Concerns have emerged over the possible knock-on effects for private sector pay after unions and the Government agreed a draft public sector pay deal worth 10.75% over 33 months.
The proposed agreement, reached at the Workplace Relations Commission in the early hours of Wednesday, will run from July 2026 to March 2029. It covers more than 400,000 public servants. Its terms include a pay adjustment of 2%, or a minimum of €1,200, on September 1, 2026, followed by a series of further increases through to March 2029. General pay rises of 9.75% will be delivered in eight instalments, with a further 1% from the second phase of local bargaining.
Public Expenditure Minister Jack Chambers said the compounding effect of the increases means the minimum value to workers is 11.3%. He said the deal will cost €5.2 billion over its lifetime, including more than €1.8 billion in 2027. The agreement also raises the threshold for lower-pay provisions from €50,000 to €60,000, delivering increases of more than 18% for some of the lowest-paid public servants.
EY Ireland chief economist Rossa White said the deal is likely to overshoot market inflation, and could embed rates of price growth last seen during the Celtic Tiger years. He noted that the current inflation rate is 4.3% and could linger if new pay deals are repeatedly struck above the rate of inflation. “Services price inflation has been high for over five years,” he said. “The risk is that pay deals above inflation risk keeping it there, like the mid-2000s.”
The concern is that large public sector settlements are often used as a benchmark in private sector pay talks. Earlier this month, a survey by employers’ group Ibec found that private sector firms were expecting average pay increases of just over 3% next year, though that figure could rise if inflation increases.
Not all commentators share the concern. Ibec chief executive Danny McCoy described himself as “sanguine about the pay deal,” and said Ireland has a functioning public sector. Edgar Morgenroth, professor of economics at DCU, said he does not expect it to create significant tension between public and private sector workers. He noted that some private sector employees have already seen significant pay rises, with faster wage growth in some parts of the sector, though not everywhere. The deal has also drawn little negative comment from political parties.
The agreement contains a review clause. If inflation or “other economic parameters” change significantly during the agreement, either the Government or the unions can ask for a review. Any such review must be completed within six weeks. Mr Chambers said the Government would only seek a review if the deal became something the State could no longer “sustain or afford,” which he said would be “clear to everybody.” He said the clause could be used if there were a “significant contraction” in the Irish economy.
Fórsa general secretary Kevin Callinan, who chaired the union negotiating team, said inflation is currently running ahead of earlier projections, but that the review clause is “one of the important things” given “uncertain times.” He added that it “will take more than a pay offer to rebuild the trust of public servants with the government.”
The Government has confirmed that Section 39 workers in the community and voluntary sector will receive equivalent increases, funded through the annual Budget process. The deal also contains provisions on productivity and reform, outsourcing and consultation, and existing remote and hybrid working arrangements for public servants remain in place.
The Public Services Committee of the Irish Congress of Trade Unions has recommended that unions suspend the strike and other industrial action while members consider the proposals. The planned national strike on Thursday was called off. Union members will vote in a national ballot, with the result expected early in the week beginning December 7.
