Public sector pay deal: everyone gets just about enough as Government buys industrial peace

Résumé détaillé

So the pay deal is done. In time-honoured fashion, with agreement reached in the early hours of Wednesday morning, bleary-eyed union officials explained it to bleary-eyed…

So the pay deal is done. In time-honoured fashion, with agreement reached in the early hours of Wednesday morning, bleary-eyed union officials explained it to bleary-eyed journalists.

There is relief all round that the public sector strikes scheduled for Thursday – and which would have caused severe disruption not just to people’s lives, but to the European summit taking place in Dublin – will now not go ahead.

There had been a clearing of the industrial relations decks in the last two days, with gardaí cancelling a work to rule on Monday and solicitors reaching a deal with the Minister for Justice in the long-running dispute on legal aid fees on Tuesday.

Of course, there is a price for all this. The Government always has to buy industrial peace (if not harmony). The issue is the price.

This pay deal is not cheap – €5.2 billion over two years and nine months. And that is not, of course, a one-off cost; it recurs every year.

Pay deals permanently increase public sector salaries, and also pensions, which rise parallel with wages. The public sector pay bill has rocketed in recent years from €22 billion in 2020 to €34 billion this year, as both wage levels and the number of public servants increased (by 70,000 since 2020 to 420,000 this year). That trend will continue in the coming years.

The cost may not be cheap, but it is affordable for the Government – assuming the present stream of corporation tax revenues continues. This year’s €8.5 billion budget – the real number will be nearer €10 billion when all is done – shows that this is probably the minimum required to keep things on an even keel politically.

Wednesday’s deal will push that number up a bit. Nobody likes to think about what happens in the event of an economic slowdown. Like everything else in the Irish public finances, it’ll be okay as long as everything stays okay.

A few other things might be said for this deal as it is digested on Wednesday morning.

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