Oireachtas Joint and Select Committees
Wednesday, 31 October 2012
Public Accounts Committee
Irish Congress of Trade Unions - Review of Allowances
2:00 pm
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I remind those present, including members, witnesses and the those in the Visitors Gallery, to turn off their mobile phones because they can interfere with the quality of the transmission.
I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give to the committee. If they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members of the provision within Standing Order 158 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policy or policies.
I welcome the witnesses from the Irish Congress of Trade Unions. The members of the committee agreed to ask them to attend to give them an opportunity to put their case and explain their views about all of the allowances about which we have heard from the various Accounting Officers. It is important for them to be in attendance to bring balance to the discussion we are having. I thank them for coming and ask Mr. Cody to introduce his colleagues and make an opening statement.
Mr. Shay Cody:
I am joined by Mr. Tom Geraghty of the Public Service Executive Union, Ms Sheila Nunan of the Irish National Teachers Organisation and Ms Patricia King of the Services, Industrial, Professional and Technical Union, SIPTU. We thank the Committee of Public Accounts for the invitation to address it. The public services committee of ICTU is always happy to assist the committee in any way it can.
While all potential savings in public expenditure are important, the savings the Department of Public Expenditure and Reform seeks to achieve on foot of its review of allowances comprise a relatively small proportion of the overall savings and reforms being delivered by public servants and their unions under the public service agreement. The implementation body for the agreement reports that the agreement has achieved annual recurring savings of almost €1.5 billion in its first two years and is on track to achieve recurring annual savings of €3.8 billion gross, or €3.3 billion net when the additional pension costs associated with people retiring from the public service are taken into account, by 2015. We would be happy to comment on recent erroneous media reports that questioned the veracity of the verified savings being delivered under the agreement, even if that is not the direct subject of this hearing.
I would like to give some background information on the allowances. Almost all public servants are on pay scales that reflect the agreed rate for the job, minus the 2010 pay cuts and the so-called pension levy, which together have reduced pay by an average of 14%. Any allowance or premium payment paid on top of these rates was introduced - sometimes many years ago - to reflect additional skills, qualifications or responsibilities over and above the normal requirements of the job. In other cases, large groups of staff in a relatively small number of grades have seen allowances introduced during the years to reflect the wide range of duties and specialisms within these grades. Most importantly from a management point of view, the payment of allowances ensures awards for additional duties and responsibilities can be confined to those staff members who carry them out without the need for promotions or the creation of new grades. Various allowances paid to certain groups of staff are pensionable or have come to account for a significant portion of the income of the staff in question. In many such cases the allowances have come to be considered by staff and management as core pay. In some cases allowances are used by management to avoid costs. Acting up allowances, for example, are sometimes paid to staff who take on the duties and responsibilities associated with a vacant higher grade post. During the years this has frequently been used as an alternative to a promotion that would result in a higher salary and pension commitment. The cost of allowances is falling as public service staff numbers continue to decline.
The Department of Public Expenditure and Reform announced the outcome of its review of public service allowances on 18 September and made a further statement in October. The review had initially been established by the Department as a management review in December 2011. It was not conducted under the processes of the public service agreement. Neither the public services committee of ICTU nor any individual trade union made submissions to the review process. We were not invited to do so. There was no negotiation with unions on the content, objectives, timetable or terms of reference for the review. The Department instructed all Government offices and Departments to report to it on the allowances paid and make a business case for those allowances they believed should continue to be paid to new beneficiaries - staff who were newly hired, promoted or assigned to duties that attracted an allowance before now. The publicly stated objective of the review was to facilitate a 10% reduction in spending on allowances and premium payments by 2014. Our understanding was that it was intended that the review would lead to the abolition of certain allowances, particularly to new beneficiaries, to help to meet this target. No allowances were paid to new beneficiaries from the end of January 2012 pending the outcome of the review.
The review was not supposed to end all allowances and premium payments. According to the letter the Secretary General of the Department of Public Expenditure and Reform sent to Departments and agencies to announce the review, the Minister believed allowances which reflected work of additional value or the arduous nature or unsocial hours of certain duties and posts remained valid, appropriate and cost-effective. The letter also stated certain allowances might have been overtaken by developments in qualifications, duties, skills and normal flexibilities now expected or required in public service employment. At the beginning of the review the public services committee of ICTU was informed that it would identify three types of allowance or premium payment - those that would be discontinued because the business case for them was not made or deemed too weak, those that would continue because the Department of Public Expenditure and Reform accepted the business case for them and those for which more information would be required from departmental management before a final decision could be made. We were also told any change would respect the public service agreement and that there would be full consultation with staff representatives at central and sectoral level.
Officials from the Department of Public Expenditure and Reform sent a letter to the public services committee of ICTU to emphasise that any initiative which would arise from the review would be advanced in compliance with the terms of the Croke Park agreement, having regard to the primary commitments given by the Government under the agreement. We took this to mean that while unions would have no part to play in the review, they would be able to contest through the arbitration procedures of the public service agreement any decision to discontinue an allowance. These processes are time-limited and binding on all parties. In such a situation our expectation was that independent arbitrators would have to consider whether the abolition or amendment of an allowance was permitted under the agreement. Although this has not yet been tested, we expected that the outcome of an adjudication would largely depend on whether the abolition of an allowance would lead to cost savings, whether the purpose for which the allowance had been introduced was continuing, whether the allowance formed a significant element of the overall remuneration of the beneficiary and whether the allowance could be defined as core pay, in which case it would be protected by the Croke Park agreement.
Our initial understanding was that the intention of the review was to facilitate the permanent cessation of certain allowances to new beneficiaries only.
However, the Minister for Public Expenditure and Reform made a number of statements during the course of 2012 in which he suggested some allowances currently paid to existing staff may also be affected. The announcement of 18 September 2012 included the cessation of one allowance for existing staff and the further review of the continued payment to existing staff of a large number of others. The statement of the Department of Public Expenditure and Reform on the outcome of its review listed allowances under three headings, which differed from its original letter to the Departments and to Government offices. First, allowances to be abolished which would apply to new beneficiaries - that is, new entrants - promoted staff and staff newly assigned to the relevant duty. Second, the allowances to be approved for new beneficiaries but which will be subject to review and or moderation. Third, allowances to be approved for new beneficiaries as well as for existing staff. The Department of Public Expenditure and Reform's statement of October 2012 further underlined the Government's intention to cease paying certain allowances to staff who currently receive them.
I draw a distinction between allowances, overtime and premium payments. It is worth adding that the grouping together of allowances, overtime and premium payments has confused public understanding of what was under review and what the review set out to achieve. In fact, it has been a review of allowances, not a review of overtime, or premium payments, which are additional payments received by some public service grades sometimes at higher rates than basic pay for working additional time over and above contracted hours. While there are many examples where the public service agreement has successfully been used to reduce the incidence and cost of overtime and premium payments, usually through the revision of rosters, the extension of working time, this was not actually part of the Department's review of allowances.
In October 2012, Departments and Government offices were instructed by the Department of Public Expenditure and Reform to open talks with unions about the abolition of some allowances currently paid to existing public servants. The 88 named allowances were drawn from a list of over 100 which were abolished for new beneficiaries when the Government announced the outcome of its review on 18 September. The Department of Public Expenditure and Reform set the 28 October 2013 as the deadline for talks to conclude. The October 2012 instruction to open talks with unions represented the first proposed involvement of trade unions in the process. In some cases talks between the individual employers and unions concerned have now commenced through the appropriate industrial relations machinery.
Committee members will also be aware that the Payment of Wages Act 1991 protects all employees, regardless of which sector in which they work, and prevents employers from unilaterally making deductions from wages that are deemed to be "properly payable". This includes allowances, unless the basis for payment has disappeared or an industrial relations process has concluded that the allowance is no longer justified. The congress public services committee is not directly involved in these talks as they are a matter for the individual employers and the unions concerned. For this reason we are not in a position to engage with the Committee of Public Accounts on the arguments for and against specific allowances. The Department of Public Expenditure and Reform has also indicated its desire for a fast-track process not least because of fear that adjudications on allowances would represent a significant additional workload for the already stretched adjudication institutions, in particular the Labour Relations Commission and the Labour Court. Unions have said that they will consider a fast-track process when the details are tabled.
2:10 pm
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Thank you, Mr. Cody. May we publish your statement?
Michael McCarthy (Cork South West, Labour)
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I welcome the delegates and thank them for their attendance. What is the union position on the decision to stop paying allowances to new recruits? What is Mr. Cody's view on the fairness and equity of this measure?
