Just hours before they were due to go on a national strike last Friday, the gardai accepted a pay deal recommended by the Labour Court. The Armageddon scenario of a country without a police force was avoided at the last moment and the population (apart from the bad guys) heaved a sigh of relief.
But what seemed like good news has now kicked off a widespread pay war here that could wreck our economic recovery and even bring the government down.
The problem is that everyone else on the state payroll now wants what the gardai have been given. This week secondary schools across the country have been shut as teachers intensify their campaign.
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Nurses in hospitals are demanding immediate negotiations on their pay and conditions -- or else. And other workers across the public service are lining up to take action, with their union leaders saying the pay deal for the gardai has changed everything.
The problem is that there are 12,000 gardai but there are 300,000 public service workers on the state payroll. The gardai have been bought off, but what about the rest?
Garda strike: Here's the deal that's being offered to gardaí https://t.co/d2LIg4NAFR pic.twitter.com/b4qTnemLhY
— Mauricio Vargas (@mauricioj33) November 4, 2016
Even if we could afford the average €3,600 pay hike that has been given to the gardai (and we can't), there is no way we can give the same to everyone else on the state payroll without causing a budgetary crisis. Which is why some ministers here this week have been saying the situation is so serious it could lead to another election, just months after the present government was formed.
Christmas may be on the way, but it's beginning to feel a lot like Greece here right now. All we need is the street demos and the smoke bombs!
The anger among the rest of the working population in the private sector is intense, with all the reader comments on media websites not just negative but vitriolic. It's shaping up like a civil war that could split the country.
The reason for this anger is clear. The financial collapse that forced the government to cut back on the state payroll eight years ago also affected workers in the private sector. But, unlike state workers, there is no sign of them getting back what they lost.
In the state sector there were no forced job losses but the government imposed cuts of an average of 12 percent, rising to 20 percent for some of the highest paid people on the state payroll.
In the private sector (all the companies in the "real" economy) the pay cuts were lower but there were cutbacks in job numbers, some companies shut down altogether and the companies that survived asked workers to do more for less, as well as slashing their pension schemes.
Pensions are a very sore point. In contrast to the way pensions were wiped out in the private sector, in the state sector guaranteed gold-plated pensions for life remain untouched.
The general overall picture is that everyone here suffered after the crash, with pay and conditions impacted. There is a strong feeling that those in the state sector were not asked to carry the can any more than workers in the private sector. And in fact many people here believe that, despite the pay cuts, those in the state sector got off relatively lightly since they never had to face the fear of losing their jobs and emigrating.
Added to this is the fact that average public service pay in Ireland is already higher than in many other European countries, even successful countries like Britain -- and it is still higher here even after the cutbacks. So teachers here for example -- the people who have closed schools across the country this week -- earn up to 20 percent more than their counterparts in the U.K.
It's the same with the gardai, who almost had a national strike last week that would have left the country without a police force. The strike campaign run by the gardai concentrated on the low pay that new recruits get in their first year. But we heard nothing about the fact that average pay in the gardai is nearly €68,000 a year.
The Labour Court recommendation last week means that this will go up by an average €3,600. Part of this will be a new "parade" payment for the 15 minute briefing rank and file gardai get before their shift begins. And it will include a special payment to compensate for the possibility of having to cancel holidays -- to make court appearances, for example -- even though this rarely happens.
The Labour Court also said that the rent allowance of over €4,000 that gardai get must be extended to new recruits (it had been taken away for new recruits after the crash). This "rent allowance" stuff was news to most people here, particularly that gardai get it even if they do not rent, still live at home with their parents or are buying their own home, etc. There are so many people in the private sector who are struggling to pay their mortgage who would love to have a "rent allowance" like that!
The whole system of allowances across the public service deliberately conceals the real pay that many state workers get. Gardai have up to 50 allowances they can claim for, like the bicycle allowance from the old days! Such allowances or expenses are rare in the private sector and in most cases have vanished altogether.
One of the factors in the current teachers strike, for example, is an allowance or payment they want for "supervision" of students at break time or lunch time. They want this even though they rarely have more than seven hours of classes a day and these breaks fall within that time period.
On The 5.30, 500 secondary schools closed again today due to strike by #ASTI teachers over pay parity row #TV3News pic.twitter.com/Tr1KYf0t7P
— Fergal O'Brien (@FergalOBrienTV3) November 8, 2016
Plus, of course, they get around four months of paid holidays a year. People in the private sector look at this kind of thing in astonishment.
Similar to the gardai, the teachers say that the main reason they are taking action is because they want equal pay for new recruits, young teachers taken on since the crash who started on lower wages. This was one of the ways the state reduced its payroll bill at the time. Instead of taking more from existing teachers and gardai and risking strikes, they reduced what new recruits would get.
This could be sorted out in a cost neutral way if the older gardai and teachers were prepared to surrender some of the extra stuff they get, like length of service increments which are paid regardless of performance. Or the extra payment teachers get for correcting exam papers during their four months paid holidays. But the placards about "equal pay" don't explain that, of course.
The fact is that the state sector is awash with these special allowances and extra payments and no one wants to give them up. They were introduced over the years as a way of giving state workers extra money that would not appear as increased pay when national pay agreements that included the private sector were in place.
But they remained long after state pay levels reached and surpassed private sector levels. On average, state pay was 20 percent higher compared to pay in similar jobs in the private sector just before the crash, and it is still 10 percent higher even after the cuts in state pay since then.
As we explained here last week, the wave of threatened strikes across the public service is aimed at securing what their unions call "pay restoration.” They want the state to restore them to the pay levels they had before the crash.
There are several problems with this concept. The first is that very few workers in the private sector have got back what they lost after the crash. They have got back some of it, typically a raise of around two percent every couple of years. But they are still way behind where they were during the boom and many have lost their pensions.
The next problem is that the level state pay reached during the boom was financed by tax revenue from the property bubble and is not either justifiable or sustainable now. One teacher union leader famously referred to the national pay agreements reached in the years before and during the boom as being like visiting an ATM -- cash poured out to state workers.
The final problem with so-called "restoration" is that the state simply cannot pay for it without abandoning our deficit reduction targets and going back to high levels of borrowing. The argument made by the state sector unions that the recovery is underway and that growth in the economy will pay for "restoration" is false.
The fact is the state is still borrowing this year. Pay increases to state workers like the gardai and all the others who will make piggyback claims now makes it very unlikely that we will be able to balance the budget next year as planned. There are also worrying signs that, after a couple of good years, the economy is slowing down, with the latest figures for retail sales, industrial output and tax revenues all down on the same period last year.
Even more worrying is the bigger picture, with Brexit looming and the likelihood that it will hit our economy hard and cost many jobs. There is also the inevitable end to the European Central Bank's bond buying program which has kept interest rates at historic lows in the past few years and made it easier for the Irish government to finance our enormous €200 billion national debt.
Once interest rates start to creep up again -- and that could be as early as next year -- it will cost us a fortune and make it much more expensive to roll over debt.
That will mean cutbacks in state spending, since we will need to take much more money out of the budget to pay the annual interest on our debt. So things like the state old age pension, welfare payments and unemployment benefits, money for housing and rent subsidy and a lot of other essential stuff could be cut. And all the time we are going to pay state workers even more?
The idea that the recovery, such as it is, gives a blank check to state workers to get back to boom time pay levels is just nonsense. You would think that at least the teachers who teach economics or business in our schools would understand that.
And you would think that the gardai would know enough about right and wrong to understand that blackmail is a crime and what they have done is completely unjustifiable.
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