November 20, 2012 / 3:25 PM / 5 years ago

Ireland re-opens public sector pay deal

* Govt signals wants to re-negotiate Croke Park pay deal

* Says wants deal on work practices, pay at earliest opportunity

* Deal has helped ensure industrial peace in Ireland

By Conor Humphries

DUBLIN, Nov 20 (Reuters) - The Irish government on Tuesday said it is to hold talks with trade unions to overhaul a key pay agreement that has delivered industrial peace while other struggling euro zone countries have faced mass strikes.

The 2010 Croke Park agreement, which promised there would be no cuts in basic pay in exchange for reform of working practices, is due to run until the end of next year.

But the government on Tuesday invited public sector unions to new talks to secure “a new agenda” on increased productivity and cost cuts “at the earliest possible date.”

The decision to start new talks reflects “a shared ambition to build on the substantial contribution already made by public servants to Ireland’s ongoing economic recovery,” the government said in a statement.

While Ireland is by far the nearest of the three countries bailed out in the euro zone’s debt crisis to returning to normal private sector funding of its debts, the government is under pressure to cut public sector wages as it tries to reduce its deficit to 3 percent of national output by 2015.

It is trying to contain cost overruns in the health service and social welfare as it tries to convince international bond investors that its finances are in order and that it will not need official funding when its EU and IMF funding runs out next year.

The Croke Park deal is credited with avoiding the kind of industrial action that has held back fellow bailout recipient Greece, helping Ireland’s efforts to revive its economy it had to bail out its banks and slash budget spending to pay the bill.

The International Monetary Fund (IMF) has said that while it recognised the benefits of the Croke Park agreement, the public sector pay bill was still high, and that continued monitoring of the adequacy of savings was needed.

Members of the centre-right Fine Gael party have criticised the deal, saying it unfairly favours public sector workers. It has been defended by the coalition centre-left junior partners the Labour party.

The public sector saw its wages cut by an average of 15 percent before the agreement was struck, six months before Ireland entered its bailout programme. Unions say they have borne much of the burden of the budget retrenchment through general taxation.

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