Government reassures on pay deal

The Government will continue to abide by the Lansdowne Road agreement despite the outcome of Britain’s Brexit referendum, according to public expenditure and reform minister Paschal Donohue. Asked on RTÉ radio whether he could now honour public pay promises, minister Donohoe said: “Yes I can.”

Pressed on the Lansdowne Road deal, which has begun the process of public service pay recovery, the minister said: “It’s affordable because, over a three-year period, it put in place a paced plan of moderate wage restoration that is costed into our financial plans.”

He said the ‘fiscal space’ – the amount of money available to spend after existing government commitments are met – “exists after we have honoured Lansdowne Road.”

But Donohoe warned that the public finances would be more volatile as Brexit becomes a practical reality after 2018. “In the aftermath of that you can expect to see significant change. We do expect the very changed circumstances we’re in to have an effect on the resources we have,” he said.

In a restatement of his existing position, the minister also implied that he saw no prospect of an acceleration in public service pay restoration, again saying that “Lansdowne Road is the only game in town.”

A week before the UK referendum, ICTU’s Public Services Committee wrote to Donohoe demanding the repeal of the Financial Emergency Measures in the Public Interest (FEMPI) act. This is the measure that imposed the pension levy in 2009, and was amended to add pay cuts across the public service the following year.

IMPACT and other unions have recently sought an acceleration in pay restoration because economic growth, and related improvements in the public finances, were significantly stronger than anyone expected when the Lansdowne deal was done. However, IMPACT had always cautioned that an unexpected decision in favour of Brexit would impact on the economy and public finances.

Meanwhile, Minister Donohoe has told an Oireachtas committee that consultations with unions on the Government’s proposed public service pay commission will start within weeks. In a statement that will be welcomed by unions, he said the Government would not necessarily be bound by the findings of such a commission.

IMPACT has said that, while it supports the establishment of a pay commission, public service earnings should ultimately be determined through direct negotiations between unions and government, rather than through commissions or legislation like FEMPI.