Mr. Shay Cody:
Let us be clear, the decision was not only to cease the payment to new recruits but to cease paying it to anybody who was not already in receipt of it. That could include people who were already in the system. If an allowance was appropriate for a particular duty and somebody was promoted into it or moved sideways into it, they would not receive it either. I draw that distinction between new recruits and existing staff. We have taken the view that if a union disputes the position of the management, whether it is with regard to existing beneficiaries or indeed new beneficiaries, it is open to those unions to take the matter to a third party to argue that the allowance should be paid. Clearly they are going to have to stand up such an argument, that is, justify that the circumstances that gave rise to the allowance continue in the main, and therefore, there is a good case to argue for the continuation of it, not just for serving staff but for new people. We have not agreed to, or engaged around drawing up the moat as has been painted. The first opportunity the trade unions have had to engage with this matter was at the beginning of October. We would expect that in some or many cases, unions will argue directly with the employer and before a third party, if need be, that allowances should be paid to new beneficiaries.
Michael McCarthy (Cork South West, Labour)
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Has Mr. Cody formed an opinion on how to approach the issue when the union may have formed an opinion it should be discontinued? I presume the union has drawn a distinction between allowances that should be retained and those that the union is less likely to argue to retain?
Mr. Shay Cody:
From the point of view of the public services committee we have not come to any conclusion. We are the central clearing house for the procedures on these matters. As a matter of day-to-day engagement and courtesy, the management side would have liaised with us as they were going through what has turned out to be a much more protracted exercise. We have not put our hands on any allowances and come to a judgment on them. That is a matter for the local union committees, where issues such as these are dealt with, be it in education, health or the Garda. Obviously we are in constant contact with them.
We take the view that in some cases the allowances are well founded and should continue not only for current beneficiaries but for new beneficiaries. In other cases, there may well be a situation - we have no immediate knowledge of them - where the Croke Park agreement buy-out formula might be more appropriate. We have not involved ourselves in that. As we have already stated, it is not something we want to get involved in because we would not have sufficient knowledge of the 88 allowances that are on the table.
Mr. Tom Geraghty:
It may be no harm to clarify that this process has not been conducted under the mechanisms in the Croke Park agreement. This was a unilateral review undertaken by the employer. Our views were never sought in respect of the allowances. I am not volunteering that they should. The fact is that our views were not sought. It will be a matter between individual unions and individual employers to process the wish of the employer to either eliminate or reduce allowances.
Michael McCarthy (Cork South West, Labour)
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Are unions or workers' representatives outside the ambit of ICTU pursuing a separate campaign with the Government on allowances?
Mr. Shay Cody:
Not to our knowledge. From the point of view of the Croke Park agreement it is legitimate for the employer to serve a claim for the abolition of an allowance. What would be required, irrespective of whether the unions or associations are happy about it, is that they should engage. We are not aware of any indication that people will not engage. Clearly people are entitled to robustly put forward whatever arguments they have. In some cases they may well convince the employer. In other cases they will have to take their chances in front of a third party. We are not aware of anybody who is covered by the Croke Park agreement who is not willing to start that conversation.
Michael McCarthy (Cork South West, Labour)
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Under the arbitration procedures of the Croke Park agreement, what level of discussion is operating within that framework?
Mr. Shay Cody:
There is a requirement under the Croke Park agreement for the employer to table their initiative to the unions. Then there is engagement on it. In many cases the implementation body would be getting reports that agreement is reached. This is probably a more sensitive area and I am not sure whether early agreements will be reached. There are facilities open to either party to trigger referral to adjudication, which is binding.
Clearly, a judgment has to be made as part of that process. If one is doing business one stays at the table; on the other hand, if one considers one will not do business there is an opportunity to refer to a third party. These processes are quite speedy and have been completed under the Croke Park agreement. Obviously, management is suggesting some fast-track arrangements because we do not want to bog down the Labour Relations Commission or the Labour Court unnecessarily. It is early days yet. To my knowledge, there has been some initial engagement on these matters, but not in all sectors.
2:20 pm
Michael McCarthy (Cork South West, Labour)
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Does Mr. Cody have information that he can share with the committee on how many of the allowances are pensionable and how many are not pensionable?
Mr. Shay Cody:
I do not have that information off the top of my head. I suspect most of the allowances are pensionable. Broadly speaking, an allowance in the nature of pay is pensionable. What is not pensionable is what might be called a transient payment; obviously, that is not on the table. Generally, overtime is not pensionable because it is a come-day-go-day payment, whereas a payment that is embedded in one's salary structure - the area of teaching is a better example - is fully pensionable. One pays a pension contribution based on the payment and also the pension levy.
Michael McCarthy (Cork South West, Labour)
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For allowances that are pensionable, is the pension contribution separate?
Michael McCarthy (Cork South West, Labour)
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What is the order in terms of percentages?
Ms Sheila Nunan:
As it is aggregated into gross salary, the pension deduction is applied across the board, including the salary spine and the allowances. Equally, when pay was reduced, allowances were reduced. The same rules applied to increases as decreases in respect of the pension levy. It is considered for the purposes of pension an aggregate and the percentage for the pension and the pension levy is applied directly to that.
Michael McCarthy (Cork South West, Labour)
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They would also have taken the 14% hit on the allowance until recently.
Michael McCarthy (Cork South West, Labour)
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Would it also be true to say that in some cases the allowance pushed people into a higher tax bracket?
Michael McCarthy (Cork South West, Labour)
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This means they would pay more tax as a result of the allowance. In regard to the genesis of the allowance system, when did it begin and in which specific area?
Mr. Shay Cody:
Some of the allowances predate the State and are an intrinsic part of the way the remuneration was built up. In the past there was a reluctance on the part of management at times to promote people or regrade them. This may have been on the grounds that it would give rise to repercussions, while in other cases people may not have accepted duties that were above their grade but did not take them onto the next step of the ladder. Often an allowance was a recognition of an additional duty in cases in which a promotion to the next grade was probably too much. Many allowances were created through that process, either in negotiations across the table, through third-party adjudication or arbitration, or through the Labour Court.
Michael McCarthy (Cork South West, Labour)
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Were any allowances introduced as a result of industrial unrest - that is, strikes - or were any introduced to avoid strikes?
Ms Sheila Nunan:
In the education sector, the supervision and substitution allowance was introduced as a result of a period of industrial unrest between the teacher unions and the employer. The resolution of that unrest was the introduction of the allowance. That is probably the most recent example of an allowance resulting from a protracted and difficult period of industrial relations dispute.
Michael McCarthy (Cork South West, Labour)
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How many of the allowances could be considered to be part of core pay? I know there are areas in which a justifiable case is made for their being part of core pay. Roughly what percentage of allowances are classed as core pay and what percentage do not fall into this category?
Mr. Shay Cody:
To put it simply, if the allowance is paid to everybody, broadly, the unions would argue that it is core pay. On the other hand, there are allowances that are paid to people for a particular duty, skill or task that they undertake and which do not involve large amounts of money. One would not argue that is core pay for a category or a grade but, as accepted at the start of the Department of Public Expenditure and Reform initiative, there are many allowances that are considered to be justified because people are doing something for it. The fact that an allowance is not necessarily core pay does not mean one can click one's figures and do away with it, as it may have originated in a person's performance of a duty over and above what was expected of his or her colleagues. Clearly, this is a large area. The list contained in the Department's announcement, particularly for the education area, shows large blocks of allowances which are paid largely across the board. I imagine my colleagues in the teacher unions will argue trenchantly that they are an unusual way of building up the standard remuneration package of teachers.
Michael McCarthy (Cork South West, Labour)
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On the specific issue of teacher unions, I seek the views of Ms Nunan, who represents the INTO. Obviously there will be an issue when a young teacher begins teaching in primary school alongside a teacher who has ten or 15 years' experience, as there will be a disparity in terms of earnings-based allowances. Is that fair?
Ms Sheila Nunan:
It is completely unfair, and we said so publicly at the introduction. I note the Deputy's earlier comment about fairness. This involves the introduction not just of a second but of a third salary scale. There was the 6% to 7% cut plus the pension levy for everybody. The following year there was the introduction of a 10% pay cut across the public service, but for teachers, because they had to revert to the first point of the scale, it was in the region of 12% to 14%. That was the second scale. This year, with the abolition of allowances, there is the introduction of a third tier. Without doubt, this will create much difficulty in schools. Clearly, in terms of incremental pay, people are on different levels in individual schools, but that is different from having people on different scales. It is unfair and unjust to new entrants into the profession and will be a recipe for not-so-pleasant relations within staff rooms in the future.
Michael McCarthy (Cork South West, Labour)
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Has the INTO identified allowances for which a stronger case can be made for retention? To ask the question in another form, has the INTO identified allowances that could be discontinued?
