Written Answers. - Pay Dispute Resolution.
Liz McManus
Question:
29
Ms McManus
asked the
Minister for Finance
if his attention has been drawn to comments made by a senior trade union figure (details supplied) in which this person suggested that if he did not adopt a more flexible stance on solving current pay disputes, that the future of Partnership 2000 would be in jeopardy, his approach to current disputes in the public service such as that in the National Museum; and if he will make a statement on the matter.
[15645/97]
It would not be helpful to go into the details of industrial disputes, such as that in the National Museum.
As regards the general issue of flexibility in dealing with public service pay issues, I do not have any problem with that in principle but I feel strongly that now and again we have to stand back and look seriously at where we are in relation to public service pay generally and set the application of approaches like that in the broader context. The present is one such time.
The Exchequer returns which were released last week have naturally re-opened the debate about the factors underlying our recent economic success and there have been a number of references to the key role played by wage moderation. As far as the public service is concerned, however, it is clear that, while much has been achieved, overall, things have not worked out as intended and considerable pressures still remain in the system.
In relation to the Exchequer Pay and Pensions Bill: (a) it is expected to increase by nearly 10 per cent in 1997 and at this point in time a further increase of over 6 per cent is projected for 1998; (b) there was an average year-on-year increase in the pay bill of 7.5 per cent over the period 1989 to 1997; and (c) it continues to account for half of all non-capital supply services expenditure and to absorb 13 per cent of this country's GNP notwithstanding the phenomenal GNP growth rates achieved over the period.
Despite these very significant increases in the pay bill, it is important to emphasise that, contrary to the simplistic analysis of some commentators, increases in the pay bill do not equate to salary increases for public servants. The labour intensive nature of the public service means that an investment of additional resources in developing new services or improving existing services invariably pushes up public service staffing levels and, therefore, the pay bill. All of us — interests groups, the media, the social partners and politicians on both sides of this House — find it all too easy to press for increased expenditure on various deserving causes without thinking about the impact of this expenditure on the pay bill and then, at a later stage, we express shock and horror at the increase in the pay bill to which this expenditure has contributed.
Even allowing for this factor, however, it is clear that the old bugbear of special increases, more recently in the form of local bargaining deals, continues to haunt us.
For the past few years, in terms of public service pay, we have been operating under the PCW pay agreement. This provided for a means of addressing various outstanding public service pay issues but within certain cost limits and through a negotiation process free from industrial action. A great deal of business was done within this process in various areas of the public service and settlements within the PCW cost norm were reached with about two-thirds of public servants. I gladly acknowledge what was achieved by unions and management on that front. However, the increases secured earlier this year by several high profile groups — mainly in the health sector — clearly went way beyond the cost parameters of the PCW agreement, albeit on the basis of certain unique considerations.
Although the PCW expired in the public service on 30 June 1997 there are still a number of outstanding cases which remain to be resolved. I want to make it quite clear that any resolution of these cases can only be achieved within the limit of the PCW cost norm as originally established. I stress this point because there seems to be an impression in some quarters that there is open season on that limit. Let me state quite categorically that the limit will have to hold. Not holding this limit could pose a far greater threat to Partnership 2000.
I emphasise that there can be no repeat under Partnership 2000 of the cost drift situation which developed under the PCW. It is absolutely essential that the 2 per cent limit on local bargaining increases, which is explicitly provided for in the Partnership 2000 agreement, is strictly adhered to. There can be no blurring of the limit, as happened under the PCW.
I am committed to Partnership 2000 and I intend to make every effort to ensure it is a success. I am committed to delivery of the tax concessions which underpin the pay terms of the Partnership. However, partnership is a two-way process and there are worrying signs of a pulling back on commitment among some parties to the pay terms. When Partnership 2000 was being negotiated, the parties concerned were well aware of the challenges posed by managing rapid growth and it is in everybody's interest that we manage our economy in a balanced and responsible way within the overall framework of the Partnership.
