OPINION:By accepting the Croke Park deal public sector unions have shown welcome realism, writes BRENDAN McGINTY
THE CROKE Park deal is a realistic way to minimise the impact of future budget cuts through a programme of fundamental public sector reform. It is the right approach, which has the potential to save money, safeguard the quality of public services and modernise work practices at a time when resources are scarce.
Despite recent cuts the public sector pay and pensions bill will be €19 billion this year, representing 60 per cent of all tax revenue. The Government is also committed to further budgetary cuts of €3 billion in 2011 and €3 billion in 2012. Savings have to be found, ideally in a way that is least painful to both public sector workers and those who rely on the services they provide.
Up to now public service managers, particularly those in health and education, have faced the almost impossible task of trying to maintain service levels against a backdrop of budgetary cuts and industrial action. The Croke Park deal offers a way forward.
The majority of public sector unions now accept that the best way of protecting their members’ interests is through agreement and compromise.
The alternative would be divisive industrial unrest and the unpalatable prospect of further, across-the-board public sector pay cuts.
The reform agenda, which has been agreed by unions and matched by commitments and assurances from government, is indicative of the degree of realism that now informs the debate here. This is not yet evident in many of the other countries that are facing into similar challenges.
However, while reaching agreement on reform is typically an arduous and difficult process, implementing reforms once agreed is the real challenge. This is where attention must now focus.
Past experience does not provide much ground for optimism. Successive public sector pay awards, including the benchmarking process, did not deliver the change that was intrinsic to those agreements.
There can be no reneging on commitments this time around. It is vital that this opportunity is not squandered.
To succeed, the deal must deliver specific, measurable savings and have a firm, published implementation timetable. Without this we cannot be sure that the process will be any different from previous experiences.
For example, take the issue of pensions. Public sector pensions are currently linked to the salary rises awarded to serving staff in the grade held by the retiree, and the new deal will revise this process.
The original agreement did not, however, state when the calculation method would change. This omission demonstrates the potential for delay that can be created by a lack of clarity on implementation deadlines.
Since the original deal, the Croke Park clarification issued on May 6th states that the change to the method of determining pension increases for retirees will not be effective before 2014.
The Government must move quickly to put in place the necessary legislation to ensure that this will happen and to clarify any remaining ambiguities in the deal.
To support the swift delivery of the deal it is also important that the body charged with overseeing implementation has private sector membership. Unfortunately, this is not currently the case.
The private sector has a wealth of experience in managing workplace change that it can bring to the table.
In many instances private sector firms have already successfully implemented the sort of reforms now being envisaged for the public sector.
The European Commission, for example, estimates that unit labour costs in Ireland will fall by 9 per cent between 2009 and 2011. This is happening through a combination of private-sector productivity improvements delivered by innovative workplace change and some reductions in wage costs.
Without the benefit of a private sector involvement the implementation body loses this valuable perspective and there is a risk that the group will become complacent and insulated from economic realities. This needs to be avoided at all costs.
Despite tentative indications of economic recovery a very uncertain global economic backdrop means that progress on repairing our public finances remains in the international spotlight. The successful implementation of the Croke Park deal is a key part of our path to sustainable economic recovery.
The deal is by no means perfect. Nevertheless, given the very serious challenges the country continues to face, an agreed approach remains the best way forward.
Brendan McGinty is director of industrial relations and human resource services at Ibec, the employers’ body