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Column 10 problems with the Croke Park Agreement

The Croke Park Agreement is too slow, driven by insiders and makes cuts in the wrong places, writes management expert Eddie Molloy.

THE CROKE PARK Agreement (CPA) was  ratified by a sufficient number of trade unions in June 2010 to enable  the deal to come into effect.  In return for  a guarantee that  there would be no compulsory redundancies and no further pay cuts,  public servants would cooperate with  a wide-ranging programme of reform, involving new work practices, new rosters, redeployment and the like.  The Agreement extends to 2014, but no one can say when in 2014.

To date there have been several significant  reforms delivered under the auspices of the CPA – for example new garda rosters, and redeployment of hundreds of staff to new workplaces up to distances of 45 miles.  Payroll savings have been made, though the precise amount is disputed. Regular reports from the  Department of Public Expenditure and Reform  and from the Croke Park Implementation body set out the achievements.

While acknowledging these achievements, I have several concerns about the agreement itself and the way it is being worked.

1. Ring-fencing pay and pensions

By ring-fencing pay and pensions – which in the areas of health and education, for example, constitute up to 70 per cent of total costs – the government is forced to find the necessary savings from the remainder. So for example, in round figures the health budget is €13billion. Over €9billion goes on pay. The minister has to reduce his costs by €1billion, which then has to come from the remaining €4billion. He is left with no option but to cut services. In education when Ruairi Quinn was confronted by the teaching unions about paying new teachers 20 per cent less than the incumbents, he pointed told them:  ‘Yes, and that is a consequence of you insisting on the terms of the Croke Park deal’.

2. Cuts both high and low earners

The CPA is unfair to people who are covered by the deal  and those who are not.  It  covers public servants who are on relatively low pay and, at the other end of the spectrum, medical consultant-professors  who are on close to  quarter of a million euro, plus their private earnings.

3. Clause 1.28

Clause 1.28 of the Agreement states that the the deal holds provided there is no “unforeseen budgetary deterioration” during the term of the agreement. At the time – June 2010 – growth was forecast at 3.25 per cent. It is now less than 0.5 per cent. Also we have tens of thousands more people on the dole and in receipt of medical cards, thereby driving social protection costs way up above what was forecast. The government has every legitimate reason to invoke this ‘inability to pay’ clause. If you think about it, this clause is there to protect  the rest of us who are not covered by the CPA from picking up the tab if the government cannot meet its Troika targets. The government seems to forget that it is not just an employer of 300,000 public servants, but the government of 5,000,000 citizens.

4. Only option is to cut services

In order to meet the Troika’s budgetary targets, and with public service pay and pensions untouchable, the government has to find the money elsewhere. Essentially they have found it by cutting services – such as closing hospital wards, closing heritage sites at the height of the tourist season, and cutting jobs among  groups who are not as well organised as the big public service battalions – for example home helps, or special needs assistants in schools.

5. Deadline

Multi-billion savings could be made in public services without damaging the quality of services, but it takes time and sophisticated management skills. Much of the work to be done in this regard has been expertly mapped out by the Department of Public Expenditure and Reform. But the government is under fierce time pressure to deliver the budgetary targets set by the Troika and there is a huge management deficit right down through the chain of command in large parts of the public service. The result was well put by Ming Flanagan: “It is like you are on Weight Watchers and you have targets to meet by a certain date. Then as the deadline approaches and you realise you are not going to meet the targets… you cut off your arm and  say ‘See, I have met my targets.’”

6. Insiders

The negotiations that take place under the auspices of the implementation body essentially involve insiders negotiating with insiders and the result is some very soft deals.  For example, after exhausting the IR machinery of the State, a deal was struck to increase the working week of local government staff from 32 to 34 hours. Imagine if representatives of ISME were at the table who have to pay rate increases? Or, for that matter, members of the public who are struggling to pay the household charge.

7. Redundancies

Trade unions and the government repeat that they are interested in jobs, jobs, jobs… If they really were interested in jobs they would not be ‘cutting off their arm’ in letting thousands of public servants go in an unplanned way, with all its collateral damage. They would reduce pay and slow down the exodus, thereby giving time to bring about the reforms in a more rational way. As I say, it can be done, but it takes time. The cutting of Special Needs Assistants is another example of  ‘our members interests first, and jobs second’.

8. Too slow

The pace of change has been far too slow.  For nearly two years, government ministers, Kieran Mulvey of the Labour Relations Commission and many others have castigated managers and departments for not coming forward with plans for savings. Just last week the Taoiseach upped the ante urging managers to “squeeze more saving out of Croke Park” as a matter of urgency. Yet so far, while uttering these statements, not a single department or manager has been named as being tardy. There are no consequences for non-delivery.

9. Entitlement

The Croke Park Agreement was entered into by a government that was under enormous  fiscal pressure. The agreement continues unbroken the narrative that public servants are “entitled” to all they have, and that they will be justified in taking industrial action if the Agreement is touched.

10. Changes overdue

The great irony is that all the reforms that are being secured under the CPA were already paid for in 2003 by benchmarking, but never delivered. Changes in Garda rosters, which are indeed a success, hadn’t changed for 50 years.  The reforms amount to no more than long overdue modernisation.

Eddie Molloy is the director of  of Advanced Organisation, as well as a consultant in strategy, change management and innovation. Over the last thirty years, Eddie has gained an unrivalled reputation for helping both indigenous and multi-national companies develop and execute their change and growth strategies. His is widely recognised as a thought leader with a record of success in the areas of strategy, structure, change and innovation.

This entry was amended on Oct 31 to clarify a statement made in relation to Central Bank staff, their working hours and pensions.

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