Public service pay deal: Paying a hefty price for some industrial peace

The new public pay deal will buy the Government another three years of industrial peace. But the pacification of around 300,000 workers in the public sector has come at a cost, and a rather hefty one at that The total price tag lies at €887m up to 2020, and while Public Expenditure Minister Paschal Donohoe had claimed before the talks he had an overall price in his head, yesterday he wouldn’t signal if the final tally was above or below that marker.

But he did concede that the deal had been arrived at “after a period of very difficult negotiation between my department and the public sector union movement.”

And there are indeed details in the 19-page document put together by the WRC, which will be difficult to stomach for both sides.

Those in the private sector who see their wages whittled away by taxes that go to pay our public sector workers will no doubt raise an eyebrow at the new package.

The combination of pay and pension levy adjustments equates to a 7.4% pay hike over three years for those earning €30,000 or less, while the deal will see a 7% jump for those earning between €50,000 and €55,000.

The trade-off has been the introduction of a permanent levy, now re-branded and renamed Additional Superannuation Contribution (ASD) which will essentially replace the old pension levy, brought in during the darkest days of the recession.

ASD will be charged at 10% on earnings of more than €34,500 and the State will earn €550m each year from this, something that Government were keen to highlight yesterday.

Concessions on the Government side include the failure to secure increased outsourcing of public services. Similarly, the extension of Saturday work has been left in limbo and will be subject to review and agreement in specific sectors.

On the flip side, some public sector unions, especially those representing clerical staff, will have a tough time selling the retention of additional hours that came as part of former agreements.

There will be a buy-out clause for some public sector members, as workers will have the option of trading in their extra hours for a pay cut, but the deal will only apply where reduced hours do not impact on services.

While nurses and other medical staff had been vocal in stressing the need for special financial incentives to recruit and retain workers, no such provision has been made.

Senior officials in the Department of Public Expenditure and Reform yesterday were keen to stress that bar a few specialised positions, there are no public sector recruitment issues.

In a briefing with journalists, officials also said 1,500 extra nurses had been taken on in the past year and suggested the health service is no more understaffed than other public sector areas.

The issue of recruitment and retention has been kicked down the road and into the hands of the Public Service Pay Commission who are due to report back by the end of 2018.

The deal is a contract of give and take, whether unions can now get their members to sign up to it remains to be seen.

€887m deal —the key points

  • The three-year deal will run from January 1, 2018 to December 31, 2020 and will cost €887m.
  • Depending on income, public sector wages will increase from between 6.2% and 7.4% over the three years, with 73% of public servants gaining 7% by 2020.
  • By 2020, 90% of public servants will be out of FEMPI pay provisions, and a quarter will have exited FEMPI pension levy payments.
  • Pay restoration will be phased over the lifetime of the agreement:
  • January 1, 2018: 1% pay adjustment;
  • October 1, 2018: 1% pay adjustment;
  • January 1, 2019: Pension levy threshold up from €28,750 to €32,000 (worth €325pa);
  • January 1, 2019: 1% pay adjustment for those earning less than €30,000;
  • September 1, 2019: 1.75% pay adjustment;
  • January 1, 2020: Pension levy threshold increased to €34,500 (worth €250pa);
  • October 1, 2020: 2% pay adjustment.
  • A new additional superannuation contribution (ASD) will replace the pension levy.
  • ASD will be paid by any public servant who earns more than €34,500. It will be, on average, 10% of their earnings above €34,500.
  • The new pension levy will not be applicable to non-pensionable earnings, including over-time.
  • Government will take in €550m from this new, permanent pension contribution, compared to the €700m generated from the current pension levy.
  • Combination of pay and pension levy adjustments will be worth 7.4% to those earning €30,000 or less over lifetime of deal.
  • For those earning between €50,000-€55,000 a year, the combination of pay and pension levy adjustments will be worth 7% over lifetime of deal.
  • Those on wages between €55,000-€80,000 will see pay and pension levy adjustments worth between 6.6% and 6.9%.
  • There will be no change in working hours, but employees can revert to pre-Haddington Road hours. This would mean a relevant reduction in pay.

 

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