Ms Sheila Nunan:
I have read very carefully the debate that took place last week between the Secretary General and staff from the Department of Education and Skills and the committee. Obviously, the big four allowances account for a substantial amount of the money paid by the Department of Education and Skills to teachers who are on allowances. There are allowances paid to a smaller number of people who have been identified by the Department of Public Expenditure and Reform in respect of the discussion that is to take place. Those are the allowances for which the Department did not make a business case; I refer to the island, Gaeltacht, teaching in gaelscoil and secretary to board of management allowances. Without going into a negotiating position, it is no secret that we will be contesting the abolition of those allowances.
Michael McCarthy (Cork South West, Labour)
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Ms Nunan mentioned island, Gaeltacht, gaelscoil and board of management allowances. Will the INTO contest the discontinuation of those allowances?
Ms Patricia King:
With respect, if an employer were to say he or she intended to take X euro from one's pay packet every week, one would find very few people who would say "That is grand; you can do that." That is highly unlikely to happen for people who come under the heading of allowances to be prioritised for early elimination. It is probably untenable to run a public sector pay structure to which 1,100 allowances are attached. That is an issue that should be dealt with as soon as possible. Our argument is that there should be high quality engagement on consolidated pay rates sooner rather than later.
People are focusing now on the issue of employers deciding to home in on the lower paid, but our union has experience of this issue and has been actively engaged in batting on it for the past two and a half years. In some cases there have been very tricky engagements, particularly in the local authority area where county managers decided they would make their savings based on how much they could pull out of a county council worker's pocket.
2:30 pm
Michael McCarthy (Cork South West, Labour)
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Local authorities might be the area in which ICTU has the most knowledge. How many people in that lower income bracket would be affected by a reduction or abolition of allowances? What would these workers earn typically?
Ms Patricia King:
All of the outdoor staff would be affected, whether lorry drivers or on the shovel. By and large, all of these receive allowances that would be affected. Many local authority payments are made on a regular rostered overtime basis and this causes further complication and confusion in the minds of people who are not aware of this as to whether the payment is overtime or an allowance. Recently, the Labour Court issued a recommendation on this with regard to Cavan County Council. It had decided it wanted to remove all embedded overtime from the council workers, but we challenged that.
Michael McCarthy (Cork South West, Labour)
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Does that mean the allowances are all overtime?
Ms Patricia King:
That is why I raise this here. Cavan County Council said it wanted to remove all overtime. We argued, and the court made a recommendation, that allowances are allowances and overtime is overtime and the two should not be tied together, and that the council should not do anything until the Government decides what it is doing in general in its review. Other local authorities had been taking a similar approach to that of Cavan County Council. They were deciding they were under huge budgetary pressure and needed to do what needed to be done for their books. Nobody disputes the fact they have significant issues with regard to their budgets. However, for the past two and a half years they have gone after these people and taken money from their pockets.
To return to the Deputy's first point, I represent these workers and deal directly with them in many cases, but I have yet to find a council worker who will tell me I should go in and tell the man in charge he can take his or her money. Chances are it is only €12, €10 or €5, but if a person is on a wage which after 40 years provides a maximum of €28,000 and someone suggests the way to save the local authority is to remove that person's €12 eating-on-site allowance, the person will not be happy about that. The reason for an eating-on-site allowance is that if one lives in place A and must get to place B to clear the drains or do whatever one is asked, there is no canteen there and no facility to make tea or go to the toilet. This is local authority work that people are asked to do. Many decades ago, we negotiated an eating-on-site allowance for such people, to try to ensure they could buy or bring the necessities with them or pay for the extra petrol they might need to drive to where the work is. In my county of Wicklow, a big county, if someone who operates from Greystones is told to do work in Glencree the next morning, that means a journey of 15 miles, with no bus service and no other way of getting there. The eating-on-site allowance must cover that. That is what it is about. Therefore, a county manager should not be able to just walk in and decide that because his budget is in difficulty, he can take that money from the worker. This causes a huge problem for the worker and we will contest that. The question may be asked as to whether this payment is core pay. We will argue strongly that it is core pay and part and parcel of what constitutes that person's wages.
Michael McCarthy (Cork South West, Labour)
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I presume the union negotiated that position in the context of the discussions that took place that resulted in the Croke Park agreement. Was that the established position all along?
Ms Patricia King:
The Croke Park agreement is there, yet for the past two and a half years people at managerial level have been coming up with these proposals. They are doing so under section 518 of the Croke Park agreement, and we had to respond accordingly under that. We have been expected to utilise the procedures in that agreement to deal with the issue and that is basically what we have done.
The issue of taking money from people over and above the pay cuts has been going on since day one of the agreement. However, there is little commentary on that and few people want to hear about it. I have been pretty vocal on this repeatedly because it is a common feature or practice. It happens in the health sector in the support grades, in catering, in portering and in security. Wherever there is regular rostered overtime, all the managerial groups have decided this is easy pickings and have gone after it. People have had their wages adjusted downwards big time in those grades, over and above the 14%. That is a fact.
The more money that is taken from these people's pockets, the more difficult the situation will be for Robert Watt, the Secretary General of the Department of Public Expenditure and Reform, who issued this paper list of the allowances the Department wanted to remove without negotiating, consulting or informing anybody in advance. Anybody who looks at that list will notice very few people on high pay receive these allowances. This is another case of having a go at low-paid people. Whatever the shoe allowance is, for example, it is an allowance for people who are on a maximum of €500 a week. We have a large membership in the support grades of the health sector and local authorities and the biggest problem the management of these sectors have with us is that our view is that the well is dry. They have already taken whatever can be taken from these people, but now they are nominating another lot of moneys to come from their pockets.
There is a big problem arising. With respect, it is wider than the issues the Deputy nominated for consideration. There is a point at which it must be said there is no more to be got.
Michael McCarthy (Cork South West, Labour)
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Is it frustrating for all of the witnesses to see erroneous comment or deliberately misleading comment that fuses the issue of overtime with premium rates and allowances?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Sorry; Mr. Geraghty wanted to come in earlier.
Mr. Tom Geraghty:
My point relates to the point made by Deputy McCarthy. Before he made that point, I wanted to broaden out the answer to the question about earnings. This is something one will struggle to hear in public discourse. One might be forgiven, when one hears the constant attacks on the Croke Park agreement, for believing there is some sort of pay bonanza in the public service. In fact, if one looks at the reply given by the Minister to a question asked by a Deputy recently, some 82% of public servants earn less than €60,000 including allowances, and more than 40% of them earn less than €40,000 including allowances. The fact we are having this discussion on allowances highlights the general impression that exists that these are some sort of bonanza. However, that is not borne out by the reality. Earnings in the public service are not excessive by any consideration.
Mr. Shay Cody:
On a related point, we started off our submission by pointing out that even at its maximum, the ambition set by the Department of Public Expenditure and Reform as to what it wishes to achieve from this unilateral allowance initiative is small beer compared to what has been achieved to date under the Croke Park agreement. Some €1.5 billion was saved in the first two years. The shared agenda is that from a peak in 2008 out to 2015 - but this will probably be achieved in 2014 - the cost of running the pay and pensions bill of the public service will have reduced by €3.3 billion. What public service workers are delivering to keep that show on the road is significant. However, in the context of that €3.3 billion reduction, we find a lot of attention is being given to what tend to be quite marginal issues.
Michael McCarthy (Cork South West, Labour)
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I will conclude on that as I am conscious of the time I have had on this.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputies McDonald, Nash and Donohoe have indicated they wish to contribute, but before they do, I have two questions arising from Mr. Cody's opening statement.
First, I am struck by the point Mr. Cody made about not being consulted. Am I to understand that prior to the announcement of the review of the €1.5 billion paid in allowances, there was no consultation whatsoever, with the unions or the implementation body itself, in regard to the figure for savings that might be achieved arising from that review?
2:40 pm
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It was unusual, however, in the case of the State as employer.
Mr. Shay Cody:
I am merely making the point that management would usually sit down and conduct an exercise like this in private. When that initial discussion is concluded, it would then table something for the trade unions to engage with. This initiative was somewhat unusual in the sense that it was publicly announced at the concept stage before there was any engagement with us. However, even if management had invited us to participate in the initial discussion, what were we to have done? It took the guts of a year for management to come to any conclusion. It is only at this stage that our job becomes relevant in terms of, as we have described, either engaging at a sectoral level or, if need be, going to third-party negotiations in order to advance whatever arguments we require to be advanced.
Mr. Tom Geraghty:
The development of the concept was done unilaterally by the Government, but the means by which any individual allowance is dealt with, in the event that the employer indicates a desire to discontinue it, is set out in the Croke Park agreement. There is a dispute resolution mechanism in the agreement for dealing with such matters.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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My second question relates to the 800 business cases. I do not like to use that term because, from what I have seen, what was produced does not fit the description very well. Setting that aside, however, were the unions consulted in terms of the presentation of the business cases and the ticking of boxes in that context?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I have one final question regarding the 88 allowances that were identified for abolition. I understand the instruction to the various Departments and agencies was that other allowances should, where feasible, be proposed for inclusion on this list. Were the unions consulted in regard to the identification of the 88 allowances?
