I move amendment No. 1:
To delete all words after "Dail Éireann" and to substitute the following:
"notes that:
– the benchmarking exercise under the PPF was an important initiative in developing a better system of pay determination in the public service;
– payment of the second and third phases of the increases recommended by the Public Service Benchmarking Body and of the general round increases under Sustaining Progress is conditional on the maintenance of industrial relations peace and on progress on modernisation in the public service; and
– effective verification processes have been put in place to ensure that these conditions are met."
I wish to share time with the Minister for Education and Science.
The Fine Gael motion is quite remarkable in what it proposes. It asks the Government to break an agreement reached only last January with the social partners. This would inevitably mean the collapse of Sustaining Progress and probably the end of the social partnership process that has served this country well since the late 1980s. The motion also seeks to deny to public servants pay increases which have been recommended by an independent and distinguished body chaired by a High Court judge. It ignores the fact that strict conditions have been attached to payment with an effective verification process having been put in place to ensure that those conditions are met. In effect, the motion seeks to prejudge the outcome of that verification process.
The motion is surprising in that Fine Gael seems to have reversed its position on the payment of the benchmarking increases. In July 2002, shortly after the publication of the report of the benchmarking body, Deputy Enright issued a statement calling for the immediate negotiation of the benchmarking report between the Minister for Education and Science and teacher unions, saying "The timetable for the delivery of the proposed increases will be crucial."
Much of the comment about the benchmarking process from Deputies opposite and others shows little real understanding of what benchmarking is about or recognition of developments that have taken place in recent years. I would like to make some facts clear.
Why benchmarking? Prior to 2000 when the body was established the public service pay scene was very unsettled. In the 1990s there had been a whole series of disputes, particularly notable examples being the nurses' strike and the famous, or infamous, "blue flu". There was a general recognition that we could not go on like this.
Deciding pay levels in the public service has always been difficult and contentious. How does one decide the level of pay for a garda or a nurse when the private sector comparators are not obvious? Over many years a system of relativities had grown up. Basically, groups were linked to other public service groups so that a pay rise for one knocked-on to the related group. Sometimes these groups bore no relationship to each other in terms of work and were linked solely for pay purposes. This led to leapfrogging, with each group trying to pull ahead of other groups with consequent claims in turn for catch up increases. Pay increases could end up being determined on the basis of irrational pay linkages, selective analogues or simply horse-trading with no real objective basis. To many, the system was illogical, inconsistent and incoherent. Right across the spectrum of political parties, interest groups and commentators the view was expressed that there had to be a better way to determine public service pay.
At a plenary meeting of the social partners in July 1998, the Taoiseach took the initiative in calling for a better way to manage public service pay. Following from this, over the next 18 months or so there were detailed discussions between the public service employers and unions to find a better way forward. These discussions culminated in the negotiations which resulted in the Programme for Prosperity and Fairness in early 2000. The outcome was benchmarking. When the Government agreed to benchmarking, an important consideration was that the unions agreed the old system of cross-sectoral relativities was dead. This was a fundamental change from the old regime and has been copper-fastened in Sustaining Progress.
Benchmarking was not some esoteric process or arcane mystery. It was essentially a process that measured the wages and salaries of workers in the public service and compared them to jobs in the private sector. In making this comparison, allowance had to be made for the differences between the two sectors, such as on job security and superannuation. The jobs were measured by a job scoring system which is a common approach to measuring differing jobs. The body that carried out this work from mid-2000 to its report in mid-2002 was an independent body, chaired by a High Court judge, and not controlled by either the employers or the unions.
This was a major undertaking. Some may not realise that benchmarking spanned the entire public service, dealing with a large and diverse range of groups such as clerical, executive and management staff, and also technical and professional staff, in the Civil Service, local authorities and health boards, nurses and other health professionals, teachers, members of the Defence Forces, the Garda, firefighters, and the staff here in the Houses of the Oireachtas. These are the people whose pay increases Fine Gael wants to block.
An essential principle underlying benchmarking was that the public service should be able to offer pay rates that would be fair to its employees and enable it to recruit and retain its fair share of good quality staff. The public service should not lose out unfairly but neither should it set the pace. This is what the benchmarking body was asked to address.
