ANALYSIS:The effect of the public service reform plan will be to secure industrial peace and buy time from the troika, but its net impact on public pay bill remains to be seen
THE MOST striking thing about the publication of the Government’s public service reform plans was the relaxed demeanour of the two senior Labour Party Ministers about an issue that had the potential to be very difficult for the party. Whatever the merits or demerits of the plan, it has the Labour stamp of approval.
The core of the plan is to make savings in public service pay by cutting the number of public servants by 23,500 between the end of last year and 2015. Minister for Public Enterprise and Reform Brendan Howlin estimated the cut in numbers will save €2.5 billion from the public service pay bill.
However, that does not appear to take account of the cost to the exchequer of the pensions and lump sums that will be paid to retiring staff. Given that standard public service pensions are half of salary, plus a tax-free lump sum of 1½ times salary, the net saving to the exchequer will probably be only half, or even less, than €2.5 billion.
Even more important the elimination of more jobs in a job-starved economy will make the unemployment crisis worse rather than better. When taken in tandem with the cuts in the capital programme it indicates that, whatever about election campaign rhetoric, jobs are not the Government’s top priority.
On top of the job cuts a modest fall in the number of quangos and an end to the decentralisation programme of the last government will contribute a relatively small amount in savings but will improve efficiency, according to Howlin.
Tánaiste Eamon Gilmore set the tone near the beginning of yesterday’s press conference when he condemned “the abuse and vilification of the public service”, which he said had been a prominent feature of recent years.
The Tánaiste praised the public service ethic, which he said was different to that of the private sector. He said that for people like teachers and gardaí, serving the public good was a strong part of their thinking.
When asked who he had in mind when he referred to the vilification of the public service, Gilmore said that the previous government had waged a campaign of abuse against the sector and that “vulgar commentary” had been taken up in some newspaper articles.
However, despite the condemnation of the last government, Gilmore and Howlin made no bones about their commitment to one of the major initiatives of the Cowen administration: the Croke Park agreement.
The two Labour Ministers ruled out any attempt to reduce the public service pay bill by further cuts in pay and instead reiterated their commitment to the agreement and negotiations with the public service unions on job cuts and redeployment.
Gilmore said the Croke Park agreement was delivering on its objectives and there would have to be ongoing dialogue with the unions to make sure it continued to deliver.
Changes in the social partnership arrangements that have been in place since the early 1990s were also announced. Taoiseach Enda Kenny said he and Gilmore would meet the unions and other major organisations representing business and farmers, but day-to-day business would be done with line Ministers.
It appears that the various “pillars” of social partnership have been allowed to atrophy and will be replaced by more direct contact between the Government and relevant interest groups.
Apart from the job cuts in the public service the other parts of the public service reform package appear modest.
The bonfire of the quangos promised by Fine Gael in opposition has turned into something much more modest, but that was always going to be the way given the fact that people employed in almost all of the quangos have jobs for life.
The move to end the decentralisation programme, one of the worst decisions made by any Irish government, is welcome but already a number of properties have been acquired by the State at a huge cost to the taxpayer.
The net effect of the public service reform plan will be to buy industrial peace with the public service and buy time from the troika. In the long run it is bound to result in a lowering of the quality of public services and the net impact on the public service pay bill remains to be seen.
