Across-the-board pay rise will do little to help fill key public sector posts

Until the early 1970s, the Civil Service was a very traditional organisation that had changed little over time. There was limited movement between departments, and almost none between the public sector and the private sector. Most people joined straight after school, there were few graduates, although many ambitious civil servants, like TK Whitaker, studied for a degree at night. Unless they were women who married [and who were effectively fired as a result], civil servants were likely to stay until they retired. Men progressed slowly through the ranks, based on seniority. My first boss in the Department of Finance told me that when he joined it in the 1950s, he had calculated, based on the seniority rule and his colleagues’ ages, that he would spend most of his career as an assistant principal before, in the final three years before retirement, being promoted in rapid succession as a principal officer and then assistant secretary. In the event, he served as secretary general of the department for seven years. Joining the EU meant quite a number of Irish civil servants left to work for the European Commission. The marriage bar ended in July 1973. Gradually, other reforms led to much more fluid movement across the public service. READ MOREThe wider public service included graduate roles such as secondary teachers, doctors and local-authority engineers. While less than a third of public servants held third-level qualifications in 1970, those who did constituted more than half of the Irish graduate workforce. All of this made public sector employment rather different from that in the private sector, with limited parallels in terms of pay. To a large extent, public and private sector employers were not competing to attract the same workers.The advent of mass third level education in Ireland changed things. Few now enter the public sector straight from school. Primary teachers and nurses now have graduate qualifications. Today, three quarters of public sector workers have a third level qualification, but only constitute a third of graduate workers. There is also greater choice, and substantial movement, between jobs in the public and private sectors. The security of a public sector job does not have the same allure when there is full employment. So the State as an employer needs to compete to attract and retain talent. That means the public sector must pay competitive rates, or some of the most able and ambitious teachers, civil servants, nurses or physiotherapists will seek better pay elsewhere.[ Are public sector workers all as badly off as strikes might suggest? This is what the data saysOpens in new window ]In the run-up to the 2008 economic crash, average pay in the public sector had reached 50 per cent more than in the private sector – an excessive gap. Following the collapse in the public finances, all public sector workers experienced painful cuts in pay. Over the subsequent decade, public service pay rose more slowly than the private sector. However, over the past few years the relationship has stabilised. Public service workers are paid, on average, about 30 per cent more than the private sector, but this largely reflects their higher average qualifications.The Government now needs to deliver a pay increase for public service workers, not because prices are higher but because most other workers are seeing their pay rise. Failure to keep pace with the private sector would see skilled employees leave.The Department of Finance forecast that average pay across the economy will rise by around 4 per cent this year and next. The budget arithmetic provided for a 3 per cent public pay rise next year, so any higher pay deal will need additional funding.The expected rise in private sector pay sets a guideline for any public sector pay agreement. If public sector workers are offered significantly more, that could push up taxes, and have knock-on effects on other pay. But if offered significantly less than their private sector counterparts, there could be an exodus of skilled staff for better pay elsewhere. [ A public pay deal will be done – and here’s what it will look likeOpens in new window ]While this sounds fairly straightforward, things are, of course, more complex. Private sector pay deals are generally contingent on increased productivity. That, too, should be the case in the public sector.Across-the-board pay increases in the public sector won’t address what’s needed to attract workers to some key areas where posts have been hard to fill – in the Naval Service, in special care, in some IT roles. While a private employer would simply pay more, public pay agreements cannot easily handle such differentiation, but need to find a way to do so. The alternative of filling key roles by outsourcing to consultants is not an ideal one.