Mr. Shay Cody:
No. That consultation has now commenced in the sense that the Department of Public Expenditure and Reform has requested that the various sectoral managements engage with the sectoral unions with a view to opening up a discussion on them. That consultation is only now beginning; everything else was a unilateral management initiative.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I welcome the delegates. On the issue of non-consultation, I read Ms Nunan's opinion piece in The Irish Times yesterday regarding the reductions in remuneration for new teachers. In respect of accusations that the unions sold out new entrants to the public sector, she states: "The unions were not part of the decision on allowances. In fact the unions were frozen out of this process..." Is it the delegates' view that they were deliberately excluded from those discussions? Are they philosophical about not having been consulted, or is it something they raised with the Government when the process got under way?
Ms Sheila Nunan:
There is obviously a particular view among my colleagues and me on this matter. Education is the main area within the public sector that is hiring, as a consequence of demographic factors leading to increased demand. Fairly speedily after the announcement by the Department of Public Expenditure and Reform of its intention to conduct a review and to freeze allowances from 1 February, the three teacher unions - ourselves, the ASTI and the TUI - wrote to the Department to express our great concern regarding the impact of that decision for young teachers who would be recruited in September and the long-term impact on the profession. My colleagues and I are agreed on the importance of recruiting the best quality candidates into teaching and of retaining them in the longer term. With rising pension ages, we are talking about teachers coming into the profession at 22, 23 or 24 years of age and being expected to remain in the profession into their mid-60s and beyond.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Having been excluded or frozen out of the process initially, it strikes me as odd that, as a group, the delegates have come before the committee with no view in respect of the allowances. We are conversant at this stage with the wide range of allowances and the history behind them. As Mr. Cody observed, many of them predate the formation of the State. In that context, I am surprised to hear that having been frozen out of discussions initially, trade unionists would be happy for those discussions to proceed at a sectoral or more localised level, without wishing to put on the record a firm or categoric view in respect of the allowances.
Ms Patricia King:
I do not know whether Deputy McDonald heard the answer I gave earlier in response to a question from Deputy McCarthy. I believe I was as clear as I possibly could be when I stated our view that it is untenable to have a pay structure to which 1,100 allowances are attached and that we will work vigorously to ensure there is a consolidated pay rate for every job. That is what our members want and it is our position. As part of our engagement in the negotiation process, as set out in the agreement, we will resist on every account, as we have done for the past two and a half years, any proposition that seeks to reduce members' pay.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I heard Ms King make that point.
Ms Patricia King:
It is important that our position on this issue is made clear for the record. I could not have been clearer in setting out that position. No employer part of the public service that I have dealt with would say it does not understand our position. SIPTU has a large constituency of low-paid workers for whom allowances and regular rostered overtime are features. We are on the record everywhere in this regard. The Labour Court is awash with submissions from us on the issue. In short, our position is extremely clear. I am not conversant with all of the procedures and everything that goes on in this committee, but in case I have not stated it clearly enough, that is our position.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Thank you for that, Ms King. I did hear the earlier contribution and was struck by it. The question I am asking, however, is whether that very clearly articulated position is the position of the group. Ms King is speaking on behalf of SIPTU, but I want to know whether it is the position of the ICTU's public services committee that allowances will be defended in the definitive way she has set out. It is notable that although Mr. Cody said a lot of things in his opening remarks, he certainly did not say that.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I am interested in the consolidation issue, which is a point well made. If Mr. Geraghty does not mind, however, before addressing that I would like a simple answer from the delegates as to whether it is their position, as a committee, that the continuation of the payment of allowances to members will be defended.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I know where the discussions will take place.
Mr. Shay Cody:
The Deputy should not read into matters that we are going to support the management initiatives or endorse them in any shape or form. We are simply saying that the unions in the relevant sectors, whether in education, local government, health, the Civil Service or anywhere else, will marshal the arguments as they see fit.
They are the same unions we represent here. We are simply saying that at the level of the officers of the public services committee, we will not be engaged with the management side on the merits of any particular allowance because that is not where the discussions take place. It would be absolutely wrong to read into this that we have a view that we are prepared to throw any allowances to the wind. We simply are saying the issue will be argued in another room.
2:50 pm
Mary Lou McDonald (Dublin Central, Sinn Fein)
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No, and I understand that this has been made abundantly clear. However, it is entirely legitimate for members of this committee to ask the witnesses whether, given they represent their constituent unions and are a committee of the ICTU, members are correct in assuming the unions will defend the continued payment of these allowances. I seek a "Yes" or "No" answer.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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That is not nearly as categoric as Ms King's answer.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Yes; members are aware of that.
Mr. Tom Geraghty:
As members of the implementation body - that is, when wearing that hat - our task is to ensure that these processes work. It is a matter between the individual unions and the individual employers to deal with any wish on the part of an individual employer to either reduce or eliminate an allowance and to use the processes that were set up under the Croke Park agreement. However, were the Deputy to ask me a question, I would say that in the vast bulk of cases, it is quite likely that the unions concerned will use the full processes. As Ms King noted earlier, it is difficult to envisage circumstances in which an employer would come along seeking to take money out of someone's pocket only for the union merely to respond that this would be okay.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Then I do not understand the reason Mr. Geraghty cannot be as categoric as was Ms King. One point that has struck members, while working their way through all these allowances, the cost thereof and to whom they are paid, is that in the vast majority of cases they are clearly part and parcel of the pay and wages of people in receipt of modest incomes. I believe members have established that.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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It struck me during Mr. Cody's opening comments and continues to strike me as odd that as a committee of the Irish Congress of Trade Unions, the witnesses cannot say categorically and simply that the trade unions will enter into the appropriate process but will be arguing on behalf of their members that the allowances continue to be paid.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Now that Mr. Cody has mentioned it, I should have thought of that.
Mr. Shay Cody:
Perhaps, in those circumstances, some people who have been reading that debate have been convinced by it and have taken the view that an allowance which brought a salary above €100,000 was no longer warranted. I am not sure if that would be universally found but we might find pockets of it in the trade union movement.
Michael McCarthy (Cork South West, Labour)
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I believe it is 1.8%.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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As Mr. Cody has raised it, I note the equivocation on his part on the issue of defending the allowances.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I will then choose different vocabulary. There is a sort of hands-off view regarding the allowances. The witnesses are happy for them to go through the more localised procedures, as was set out-----
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I am not disputing that. I am asking for a straight answer.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Mr. Cody is not giving me a straight answer.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Mr. Cody should note I would expect the public services committee to have a settled position on a couple of things in respect of these allowances and pay generally within the public sector. I would expect it to have a settled view that people on modest incomes cannot take another hit. I would expect it to have a settled view that it cannot tolerate what is almost pay apartheid within the system, whereby new entrants in particular or new beneficiaries, as the witnesses have pointed out, are put in a disadvantageous position. I would also expect that as trade unionists, the public services committee might take their own unilateral action and start looking at the albeit small number of people who earn excessive wages within the system. Almost 7,000 people are in receipt of more than €100,000 in the public and Civil Service. Moreover, that figure does not include city and county managers, heads of VECs and so on. It is striking that although the State and managements froze the unions out of a process regarding allowances that predominantly affects the pockets of people on lower incomes, the unions are allowing that to proceed, yet Mr. Cody makes a sarcastic remark to me as regards a position Sinn Féin takes on high earners within the system. I find that very striking.
Mr. Shay Cody:
Any remarks made were not intended to be sarcastic. They simply made the point that various people will argue that some allowances no longer stand up. It is entirely a matter for the relevant unions to listen to the arguments and to make a decision themselves as to whether they wish to go to a third party if they cannot convince the employer. This is part of the normal cut and thrust of all industrial relations.
With regard to the higher paid, to correct the figures Deputy McDonald gave, I understand from the information given to Deputy Tuffy that there are approximately 5,800 people in the entire public service who earn more than €100,000 per year and that the figure does include chief executives of VECs or county managers.
Gerald Nash (Louth, Labour)
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To put this into perspective, there are 111,000 such people in the entire economy.
Mr. Shay Cody:
A judgment must be made by the relevant union as to where it will fight the battle. We all are quite satisfied that in the great bulk of cases, the unions will argue for the continuation of these allowances, not just for existing beneficiaries but for future beneficiaries. However, it would be wrong for us to pre-empt the entire process by stating this will happen in every last case because there may well be arguments that the grounds for the original awarding of an allowance no longer stand. However, we do not want to get involved in that simply because the knowledge and arguments in that regard are best done in the areas in which they are in place.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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In respect of high earners within the civil and public service, including county and city managers, head of VECs and so on, Mr. Cody should indicate whether he, the ICTU or the trade union movement proposes to take on that particular issue any time soon.
