as demonstrated by the painful corrective measures that had to be implemented.
As the economy collapsed it became painfully obvious that this level of expenditure was not supported by the tax base, necessitating drastic cuts to both the numbers and pay of public servants.
This is not a model of artificial and temporary increases in public service pay that I intend to return to.
It is also not a model, I believe, that ultimately serves public servants, the taxpayer and critically those who rely on our public services.
The pay pressures in the public service reflect developments in the wider economy and I accept that.
After all, employees in both sectors all meet in the same super market, engage in the same housing and rental market and are subject to the same pricing regimes in utility and other markets.
Of course, the public service should not lead the private sector in pay matters but it must provide fair and reasonable rates of pay to attract, retain and provide worthwhile career paths for all public servants while respecting the taxpayer and ensuring the public service pay bill remains sustainable.
How we manage those pay pressures into the future remains a challenge for both employers and employees in the public service.
This is a challenge of recovery and progress, not despair and reduction which was a feature of austerity and the Financial Emergency measures legislation which thankfully we are now on a defined statutory pathway to bring a close to that era.
A good employer
The role and success of collective bargaining in the public service, is underscored by the fact that the public service has and will continue to be a very good employer.
Successive Irish Governments, working constructively and co-operatively with Trade Unions through a collective approach have delivered terms and conditions in the public service that are beyond what is widely available in the private sector.
One would be forgiven from some of the commentary over the course of recent months for thinking otherwise.
The fact is that the employment package available to public servants contains many attractive elements. It is worth acknowledging some of these.
- In the area of pensions, occupational pension coverage in the private sector in 2017 stood at just under 30%, compared to the near full coverage in the public service. Public service employees enjoy Defined Benefit pensions arrangements or career average arrangements compared to the Defined Contribution schemes which dominate in the private sector. I think public service workers appreciate that these pensions entitlements confer real benefits.
- Public servants in general benefit from two forms of pay adjustments, incremental progression and the general pay increases contained in collective agreements. This too is somewhat different in the private sector where pay has moved towards more individualised forms of bargaining where some do very well and others don’t. In general when looking at wage developments in the public service we should acknowledge both the incremental pay award and the PSSA increase. When added together it is clear that the wage progression compares favourably with what we are seeing in the economy more broadly.
- The public service is a very progressive employer when it comes to other entitlements such as annual leave, flexible working and facilitating work-life balance. Most Government Departments and agencies offer flexible working arrangements but a recent report by Aviva Insurance found that only 30% of Irish Employers offer flexible working hours. Also, how many employees in the private sector enjoy full salary top up on maternity and paternity leave?
- Finally it should also be recognised that public servants have a security of tenure in employment, guaranteed by the existence of the State. Job security of this nature does not generally prevail in the private sector, or indeed in politics – where everyone is potentially expendable!
Conclusion
Taking the time to list out these favourable terms and conditions is not to suggest that public service terms and conditions should be reduced or diluted.
I do think however that the considerable benefits of public service employment should be recognised for what they are: the outcome of a long and mutually beneficial tradition of collective bargaining between unions and Government over many decades and many collective agreements.
Looking to the future, I hope that this tradition can continue and deliver fair and affordable benefits to public servants as well as stability and certainty for Government and the millions who depend on our public services.
This will only be possible, in my view, however, if the trade union movement as a whole and individually remains committed to delivering its side of the bargain in terms of adherence to pay terms and industrial peace.
These are fundamental requirements for Government and for taxpayers – not least at the current time when our country faces such considerable external risks. They are not optional extras!
But I am optimistic.
We are going through a period of challenge.
I think, with commitment on all sides, we can learn from it and be stronger for it so that we ensure the collective approach can continue to deliver what both sides expect and require of it.
ENDS