An improved pay offer to public servants is likely to be made on Monday by the Government in a bid to avoid a series of threatened strikes over the rising cost of living.
Sources briefed on the issue said that the new offer would be no more than an additional 1 per cent on top of the existing 5 per cent offer between now and the end of next year which is already on the table since early summer.
Unions are also likely to be told that diverting resources to fund a more generous public sector pay deal would mean less cash available for childcare, the health service, education and social welfare in the budget.
With key budget meetings between officials already under way, Minister for Finance Paschal Donohoe and Minister for Public Expenditure Michael McGrath are insisting that the Government sticks to previously agreed budget limits which will mean difficult trade-offs between spending priorities.
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Renter tax relief
“The more you give on pay, the less room for manoeuvre on everything else,” said one senior figure involved in the process.
Officials have estimated that each 1 per cent increase for the public sector costs the exchequer about €250 million per year.
Meanwhile, it is also understood that among the issues likely to be considered by the Government in next month’s budget is a return of tax relief for renters. Such a move – which has been advocated by Sinn Féin – would give cash back to hundreds of thousands of people struggling to pay record high rents. Tax relief on rent was a feature of the tax system for many years but was abolished in 2010 during the financial crisis.
While there is considerable enthusiasm for the move in some parts of the Government, sources also warned this move would also mean less leeway for other tax reductions.
Representatives from the Department of Public Expenditure and the public sector unions will restart talks at the Workplace Relations Commission on Monday after months of stalemate following the unions’ rejection of the Government’s previous pay offer.
Rising costs
Public sector workers are due to get an increase of 1 per cent in October under the existing pay deal which runs out this year.
Unions representing about 350,000 workers, including teachers, nurses and civil servants, said the Government’s offer of 5 per cent in the next deal was insufficient to meet the rising costs faced by their members. Inflation is running at more than 9 per cent, according to the latest estimates. Some unions, including those representing teachers and nurses, have already said they will ballot on strike action unless the Government produces a satisfactory pay offer.
In a statement issued in advance of the resumption of talks, the Irish Congress of Trade Unions said it was “ready to be flexible” but warned any new offer would have to be a “significant improvement” if it was to prevent industrial action.
Sources close to the talks said that as the negotiations were relatively straightforward, involving a straight pay issue, it would probably be clear early this week if a deal was possible.
Concern is growing in Government that failure to reach a deal would result in an “autumn of discontent” with a series of strikes in the public sector. Unions said they would carry out a “co-ordinated campaign for improved pay terms in light of the cost-of-living crisis”.