Mr. Shay Cody:
The congress has always taken the view that the solution to issues concerning higher pay is to be found through the taxation system. It would be most unusual if we found ourselves in a situation in which higher pay for a county manager, for example, was to be treated in a different way from higher pay for someone in a private sector company. The congress position, in its pre-budget submissions for this year and on previous occasions, is that there should be an additional level of taxation on higher earnings, wherever those earnings come from, regardless of whether they are made up of core pay, allowances, private sector income, public service income or anything else. We believe this is the most equitable way to deal with those matters.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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That is a fair point to make globally in respect of taxation, and I do not disagree with Mr. Cody. However, given that the public sector pay bill has been such a focus of discussion and misrepresentation, does Mr. Cody not have a concern in respect of issues of equity within that system? Given that those workers on the shovel, as Ms King described them, have been so badly hit in respect of their take-home earnings and given that their allowances are now on the table for discussion, does Mr. Cody not think it would therefore be prudent for unions to raise the issue of the small number of people in receipt of excessive pay within the system? Would this not be a progressive and positive thing to do?
Mr. Shay Cody:
I do not believe the Deputy will find many trade unions arguing the solution to the economic crisis we are in is to cut pay. The argument the trade unions have made consistently is that if there is a financial crisis - and there is - what we should do is to tax higher pay. That is equitable. In fact, were one to decide to deal with higher public service pay in isolation, I would note it is a small drop in the ocean compared with the number of highly paid people right across the economy. The figure given earlier is that there are fewer than 6,000 public servants earning more than €100,000 while there are more than 100,000 people in the private sector earning that amount.
3:00 pm
Mary Lou McDonald (Dublin Central, Sinn Fein)
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For the purposes of this discussion, we are discussing the public sector and its pay bill. There is a shared commitment, as Mr. Shay Cody put it, to reduce the pay and pensions bill dramatically. Members of his union and others have taken a substantial hit. However, there remains a segment of people at the top who still earn very high wages by international comparisons. It strikes me, as well as many trade union members, as odd that the leadership of the trade union movement has not named this issue and made some proposal to address the inequity of the system. The unions presided over pay cuts which people felt in their pockets.
Michael McCarthy (Cork South West, Labour)
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In all fairness, we are straying from the subject. Are we going to discuss Sinn Féin’s tax policy too?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputy Mary Lou McDonald’s time has concluded.
Mr. Shay Cody:
The difficulty of singling out the higher paid to take another haircut is that the definition of the group keeps on changing. I know the Deputy’s party is of the view that it should consist of those whose salaries go into six figures. However, many public representatives, and particularly the media, take the view that the figure is very generous and that the definition of higher paid goes well down into the ranks of the medium and lower paid. From the trade unions’ point of view, if we let the hare out on that one, we may well find ourselves in the position that we have opened the door to all our members being attacked.
Mary Lou McDonald (Dublin Central, Sinn Fein)
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I do not accept that. Mr. Cody is entirely wrong and it is disingenuous for him to make such an argument.
Anyone looking at the system of allowances can only conclude that the existence of 1,100 allowances that have come to be through a variety of circumstances is not a sustainable position. Has the Minister opened up a discussion with the unions on the kind of consolidated pay regime that would be desirable in the sector?
Mr. Shay Cody:
The Minister's statement draws attention to this. He identified structural weaknesses in the remuneration packages and stated that he was open to commencing a medium-term process of addressing them. The view of the trade unions is that we would rather it were a short-term process and should be started sooner rather than later for the simple reason that it is impossible for anyone to track that many allowances. We would welcome an opportunity to engage with the Minister’s officials on that at an early stage.
Gerald Nash (Louth, Labour)
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On the theme of consolidation of allowances and their being part of core pay, has the trade union movement, in the context of social partnership arrangements going back to the 1980s, made efforts to have allowances consolidated in the way Ms King described? If it has, what sort of obstacles occurred?
Ms Sheila Nunan:
A large proportion of the so-called allowances are on the teachers’ pay bill. Part of the reason it did not come up was that it was understood by teachers to be part of their pay. "Allowance" has become a pejorative word in the context of pay. There was a time when this would not have mattered. Clearly, the agenda has now shifted considerably, given the comments made about allowances.
In response to Deputy Mary Lou McDonald’s comments, I am taken aback, as a general secretary representing teachers who have been badly affected, at any suggestion that we would not contest the cuts in the strongest possible terms. I noticed that when the Department’s Secretary General was before the committee last week, he was also sensitive to the negotiation process in this regard. The guns are not blazing at the committee but in the appropriate remuneration forum.
To my knowledge, there has not been an exercise to consolidate allowances. For example, it is not as quite as straightforward for a principal teacher because it can depend on the number of years of service and so forth. In the future, work could be done to resolve aspects of this.
Gerald Nash (Louth, Labour)
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Was there an acceptance by teachers that allowances formed a core part of their pay package and would not be under threat?
Mr. Shay Cody:
Following up on a point made by my colleague Ms Patricia King, allowances for support grades across the public service should be examined in particular. While the individual amounts might seem quite modest, they accumulate into quite a significant proportion of the take-home pay of low-paid workers. If there were a way of consolidating and making comprehensive their remuneration arrangements, it would make more sense than leaving parts of their much-needed income vulnerable to criticism from outside the system.
Gerald Nash (Louth, Labour)
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I am familiar with the assaults on the pay of local authority and health sector workers in recent years which were introduced unilaterally and challenged heavily by the trade union movement. I made the point at the hearings on the Department of Defence allowances that there were many Defence Forces families who could become dependent on family income supplement if their allowances were removed. Does Ms King agree that if there were a widespread cull of allowances for lower paid workers, in one way or another the taxpayer would end up footing the bill through increased social welfare payments to those affected?
Ms Patricia King:
I do not believe consolidation will be easy. There are those in the establishment who would view it negatively. The manner in which the whole issue of allowances has been handled, in which we were basically handed a list of what is to be eliminated without any prior notification, is a significant challenge to the Croke Park agreement. The agreement is a collective agreement between employees and employers. The operation of another procedure alongside it is a big challenge to the agreement. When the procedures are not used on the employer side due to its view that it is curtailed by them, this adds a big challenge to making the agreement work.
It never fails to amaze me when I hear some local authority or health sector manager make arguments about removing allowances. All they want is a smash and grab, taking the money to resolve their budgetary issues.
They have made up their minds that that is the way they are going to resolve that budgetary issue. It never fails to amaze me that they have not thought that if they managed the place or restructured a little better, they might not have to grab this money from the lower paid. I gave the Greystones to Glencree example. If they want to do it properly, there is another way of doing so - in other words, they should use their heads and start to manage the issue. It is unbelievable in some cases how much that is lacking in the system. The easiest thing to do is to go after the person at the lowest level and grab the money.
3:10 pm
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is it the case that management is lacking?
Ms Patricia King:
Yes. I refer to common sense and using your head. One should restructure and ask people to do something in a different way to see if one can manage the resource differently instead of coming in with a diktat and saying, "This is how we are going to do it."
To get back to the Deputy's question, the people concerned have a set of budget figures that they must produce at mid-year or the end of a year and they must balance the books. They can state they made savings in so many areas. The fact that the Department of Social Protection might see an increase in its bill for family income supplement give it little reason to worry because it has done its piece. Why should it worry about some other Department? That indicates the disjointed nature of the approach taken.
I refer to those on a wage of approximately €27,000 or €28,000. Deputy Mary Lou McDonald has said she has not heard the trade unions state this, that and the other about those on high pay. Perhaps she is lucky that she has not been at some of the meetings that I attend every day because not only have I said it, but I have also said it to their faces. There is no better way than to say it to their faces and, as my colleagues know, I do it on a regular basis because there is an inequity in t5he system against which we have argued and which we continue to resist beause it is the lower grades which pay. Certainly, my union has been to the forefront in arguing against it and it will continue to do so. Every time it happens, it tests the Croke Park agreement to the limit. That is what has happened and I am not making any claim that cannot be substantiated. That is the reality of what has happened.
Mr Shay Cody:
I go back to the point I made because it is worth reiterating in the context of the question asked. More than 40% of public servants earn less than €40,000. If their pay is cut further, of course, there will be implications in terms of the payment of family income supplement. One can do the mathematics.
Gerald Nash (Louth, Labour)
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There will also be implications for the economy.
Mr. Tom Geraghty:
My union represents support grades in the Civil Service, the majority of whom are in receipt of family income supplement. Clearly, if an agenda of removing allowances from them was to be pursued, we would resist it. If the management side was to be successful, all it would be doing is creating a problem for another Minister. Frankly, it would be nonsensical.
