Time for real reform of public sector pay

AT FIRST glance, the amount of money involved in the new public sector pay deal appears to be a figure that wouldn’t particularly frighten the horses.

A small percentage rise over three years and, in conjunction with a relaxation in the pension levy, would seem, on the face of it, not a totally unreasonable or financially crippling proposition.

But at the end of the day, when you look closer and actually crunch the numbers, the result of that pay hike is somewhat more alarming. For what it means in essence is that taxpayers are going to have to contribute almost another €900million a year to cover the additional costs.

What’s worth factoring into the equation too is the overall context of the situation. Recent data has shown, for example, that public sector pay was already ahead of its private sector equivalent.

On top of that we have had warnings from the Fiscal Advisory Council, which has advised, in no uncertain terms, against overheating the economy by flooding it with money.

Nor is this a straightforward matter of simply taking more money from existing taxpayers. As incoming taoiseach Leo Varadkar has correctly pointed out, this is, of course, the very money that will not now be available to improve or extend our vital public services. So where, you would have to ask, do our societal priorities lie?

Those who work in the private arena would be delighted with the deal secured by the public sector workers.

Indeed, what this deal now demonstrates all too clearly is the urgent need for the establishment of a more comprehensive, sensible and long-term mechanism.

What we require is a fail-proof system that properly and comprehensively relates public sector pay to what is happening in the private sphere and, by definition, in the real economy.