Ireland’s public sector wins pay concession

Ireland’s public service unions have called off Thursday’s threatened one-day strike after winning concessions from the government that pay would not be cut in next week’s budget.

Union officials claim the outline deal which envisages the 300,000 employees in the public sector taking 12 days unpaid leave in 2010, will “go some considerable way” to meet Dublin’s target of saving €1.3bn ($1.9bn) in the public sector pay bill next year.

Shane Cody, deputy general secretary of Impact, the main public service union, described the deal as “temporary measures, one-off measures which achieve what the unions sought which was no compulsory redundancies, the protection of pensions, and no reduction in salary scales”.

However, business groups and opposition politicians complained the agreement would do nothing to address the issue of competitiveness in the economy, and moreover ordinary taxpayers would be the main casualties through the implied reduction in the provision of public services.

Danny McCoy, director-general of IBEC, the Irish employers’ group, said it was “a fudge” and warned it would not be seen by the debt markets as “a credible solution”.

The government is looking for total savings of €4bn through reductions in public spending or increased taxation. Even with the savings, Ireland is set to have to borrow the equivalent of 12 per cent of national output in 2010, or four times the amount allowed under the European Union’s fiscal guidelines for countries joining the euro.

Mr McCoy said the government is “in its role now as employer needs to face up to the immediacy of its budgetary situation”.

He said it was “an opportunity when prices are falling in our economy to adjust”.

Richard Bruton, finance spokesman for the conservative opposition Fine Gael party, said the government had “bottled” its plan for public sector reform.

“They had a chance to deliver real change and cost reductions in the public sector and they’ve blown it.”

Mr Bruton also said it was unfair for low-paid public servants to have the same proportion of their pay cut as the higher paid.

Jim Power, economist with Friends First insurers, said the deal would “leave us on January 1 2011 with exactly the same bill for running the country, and it’s a cost base we just can’t afford because the tax base has just collapsed in the economy”.

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