Gerald Nash (Louth, Labour)
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Can the witnesses shed some light on how many of the allowances which number in excess of 1,000 were agreed to between 1997 and 2007? Would it be fair to state a considerable number of them were negotiated during the Celtic tiger years?
Gerald Nash (Louth, Labour)
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I merely wanted to establish that fact.
Mr Shay Cody:
If one looks at the list of the biggest allowances, the great majority are of long-standing. My colleague mentioned the supervision and substitution allowance. It is probably the only significant allowance introduced within living memory. There may be small allowances here and there but nothing that would register as being significant financially.
Gerald Nash (Louth, Labour)
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It would be useful if the witnesses could establish for us their own view on what constitutes core pay. We have been exploring this issue for the past few weeks and much has been said about a small amount of money being involved. I am a great believer in looking at the wood, not a particular tree. There is a broader context, but that is not a matter for us to consider today. Is the definition of core pay dictated by the vintage of an allowance and the percentage in terms of overall pay for an individual public or civil servant? Clearly, the Labour Court has defined it in the context of some of the allowances paid during the years. Are the witnesses in a position to define it as best they can?
Mr Shay Cody:
Defining an allowance as being part of core pay, in my judgment, is not the only justification for its continuation. Allowances can be paid to either individuals or small groups and, frankly, it would not be tenable for us to argue that they are part of core pay, but it would be tenable for us to argue that they were justified. For example, in the support grades in the Civil Service some staff are in receipt of a key holder allowance, in other words, they can be called in early or late to open a building if, say, there is an alarm going off. Everybody does not receive the allowance. It would not be possible to argue that it was part of core pay, yet at the same time the Minister has accepted that because it is a particular duty and responsibility that must be performed, the allowance should continue to be paid, not only to existing beneficiaries but also to future beneficiaries.
To deal with the issue of core pay, if an allowance is paid to all or almost all staff and has been seen as part of the remuneration package, whether it is described as an allowance on top of basic pay or as being part of core pay, it is part of the way one remunerates somebody. A classic example - the one which has been used on many occasions - is that of school principals. For some odd reason, they are on a salary and in receipt of a school principal's allowance, whereas if they worked anywhere else, they would be on a consolidated salary for the grade of school principal. There are many similar examples. Frankly, in the great majority of these cases, there would be no issue between the employer and the unions because, as Ms Nunan stated, it has always been so. Perhaps we can tidy matters up but not as part of this do-away-with-allowances initiative.
Ms Patricia King:
In our submission to the Labour Court in the case involving Cavan County Council we stated the allowances were part of the established income of the workers concerned and that non-payment would have a direct impact on their personal financial commitments. That is, effectively, the definition we used in the Labour Court.
Paschal Donohoe (Dublin Central, Fine Gael)
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I welcome the delegates and thank them for coming. I have a question for each of them on the basis of the answers they have given to my colleagues.
Mr. Geraghty stated during an exchange with Deputy McCarthy that his views had not been sought initially on how the matter of allowances should be handled. If his views had been sought, what would they have been?
Paschal Donohoe (Dublin Central, Fine Gael)
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I accept that.
Mr. Tom Geraghty:
No trade unionist worth his or her salt will offer to give up money on behalf of his or her members. That is not the business we are in. We have in place an agreement that is taking considerable costs out of the system and was doing so before this issue arose. The point has been made that it will reduce the public service pay bill by €3.3 billion by 2015. Had our views been sought, I dare say we would have said this. We would have said this was an unnecessary exercise.
Paschal Donohoe (Dublin Central, Fine Gael)
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If they had been sought, they are the bones of the views with which Mr. Geraghty would responded?
Paschal Donohoe (Dublin Central, Fine Gael)
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I accept that. On the origins of the system, I am struck most by its extraordinary complexity having heard details of the origins of the allowances and how they are paid in different sectors.
Mr. Cody spoke about where they came from and said many of them had been in place for some time. Considering the origin and development of allowances, does he believe an alternative way could have been found to address the legitimate needs of workers without creating the kind of complexity that is a feature of the system we have now?
3:20 pm
Mr. Shay Cody:
I might just give a simple example. There was a lot of media comment about a shoe allowance paid to some service officers in the Civil Service and jokey comments around it. Actually it existed for a very simple, cost-effective reason. It was only payable to those who had a uniform and it was found it was much cheaper to give people €65 to buy their own shoes rather than having a store of shoes that would be ill-fitting and would require the existence of some sort of logistics department with different shoes in it. Sometimes allowances make complete sense from the employer's point of view. Workers did not ever unilaterally - if I can call it that - impose allowances on the system. They came by way of agreement. In some cases they came by way of management initiatives, such as the example in which management decided it was a hell of a lot more cost-effective to allow workers to buy their own shoes rather than supplying them as part of the uniform, as happens in some bigger services such as the Garda and the Army. That goes back to the 1930s and, frankly, I do not think there is a better system in place. It is obviously relatively small beer - although €65 a year is a lot more money for somebody who is on a very modest salary than for somebody who is a county manager - but it makes absolute sense from the employer's point of view that it supply the uniform in the most cost-effective way it can. That is how that particular payment came about, and a lot of other allowances are there because management actually wanted to save money - rather than promoting workers, it would pay them allowances for carrying out additional duties. There are many such examples.
Paschal Donohoe (Dublin Central, Fine Gael)
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A consequence of that has been the proliferation of allowances. For example, in the Irish Prison Service alone there are 64 allowances. Within our Defence Forces, there are 63 allowances which are separate and bespoke to those two units of our public service. While I understand and accept Mr. Cody's point that in many cases an allowance was the most cost-effective and straightforward way of dealing with a particular claim within a particular sector, when all the sectors are put together, there are 1,100 of them in total. Of those 1,100, if one strips out the equivalent of the top four across every arm of our public service, as Ms Nunan mentioned, there are still hundreds that are low in value and claimed by few. However, when put together there are a gigantic number of them.
Mr. Shay Cody:
Under the Croke Park agreement and, I think, into the future, management - and the country - will require an awful lot more interchangeability among public servants. We already have some significant examples, which were outlined in the implementation body report, of people moving from one employment to another, changing employers and being redeployed in different areas. There is a move towards a more rationalised set of public service terms and conditions, whether in pay or allowances - we have done this for sick leave and annual leave. Perhaps out of this whole shemozzle we may end up with a more rationalised structure. The initiative that was suggested by the Minister of some form of consolidation could actually tidy up some of those. I do not think it would be possible to tidy up everything, but some significant strides could be made that would facilitate the creation of a more unitary type of public service, which is what we are doing under the Croke Park agreement, whereby if somebody is not needed here and is needed over there, then on a fairly seamless basis we can migrate them from the less important job to a more important job.
Paschal Donohoe (Dublin Central, Fine Gael)
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One of the examples that was given to us was that of the prison service. This is the most recent allowance to be introduced. There was a difficulty regarding overtime payments within the prison service. A dispute took place and a system of 13 different allowances was introduced. On paper that looked extremely complicated, as was acknowledged by the people who were operating it. None the less, it gave them the ability to tailor individual payments to individual people as opposed to operating a blanket overtime system. They argued that there was a saving of approximately €30 million a year. While a consequence was higher complexity, they felt that was worthwhile.
Mr. Shay Cody:
That is why - going back to the earlier point - sometimes it is best for this discussion to take place close to the workplace where people who know an awful lot more about this than either the people in the Department of Public Expenditure and Reform or indeed ourselves can actually bring that experience to bear. In some cases, what looks on the face of it like an unusual arrangement makes absolute sense for the proper operation of the local workplace. That may well be the outcome of some of those discussions - not in all cases, but in some.
Paschal Donohoe (Dublin Central, Fine Gael)
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I ask Ms King for her view on the matter. She touched on the question of how feasible it is to continue with all 1,100 allowances in terms of the structure. I learned much from the detail about professions that are rostered and the role that allowances can play there. I cannot remember the section from which this came, but it was interesting to hear how allowances can play a role. What is her view on the role of allowances in a rostered environment?
Ms Patricia King:
On the question of consolidation, our bottom line is that whatever comes out at the other end of the machine should not mean less money for people. Just to be very clear, that is the way we are approaching it. The Deputy is right that there is complexity in some cases - unnecessary complexity, on the face of it, although those who took part in the negotiations on a particular allowance in a particular circumstance will tell one there was a reason for the complexity.
Some sectors of the public sector have used regular rostered overtime as a vehicle. The court, in its recent comments, was clear that it must be either one or the other. It is either overtime or it is an allowance, but it is not both. In the local authority sector, they were paying overtime but saying it was an allowance. The court clarified that, which was a useful recommendation. As I said, there is regular rostered overtime. With regard to consolidation, if we could get to a position in which we had the adjusted rosters, the pay rates and no loss for people at the end of the day, that would be a good job done. That is the task one would have.