The research exercise on private sector jobs carried out for the benchmarking body was one of the most extensive of its kind ever carried out not just in Ireland but anywhere. We have heard much of the argument that the process lacked transparency but I do not accept that this view is soundly based. The benchmarking body did publish an extensive description of the research it had carried out. What it did not publish was the raw data it had collected on private sector earnings. There were good reasons for this. First, most of the data collected on private sector jobs and earnings was received on a strictly confidential basis. It would not be possible to get it otherwise. Second, publishing masses of raw data would only create scope for endless challenge and nit-picking. This is the reality of how industrial relations works. Any sensible industrial relations practitioner would acknowledge this. There is a considerable amount of misunderstanding in this area. Anyone who has ever been involved in industrial relations, and who knows anything about the process of how an independent arbiter decides on a case, knows that the information given by one side or the other is not thrown into the public domain for someone to nit-pick later. One would never get a result if that were the case.
One can imagine the chaos that would ensue if the detailed workings of the benchmarking body were sent out to the public. Every group who considers it should have got a greater increase would come back and ask why such a thing was not taken into account. One of the purposes of setting up the benchmarking body was to get away from the relativities that have bedevilled industrial relations in the public service for the past 50 years. It is the one issue that successive Governments made extraordinary efforts to get rid of and none has been successful. Many years ago I was a member of a Cabinet which thought it had finally finished with this particular relativity. That was in the early 1990s and the Government of the day did not bother to appoint a conciliation arbitrator as all the unions had signed up bar a few. It was the closest we ever got to getting rid of it and the whole process started off again. It was not the fault of any one Government, it goes across Governments. Deputies will be aware that relativities have bedevilled industrial relations business. If one group gets an increase another group must get it.
As one who enjoys being Minister for Finance, one thing I was not aware of when I took office was that an extraordinary amount of my time would be taken up by the role of Minister for the public service. I have learned that the smallest concession given to any group cannot be ring-fenced, even when the relevant Department tells me that it can. Nothing in the public service is ring-fenced. If the smallest increase was given to anybody in this room tonight, on a confidential basis and on the basis of excellent work, before 5 p.m. on Friday a group in some other area would look for the same concession. Anybody who has served in Government knows that. Deputies who are members of unions such as teachers' unions know that if an increase is given to anybody, somebody else will want the same. We could never get out of that situation.
The biggest advantage of benchmarking is that everybody signs up for it. It examines the situation for once and for all and tries to get rid of the relativities. As people well know, if the usher at a hospital in Dublin got an increase, within a year the chief executive of the same hospital would have to get a proportionate increase or even more. Then the whole circle would start again. I make that point about one particular benefit of benchmarking. In Sustaining Progress this was signed off again. If we can stick to this benchmarking report the relativity problem will be solved once and for all and then anyone who tries to break out of that straitjacket will not have the protection of the Government. This is why we are not prepared to do as suggested. We have decided on this based on the independent body's report and this is what everyone has signed up to, including the unions.
As I said, any sensible industrial relations practitioner would acknowledge this. The better approach is to appoint a suitable body of independent experts whose judgment and fairness can be accepted by all, to oversee research and reach conclusions. One will find that similar approaches are adopted by many comparable bodies in other jurisdictions. The review body on higher remuneration in the public sector, for example, as a result of whose report Members have benefited, which deals with top public service posts, has operated on this basis for over 30 years.
The report of the public service benchmarking body was issued in mid-2002. The increases recommended averaged 8.9%. It is worth noting at this stage something which most people seem to have forgotten, that in the period prior to the report there were fairly widespread forecasts of across the board increases of 12% or 15%.
The increases recommended ranged generally from about 4% to about 15%, with a small number of cases outside this range. Again, this spread of increases was wider than many would have forecast. The safe option for the benchmarking body would have been seen as recommending only a very narrow spread of increases. That the benchmarking body was not inhibited in this, but rather called it as it saw it, was a clear demonstration of its integrity and independence.
The implementation of the increases was negotiated with the unions in the context of the new national agreement, Sustaining Progress. It had been agreed under the PPF that one quarter would be paid with effect from December 2001. As part of the public service pay agreement under Sustaining Progress it was agreed that half of the increases would be paid on 1 January 2004 and the final quarter on 1 June 2005, provided certain important conditions are met.
It is important to remember that during the Programme for Prosperity and Fairness, which preceded Sustaining Progress, there were no pay settlements in the public service above the standard pay rounds of the agreement. At the same time in the private sector, whether because of the tight labour market or otherwise, the terms were exceeded in a large number of firms. Inevitably the results of this were reflected in the benchmarking exercise which was in practice a catching-up exercise. The cost of the increases is high, about €1.1 billion a year when fully implemented. While I might have preferred if this cost came at a better time for the Exchequer, the Government made commitments on this for good reasons and I believe in sticking to the deals that I make. Moreover, with the final phase of the increases being payable from mid-2005, the cost is being spread over a number of budgetary periods.
A further feature of Sustaining Progress which tends to be overlooked is that there is a six month pay pause at the start of the agreement. This does not apply in the private sector.