Calling time on Croke park would be a foolish move

Croke Park StadiumIt’s right that public service pay and reform remain in the policy spotlight as we head into yet another hugely difficult budget. As part of that debate, the benefits and terms of the Croke Park agreement need to be aired, interrogated and understood.

But much of what passes for debate on Croke Park is too poor to help legislators making difficult choices, or even explain why the parties to the deal, including the Government, have stuck with it. If we set aside the invective directed at trade unions and the personal insults fired at some of their leaders, last week’s article by the usually-measured Eddie Molloy (Irish Times 7th September) was a classic of this kind.

Mr Molloy’s article deployed three techniques common to those who tell policymakers that scrapping Croke Park is an obvious and easy solution to our budgetary problems: They ignore the benefits of the deal while attributing unrelated policy failures to it; they imply that all public servants enjoy high pay and huge pensions; and they are mealy-mouthed about what they are really advocating, which is a third pay cut for all public servants, not just the high paid.

Let’s deal with them in turn, starting with the benefits being delivered under Croke Park. The Government continues to support the agreement for three reasons. First, it continues to deliver verified savings. In its first two years, pay and non-pay measures have generated recurring savings worth €1.5 billion a year, and the deal is on course to increase this to €3.3 billion in annual savings by 2015. Second, its seldom-discussed reforms are ensuring that, by and large, services are being prioritised and maintained as staff numbers, currently at 290,000 from a peak of 320,000, continue to fall.

Many of these reforms are themselves cost-reducing. Examples include substantial savings in overtime payments, achieved through changed rosters in medical labs, addiction services, disability supports and other services. Thirdly, the fact that these adjustments are happening in an orderly way, with the co-operation of staff, is a major contributor to Ireland’s growing international reputation on which our current and future economic prospects depend.

Mr Molloy makes no mention of these surely-relevant factors in his polemic. But he does blame Croke Park for a number of unrelated policy issues. Along with others, unions have consistently criticised the huge pension packages paid to a tiny minority of senior civil servants. Neither do we understand why hospital consultants’ public and private earnings can soar while services are cut and lower-paid staff lose income as changed rosters save on overtime and premium payments. But these issues pre-date Croke Park and the agreement presents no barrier to any Government determined to take them on.

Incidentally, unions did not agree to additional pay cuts for new entrants to the public service either. These were imposed by Government and criticised by unions, and are an issue that will have to be fixed over time. Nevertheless, it is common practice for private companies to adjust starting salaries downwards in a recession. It’s happened in Eircom and Aer Lingus, a company Mr Molloy’s article holds up as a private sector model. No doubt it would have been cited as further evidence of ‘featherbedding’ had the Government not done the same.

The second technique deployed by Mr Molloy and others is to characterise all public servants as high paid and well-pensioned, a common device that’s essential to the “Croke Park is unjust” narrative. How often do we read about public servants as hospital consultants, departmental secretaries or political advisers? How seldom as clerical staff, caretakers, special needs assistants or home helps?

Mr Molloy’s memory is strong enough to remember benchmarking, which, over a decade ago, led to average pay increases of 8.9% paid in instalments over almost seven years. But his memory lapses when it comes to more recent pay cuts – averaging 14% – which comfortably obliterated benchmarking increases.

An acknowledgement that public servants are PAYE workers, subject to all the increased and additional taxes and charges of recent years, would not have helped paint his picture of privileged public servants sheltered from the recession. Neither would an explanation that the “index-linked pensions” he criticises would be static (because they are linked to pay, which has been cut) had they not actually been reduced at the start of 2011.

The public service is not a high pay enclave. Over 111,000 people in Ireland earned over €100,000 last year. Just 6% of them – half are medical consultants – work in the public service. I agree that higher paid and wealthier people should bear the largest burden, but why single out the public sector?

We must assume that commentators like Mr Molloy have looked at the easily-available figures, which show that most public servants earn modest incomes. Almost 40% are paid less than €40,000 a year and 75% are on less than €60,000. The critics must also know that cutting the salaries of high paid groups would fail to even generate the savings currently being delivered under Croke Park – still less obviate the need for budget cuts come December. In this respect, critics like Mr Molloy are at best careless and at worst dishonest about the inevitable outcome – if not intent – of their preferred policy. If we abandon Croke Park and seek equal (let alone additional) savings from pay, it would mean a third pay cut for all public servants, not just the high-paid.

Mr Molloy and others urge the Government to invoke the clause that allows Croke Park to be renegotiated if there is an unforeseen budgetary deterioration, saying things have changed since Christmas 2009 “when the agreement was finalised.” Again, his memory fails him as negotiations were not even underway at that stage.

In any case, and as Minister Varadkar said at the weekend, we are not in that situation because all our budgetary indicators are on target. The ‘troika’ is also satisfied that we are meeting its demands and, when asked, acknowledge the contribution that Croke Park is making to this.

When Mr Molloy says Croke Park should be scrapped because of levels of Government borrowing and falling growth projections, he appears to be urging an intensification of the public spending cuts that, here and across Europe, have themselves helped scupper growth and compound deficit problems. Unless there is a fundamental change in approach, in Ireland and across Europe, sluggish growth will continue to be a huge problem, which will influence any negotiations on a successor agreement. But abandoning Croke Park to allow even more money to be taken out of our economy now would simply make matters worse.

Bernard Harbor

This article first appeared in the Irish Times on 11th September 2012