Paschal Donohoe (Dublin Central, Fine Gael)
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I thank Ms King.
Mr. Tom Geraghty:
Let me come back to a point the Deputy made which probably bears repeating. He made reference to the prison service and the annualised hours agreement. I am not an expert on that particular agreement, but if one talks to those in the management - I know the committee members have met them - they will tell one that not only did it save them money in overall terms, but it actually gave them much greater flexibility in ensuring attendance when they needed it and so on. In a way, that illustrates the point that sometimes there is a very good reason for allowances to be in place. To describe them - as I have seen them described - as perks is absolutely inaccurate. In fact, there are good operational reasons for having that system as opposed to perhaps consolidating all of those allowances into pay. As Mr. Cody has said, it just will not be possible in every single instance to consolidate the allowances into pay, and it would not necessarily be desirable.
Paschal Donohoe (Dublin Central, Fine Gael)
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I am not sure it would be. Having looked at hundreds of allowances at this stage, we have seen that while most of them are pensionable, many of them, for good reasons, are not. I know everybody would want all the pay they receive to be pensionable, but many of them are not pensionable and are very specific and quite flexible. Integrating that into core pay-----
3:30 pm
Simon Harris (Wicklow, Fine Gael)
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I thank the delegation for appearing before us today and apologise for being late. I had a referendum meeting beforehand. I really appreciate the delegation's appearing before us. Unlike many people we see sitting on that side of the table, the delegation does not have to be here, and the fact that it is here is very important. I found this process over the past number of meetings very useful and educational in my role as a public representative. Other colleagues have used the word "complex". It has been shown that the issue is more complex than any of us, including the delegation, thought, so it has been a useful and measured discussion. I hope we can put together a good report following on from this.
I have seen positive changes in the teaching practices of teachers, but what really frustrates me and many teachers to whom I have spoken is the fact that teachers are not allowed to spend the additional hours they must now spend in school because of the Croke Park agreement with students. There is a knock-on effect whereby the mathematics teacher who for the past 20 years has given the extra hour on a Wednesday afternoon is no longer in a position to do so. Was it the union's position or that of the Croke Park implementation group that the extra hours had to be spent on planning, meetings and the like? Obviously, there is a role for that but I am worried by it and have seen anecdotal evidence of it in respect of extracurricular activities and grinds, for want of a better word, that teachers have provided. There is possibly a better way in which some of those Croke Park hours could be spent. That is certainly the message I am hearing from teachers.
Simon Harris (Wicklow, Fine Gael)
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I am referring to post-primary education.
Ms Sheila Nunan:
I am not absolutely familiar with some of the difficulties arising there. I welcome the fact that Deputy Harris welcomes the positives that have come out of it. In the main, the positive aspect from the point of view of the parents is the non-closure of schools at certain times of the year because parent-teacher meetings are held outside school hours. It is quite specific in terms of mostly administrative matters. The activities that are covered in the additional hour are governed by circular. It was never intended for it to be an additional teaching hour because, as the Deputy knows, schools have become very complex environments, requiring everything from administrative to curriculum development work, and the hour has been used for that. It is being assessed by the Department in terms of the distribution of the time and what the hour is being used for, and something might come out of that review.
Simon Harris (Wicklow, Fine Gael)
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That was just something on my mind. Representatives of a number of workers and, obviously, officials from a number of Departments have appeared before the committee. The Army is one group that sticks in my mind, along with maintenance workers, caretakers and the like. We are talking about many people who are low-paid, embarrassingly so in some cases. Let us take the example of the Army, although I know ICTU does not represent it. Here one finds people earning less than the minimum wage. Rather than grasping the public sector pay nettle and trying to find a solution, we as a State just decided to throw allowances at them. Instead of saying that a person doing job X deserves to earn salary Y, we did what seems to me to be a uniquely Irish thing of giving that person an allowance. As a result, one sees many public servants, many of whom I meet, who are almost embarrassed by the fact that it is called an allowance, because it is incorrect, but who are also earning low salaries. Obviously, I hold the Government, successive Governments and all of us involved in civic life accountable for that but, equally, do the trade unions not bear some of the responsibility? Ms Nunan will have to help me out because we are going back some way in respect of some of these allowances, which predate many of ICTU's own appointments. Did the trade unions not sit around the table and agree this system of allowances? Did the trade union movement in its various guises ever jump up and down and say that we did not need an allowance but needed to get to the bottom of the problem? Did it ever say that what we need is not 1,100 allowances but rather to give some of those people decent salaries?
Mr. Shay Cody:
That is probably where the debate started. The Deputy will recall that in the past there was quite considerable agitation, originally among the spouses of soldiers before soldiers were allowed to have their own association. It was a campaign about low pay so the workers and their associations subsequently argued for resolution of the low pay issue. There was always a fear on the management side - not in the Department of Defence but in the Department of Finance and probably, today, in the Department of Public Expenditure and Reform - that if one did something for the Army, that might have implications elsewhere. That is how the device of allowances emerged in many cases. When representing soldiers who had an offer of some improvement in their conditions by way of an allowance, people were told that hell would freeze over before a formal pay increase would be given to them, so they ended up making a pragmatic judgment, particularly in circumstances in which there was no firestorm of media abuse about allowances.
We now find allowances routinely described as perks, bonuses and benefits, whereas Deputy Harris is 100% correct in stating that they were simply a way of building up something by way of a remuneration package that in private sector companies is usually made up of salary plus bonus plus, possibly, share options. The public service came up with its own myriad of different inputs because of a fear of knock-on consequences. This was not an issue until somebody started describing these arrangements as unearned bonuses and, frankly, abusing them, which is not fair or reasonable.
Ms Patricia King:
Deputy Harris may have his own view of the role of trade unions and what they did or did not do, to which he is perfectly entitled. When a trade union representative made a case on behalf of a person or group, one could take it that this claim would be for a wage increase. It would not be that the person or group should get something bolted on to the side of their rate of pay which would have a degree of insecurity attached to it. I would be more inclined to say that some of the allowances are a demonstration of the lack of success in getting the rate of pay consolidated, rather than the way in which Deputy Harris has portrayed it.
The Deputy and I have something in common. I was born and reared in the county represented by the Deputy and I would say we come across some of the same types of people. If I was to tell the Deputy about some of the public servants I know, with whom the Deputy probably engages, the vast majority would be on the lower end of the scale. Apart from the embarrassment, they are concerned about the level of uncertainty attached to the rate and what will happen to the next piece of their pay. I am sure all of those people would say that to the Deputy.
There are a variety of reasons over the decades for this situation. Deputy Harris is correct in noting that I do not remember them all, but I must admit I probably remember some of them more than the Deputy. Among the issues were pay, recruitment embargoes and all sorts of instruments used by successive Governments to curtail the public service pay bill, although not in the way it is currently being done. However, there were methodologies in place and providing allowances to groups of people for particular circumstances was a way of dealing with the fact that pay was warranted but the pay bill could not rise. The people in the Department of Finance were familiar with the computations and what they told the world about the pay bill and whether it included just salaries or salaries and allowances and all that good stuff. However, that is why we are where we are. It is a combination, over decades, of ways and means that people found to deal with particular exigencies that had to be dealt with. That is basically what we are dealing with here. That is why I am telling the Deputy that the consolidation argument will not be easy.
Simon Harris (Wicklow, Fine Gael)
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No, it will not. We have heard that from both officials and union representatives. Certainly, the message I get from the people Ms King talks about in my constituency is that they want it to happen. Obviously, they want the same amount of money in their pockets at the end of the week. That is normal, and it is ICTU's job to protect that interest. They want a situation whereby their core pay is not called an allowance because they view it as their core pay.
On that much we can probably agree.
Mr. Geraghty was never asked for a submission. Had he been asked, could it hypothetically have contained A, B or C? If we could continue with that hypothesis for a moment. During this examination, I have divided allowances into approximately three categories in my mind. First, an allowance that is a payment for extra responsibilities, qualifications and additional work, which would also be the case in the private sector. One would do a job in a company, get promoted or be given extra responsibility. Teaching is the simplest example. A teacher is given a post of responsibility and is given an allowance. That is core pay.
Second, an allowance that is an expense. Be it for shoes or something else, it relates to costs incurred while going about one's daily job. It is fine that some of these are met by expenses.
The third category could be broken down into section upon section, but when colleagues and I have asked about some allowances, paper started flying while the raft of officials tried to find out what the allowances were about. The recipients are not making fortunes from their allowances. As Deputy Donohoe stated more eloquently than I could, it is a long tail of small allowances being paid to a few people, for example, for eating in one's workplace, the caretaker in Mayo, etc. We have looked through a raft of allowances.
