EurWORK European Observatory of Working Life

Croke Park deal delivers cost containment and promises major change in public sector

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Country: 
Ireland
Author: 
Brian Sheehan
Sector: 
Public Sector
Institution: 
IRN Publishing

A four-year agreement, which includes a pay freeze, job security and the maintenance of existing pension arrangements for 330,000 Irish public servants, has been accepted by their unions. It was voted through by a majority of almost two to one and includes commitments to a programme of major change overseen by a new implementation body which it is hoped will yield productivity improvements and efficiencies and guarantee industrial peace in the public sector.

In June, the Public Services Committee of the Irish Congress of Trade Unions (ICTU) backed what has become known as the ‘Croke Park’ agreement, by 1,894 delegate votes to 986. The agreement, negotiated at Croke Park, Ireland’s premier sports stadium, means a four-year pay freeze, and commitments by the government not to implement compulsory redundancies and to maintain existing pension arrangements. It also includes the prospect of a limited reversal of pay reductions introduced last year.

In return, the trade unions have signed up for a ‘transformation’ programme, expected to yield major productivity improvements and efficiencies – as well as a broad commitment to maintain industrial peace. The range of workers affected by the deal includes civil servants, health workers, teachers and employees in the security services.

Role of key unions

The key trade union votes in favour of the agreement came from the two largest unions, the Services, Industrial, Professional and Technical Union (SIPTU) and the Irish Municipal Public and Civil Trade Union (IMPACT). With the addition of the Irish National Teachers’ Organisation (INTO), the ‘yes’ vote was comfortably ahead of the combined total of unions that rejected the deal, such as the Irish Nurses and Midwives Organisation (INMO) and two second-level teaching unions. At one point in the 11-week voting process, media reports suggested that the deal might be rejected, but crucial decisions by the leadership of SIPTU and IMPACT ensured its acceptance.

An important role was played by the Labour Relations Commission (LRC), whose Chief Executive, Kieran Mulvey, and the LRC Director of Conciliation, Kevin Foley, helped to broker the deal between government officials and top trade union leaders.

Subsequent to the agreement being ratified, the unions cancelled a series of industrial actions that they had put in place since the breakdown of similar talks on 4 December 2009. These abortive talks had taken place within a wider social partnership context. For the trade unions, the December 2009 breakdown of talks also represented a break with 21 years of social partnership, though the government believes that the partnership process has not ‘died’; rather that its character has changed (IE1001039I).

The agreement follows the severe cost-cutting measures put in place by the government since the introduction of a 7.5% public sector pension levy in February 2009. On top of this, the government introduced salary reductions of over 7% in December 2009 as part of its 2010 budget, which meant an average cut in public sector pay of around 15% within 12 months. These reductions, which would have been inconceivable not so long ago, were achieved without a major confrontation. The government also introduced cuts in social welfare and maintained a moratorium on public sector recruitment, which will see employee numbers fall by around 20,000 over the next four years.

There remains some uncertainty about whether one or two of the unions that rejected the Croke Park agreement will accept the overall majority decision of the ICTU Public Services Committee (PSC). The most important of these is the second-level teaching union, the Teachers’ Union of Ireland (TUI), but it is highly unlikely that any action it might engage in could jeopardise the overall agreement.

Role of Implementation Body

A new Implementation Body is to oversee the transformation and change commitments in the Croke Park agreement. It held its first meeting in early June under Chair PJ Fitzpatrick, who has experience of managing change in Ireland’s courts’ service. Mr Fitzpatrick will preside over a committee on which public sector management and public sector unions will have equal representation. Its work has already started and the body expects action on change to commence in the autumn.

The role of the Implementation Body will be crucial in determining whether the commitment to reverse some of the 2009 pay cuts can be implemented, with priority given to workers earning an annual amount of €35,000 or less. The Minister for Finance, Brian Lenihan, is set to review these pay cuts in 2011. He will look to the findings of the Implementation Body to assess whether some of these can be reversed. But he can only do so if commensurate savings are made, an outcome that depends on the achievement of self-financing change or productivity improvements.

Commentary

The Croke Park agreement can be regarded as an achievement for the government and for union leaders such as Jack O’Connor, the General President of SIPTU, and Peter McLoone, the outgoing General Secretary of IMPACT. However, the agreement will ultimately be judged on whether it delivers on its potential for public sector transformation. Meanwhile, the public sector unions can point to a government commitment not to reduce pay further, to avoid forced job cuts and to retain pension arrangements. In the context of an unemployment rate of 13.5% nationally, this may come to be seen as no small achievement.

The agreement also looks set to guarantee industrial peace in the public sector for four years, with the possible, though unlikely, exception of some secondary school teachers and university lecturers. In the context of what is happening in the rest of Europe, the government can point to this as a major dividend. With a general election due within two years, the agreement will carry over to the next administration, allowing it some breathing space and certainty on public sector costs.

Brian Sheehan, IRN Publishing