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Our View: Devil is in the detail of new public pay deal

WHILE the government’s plans to ensure the public payroll remains under control after the assistance programme ends are commendable, it is questionable whether the agreement reached with PASYDY would achieve this objective.

The agreement, announced last week as part of the wider reform of the civil service, which was an obligation under the terms of the memorandum, aims to maintain the payroll at reasonable budgetary level and prevent increases caused by the unjustified hiring of new employees. At least this is the plan.

Pay rises in the civil service would be determined by the growth of GDP, with the law stipulating that rises would not exceed the growth rate. In years of recession or of very low growth rates, the poor performance of the economy would be reflected in the pay rises and in appointments. This would be in line with the provisions of the law on budgetary framework which stipulates that the government’s budget policy were in accordance with the laws and directives of the EU. One of the directives is that the annual rate of increase of state spending should not exceed the medium-term rate of growth of GDP.

Past experience does not justify excessive optimism, even if laws now exist to prevent populist politicians from taking reckless decisions. A couple of successive years of strong growth is all that would be needed for politicians and PASYDY to agree to the type of pay rises that were given before the arrival of the crisis. For instance, the Cost of Living Allowance remains in place to push up wages regardless of GDP growth, annual pay increments are still in place and civil servants’ pensions, which are too high, will increase annually.

A provision that makes little sense is that new appointments would also depend on the growth of GDP. Surely, the new appointments should be according to the needs of the civil service. For instance, if there have been many retirements in a year or a new department has been opened new people should be hired, but there is no justification to employ more people simply because GDP grew at a healthy rate. The provision leaves the door open for irresponsible governments to hire people that are not needed, in an election year for instance, as has been standard practice in the past.

Although the government’s good intentions cannot be doubted, the law it has drafted seems to have weaknesses. Perhaps this was why it was supported by PASYDY, the union believing there were gaps it could exploit. Was it the union that ensured there was no mention about productivity? It just seems wrong that civil servants would be given annual pay rises regardless of productivity, based on the growth of the economy, which is down to the private sector. So, what will the law have changed if civil servants carry on receiving pay rises that are unrelated to their productivity?



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