Assuming Mr. Geraghty was making a submission, would it not bring more to the table if the allowances that could be consolidated into pay were identified? I am referring to outdated allowances, even the names of which are damaging to the credibility of the pay of public servants. Titles such as "eating at a desk allowance" or whatever it is called do nothing to serve the needs of workers, let alone anyone else.
3:40 pm
Simon Harris (Wicklow, Fine Gael)
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Is there an eating in one's workplace allowance?
Mr. Shay Cody:
There is an eating on site allowance, which is a payment made to people who do not eat at their desks, if I could put it like that, but on the side of a road. Some journalists decided to make fun of it and started discussing the "desk allowance" on late night radio programmes as if it were the truth. That is most unfair to people.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I might make a point, as Deputy Harris may have missed it. In Ms King's contribution, she dealt with the description of the eating on site allowance. I want to relate this issue to a question that I asked on the business plans. Had they actually been business plans and included explanations, they would have dealt with all of the issues raised by Deputy Harris. A further unfair view of the allowances, their purpose and so on has been created. Someone in the system has failed. I do not blame the witnesses, as they have explained that they were not asked about the business plans. It is a failure of the system that people did not take advantage of the request to provide business plans to describe the allowances as they should be described and as we have heard them described today. A description would have informed the public and every interested party.
Through exchanges at this committee, members have learned a great deal about the allowances. For clarity's sake, our meetings give everyone - employers and the unions representing workers - the opportunity to get the information out there one more time. However, listening to explanations is disappointing, given the fact that management, working with the unions, missed the opportunity to put together business plans that would have made all the difference in conveying information. This seems to be the position. I apologise for cutting across Deputy Harris.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I stated that clearly.
Mr. Tom Geraghty:
A question was asked about people being paid less than the national minimum wage. Thankfully, I am unaware of anyone for whom we have responsibility who is paid less than his or her legal entitlement. We were asked whether we shared some of the blame. If we were responsible for any such person, some of the blame would have to attach to us.
There is no problem with people being paid less than the national minimum wage, but there is a problem with low pay in the public service. A large chunk of public servants are paid badly by any standard, but one will not read about them in the newspapers, see them on television or hear about them in public discourse. The issue has been suppressed. The narrative and view created in the public mind is that people in the public service are on a gravy train. This is not borne out by the facts.
A question was asked about the allowances' complexity. A point is worth making, but might be overlooked. All of the allowances, however they originated, went through a process before their introduction. For example, unions identified a small group of people who were doing something over and above what would normally be expected of them and they negotiated with the employer. Often, allowances are a consequence of a third party ruling that the unions' cases stood up. One cannot consolidate all of them into pay, as some are specific to people who are part of a wider group and paying the entire group for what that small number do would never be accepted. We might like it if the entire group was paid. As Ms King stated, some of these allowances might have originated as pay claims that the employer presumably did not accept, leading to a third party ruling.
Ms Patricia King:
Without going into detail, I agree with the Chairman on the descriptions. I examined the eating on site allowance business plan, but it did not describe the allowance. The explanation offered earlier at this meeting was necessary and I will not hold up the committee by repeating it. The employer should either provide council workers with canteen facilities at every place of work or provide this allowance. The employer does not have the wherewithal to provide canteen facilities where someone can eat a lunch and have a cup of tea. In many cases, the employer does not even have the wherewithal to provide a toilet. I would argue strongly that the eating on site allowance should be maintained.
Of the list of allowances given to us by the Department's Secretary General for consideration, I will refer to two in the health sector. I do not know why the cardiac allowance is on the list. Had any degree of research been done, the Department would have realised that it was paid to emergency service workers and had already been classified as part of core pay by the Labour Court. However, the Department has included it on a list of allowances to be removed.
We were involved in discussions on the agreed transport allowance a number of decades ago. In the health service, €16 per week is provided to non-professional - this is the description - health care assistants who need to be on a ward at 7.30 a.m. during the weekends. There is no public transport, yet they are likely to need it to get to work from where they live. The transport allowance was negotiated to assist them in being at their places of work at a time when there are few ways to get there, yet it is also on the list. I will argue strongly that it should not be there and that the money should either be consolidated into pay or maintained. It is a valid payment. Like me, members might ask why it is on the list. All of the relevant conversations have yet to take place. There has been no discussion with any employer, but there has been a diktat in the form of a circular.
One cannot manage the public sector with circulars or diktats. I have picked out two allowances on the list where I believe errors were made. One allowance has already been determined as part of core pay and there is a substantive case for doing the same with the other, which affects thousands of health care assistants. Lest anybody be under any illusion about the response to this, it will be a vigorous argument in favour of continuing to pay the money to the people concerned for very valid reasons.
3:50 pm
Simon Harris (Wicklow, Fine Gael)
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This is useful because the Committee of Public Accounts does not want to be fed fictional figures for potential savings. If the Labour Court has ruled on something which is being counted as part of savings, we run the risk of potentially wasting everybody's time. I have several more questions to ask.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The witnesses are under time pressures.
Simon Harris (Wicklow, Fine Gael)
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I will be very brief and ask the questions together. The witnesses have done work on which allowances could be consolidated and the allowances they want to see continued. I ask them for their views in this regard.
One cannot make public comments about the Croke Park agreement without being pitted as for or against it. It has good elements, but it also has absolutely ridiculous elements. It is absolutely ridiculous that an agreement is in place which protects the lowest paid in the public sector but which hospital consultants can also use as cover to protect their pay. Treating everyone in the public sector the same does not work, just as treating everyone in the private sector the same does not work. That is my view on the Croke Park agreement and I want to state it very clearly because it is often distorted. I do not expect the witnesses to publicly negotiate a second Croke Park agreement, but do they see room for a more targeted agreement which would not lump a local authority caretaker with a county manager who might be paid the same salary as a European Prime Minister? That is what this is about. I do not want to scare Deputy Mary Lou McDonald, but she and I share common ground on this issue.
Michael McCarthy (Cork South West, Labour)
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Can we have this minuted?
Mary Lou McDonald (Dublin Central, Sinn Fein)
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Deputy Simon Harris is not scaring me. Fine Gael should be scared.
Simon Harris (Wicklow, Fine Gael)
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I am scaring myself.
Michael McCarthy (Cork South West, Labour)
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Scare tactics.
Simon Harris (Wicklow, Fine Gael)
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I am frustrated because ordinary everyday workers are being lumped with consultants and county managers who receive the same level of protection. The State is in serious financial trouble, but we are all expected to defend a situation where the perks and holiday entitlements of a county manager are looked after to the same level as those of a caretaker. It is illogical.
Mr. Shay Cody:
On the issue of consolidation, the way the winds are blowing people are safer in having as much material as possible consolidated in their core pay. We will be as ambitious as possible, but there is another side to the negotiations and there will be other perspectives. It is welcome that the Minister has indicated it is a task we should set for ourselves.
On the issue of higher pay - I do not necessarily want to revisit the point unduly - Deputy Simon Harris identified a particular grade. It was my understanding the programme for Government included a cap on pay across the public service and that the Taoiseach and various others had had this measure applied to them. It was at the Cabinet table, not in the Croke Park agreement, that a decision was made to leave well enough alone for a particular category. I need to be absolutely clear about this. It was a political decision to revise the programme for Government. It is unfair that the Croke Park agreement and all the work put into it have been beaten over the head with this decision which was a political rather than an industrial relations decision.
Ms Patricia King:
I am confused about this because all workers are not lumped together in the Croke Park agreement. We represent our members and the agreement is the mechanism to which we agreed to have matters ordered for them. There is nothing stopping committee members, as legislators, from making decisions on rates of pay for groups they determine are highly paid. This would require the trade union movement to do what it had to do. Members of the committee would not see me standing outside with a picket because of the position taken by consultants or county managers.
Simon Harris (Wicklow, Fine Gael)
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That is a good assurance.
Ms Patricia King:
With respect, how committee members, as legislators, handle the management of the public service is a matter for them. I cannot run around the table and tell management how to operate. My task is to represent our members and that is what I will do.
As Mr. Geraghty made clear, the situation on allowances did not evolve through the Croke Park agreement. It was a decision by the collective employer to come to the table and announce that it wanted them to be reviewed. This is what happened. There is nothing stopping committee members, as legislators, from making decisions on who they regard are highly paid in the public service and there is nothing stopping the trade union movement from reacting accordingly. That is how the system operates. The Croke Park agreement does not state anything about taking away allowances, but, hey presto, we now have a list on the table which the Government states it wants to take away. That is the reality. Beating up the Croke Park agreement and the trade unions attached to it and stating they are the cause of all the ills is narrow. People must take responsibility in places where they need to do so.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We have come to the end of this session. I thank the witnesses for coming before the committee and being so frank and helpful.