THE Minister for Finance, Mr Quinn, has warned that there is no provision for increases in public service pay "hidden" in the 1997 Estimates. Any increases beyond those due from the Programme for Competitiveness and Work will to come from additional taxation.
According to figures released by Mr Quinn yesterday, it would cost around £65 million to give public service employees a 2.5 per cent increase in 1997 (the equivalent of the rise negotiated in the private sector) and £125 million in a full year. This is the equivalent of reducing the marginal rate of income tax by over two per cent.
Mr Quinn gave his warning to the public service unions during yesterday's press briefing on the Estimates. "We are not in a position to pay the kind of rates agreed in the private sector," he said. All public service workers would receive increases anyway in 1997, because the provisions of the PCW did not expire for them until next June.
National agreements and social partnership had worked well for the economy, but the Government was not prepared to negotiate a public service pay deal "at any price", he said.
Earlier yesterday, talks began on the public service pay element of a new national agreement. The discussions were exploratory, but a clear gap emerged between the two sides.
The Government indicated that the only way it could concede increases similar to the 9.25 per cent in the private sector, was if the public service unions agreed to a number of conditions. These included a pay pause during the second half of 1997, an agreement that ran for longer than the 39 month private sector deal and a tightly drawn up local bargaining clause.
It wants a clause with a built in mechanism for measuring productivity, and payment would only come once if the changes yielded results.
Public service managers are understandably wary of local bargaining after the experience of "restructuring" deals in the PCW. Figures released yesterday showed that £110 million was paid out in such deals, almost as much as the £131 million paid in general cost of living increases.
This is without counting the cost of restructuring deals still to be concluded with teachers nurses, lower grade civil servants and linked grades. They comprise half the workforce. Mr Quinn has set aside £110 million in the estimates to settle with these groups in 1997.
The unions may not have too much difficulty with such a local bargaining clause, because the demands for change in the public service are becoming as incessant as those in the private sector. A bigger problem would be accepting a longer agreement than the one concluded for private sector workers.
The PCW does not expire until next June in the public service. A 39 month agreement means the next pay round would not expire until September 2000. Any significant lengthening of the agreement would take it into 2001, which would mean that public service workers might not receive their last pay increase until a year after many workers in the private sector.
It is likely to be the end of the week before it is clear if a deal can be struck. While there is a feeling among some private sector workers that their public service colleagues did better under the PCW, the reality is that most unions have a substantial number of members in both sectors. It would be difficult for them to defend an agreement that offered significantly different terms to one group of members than the rest.
Private sector employers are of course opposed to further growth in public sector pay. The problem is, if no deal is struck for the public service, then the private sector deal will start to unravel.
Talks resume today.
