The Department of Expenditure and Reform sees Haddington Road as a fully-fledged agreement

By Economics Correspondent Sean Whelan

The Civil Service have already received their first pay packet of the new, post-Haddington Road Agreement era and, for most, it was not a pleasant experience.

That is especially true for those earning more than €65,000 a year, who saw cuts to their core pay that should save the State €210 million over the next three years.

And not only have the management grades had their pay cut, they are now being threatened with the sack if they fail to deliver on change in their own bailiwicks.

The old “there’s no future in this organisation for those who fail to deliver” line is now being used down Merrion Street way, particularly when health service management is spoken about (new managers are being hired on three or five year contracts, and we are told that failure to meet performance criteria means no renewal of contract).

Despite being hated by the rest of the Civil Service (especially those earning more than €65,000), the Department of Public Expenditure and Reform is bigging up the Haddington Road Agreement – not only as a cost saving measure, but also for being what DPER is calling the biggest productivity deal in the history of the State – and one that they are not paying staff for.

The productivity element is basically getting the staff to work extra hours for no extra pay, so the Government can save by reducing the amount of overtime payments (and in the case of the Health Service, the amount of agency workers hired in).

The agreement, they say, delivers an extra 15 million hours a year of work.

Apparently that works out at an extra two hours and 15 minutes a week for civil servants. Perhaps a more meaningful figure is that it represents around 9,800 full time equivalent posts (at an average pay grade of almost €44,000 – to give the savings figure of €431 million in a full year).

The savings break down as follows:
Less overtime and agency working – €131 million
Ending supervision and substitution allowance for teachers – €125 million
Facilitating headcount reduction – €175 million
Total – €431 million.

The so-called “Central Measures” of the agreement are the €210 million pay cut, a pension reductions and a freeze in increment payments, saving €130 million – total €340 million.

The remainder of the savings will come from what are called “sector-specific measures”. These have to be sorted out in each sector of the public service, and cover things like overtime rates and non-core payments.

These measures are supposed to save almost €230 million. That makes up a billion of savings by 2016, and would be a particularly impressive achievement if it’s delivered without any industrial disruption.

If it all works out, the Public Service will have reduced its own pay bill by around 20% between 2008 and 2016 – all while providing services to more people (particularly in education and social welfare) with fewer staff.

This arrangement started out being called Croke Park II, but DPER was keen on a rebranding to differentiate it from the original agreement.

That’s because they say Croke Park was a framework process to allow negotiations that could result in savings. However they say Haddington Road is a fully worked-out programme, with most elements detailed in advance.

This allows DPER to be more confident about savings because it can do things like deducting €125 million from the Department of Education budget that it now won’t be paying supervision and substitution allowances for the duration of the agreement.

Apparently the key to getting this level of specific cuts was a “forensic” analysis of the cost drivers in the main spending departments in the six months preceding the start of the negotiation.

This meant the Government side could go in with a clear idea of what it wanted to get. The challenge for public service management now is to use these millions of extra hours and drive out costs to meet the targets.

And that’s where it gets trickier.

Cutting overtime is relatively straightforward, but measuring performance is notoriously difficult, particularly in public service management. The agreement promises to put in place performance management systems where none currently exist, and strengthen those that do exist to hold managers accountable for the performance and development of their staff.

Hence the tough talk about managers who fail to deliver “not being in a position to remain in position”. Few will believe such talk until they actually see the P45s – the ultimate measure of management accountability.