Public Sector Pay

Unions target radical shift to inflation-linked public pay

            Unions are looking for a radical departure in the next public sector pay deal by creating a “formula” that keeps any pay agreement linked to changes in the inflationary environment for years to come.

The news comes as public sector unions are continuing to ballot for industrial action, with senior sources indicating that most ballots will be complete by the first week in September, with the likelihood of staggered industrial action beginning in the autumn.

Preliminary public sector pay talks took place in June between unions and officials at the Department of Public Expenditure, but collapsed when the government refused to agree to the principle of automatic indexation as the basis for formal talks beginning.

Jack Chambers, the minister for public expenditure, insisted in the aftermath of those failed talks that there “shouldn’t be preconditions” for any pay talks, and that he wouldn’t agree a deal “at any cost”.

            The idea of using a formula to create a living pay agreement that tracks inflation has never been implemented in Ireland. However, automatic public sector wage indexation is a feature of agreements in Belgium, Cyprus, Luxembourg and Malta.

            The view in unions is that inflation has outpaced their wage growth in recent years by a factor of 5 per cent, leaving them worse off. Union sources also point to the fact that the last pay agreement only continued to the first half of 2026, leaving members with an effective pay freeze in the second half of this year.

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            Unions not only want those losses made good, but for any new pay deal to be subject to an indexation “formula”, which would see public sector wages automatically change in line with prevailing inflationary conditions.

“It is up for debate what that formula is”, one Union source said. “But this is a feature in other countries, and will form the basis of any talks getting underway.”

If indexation can’t be agreed, unions will instead seek a short term deal to make good on cost of living losses, without any guarantees of industrial peace.

Kevin Callinan, general secretary of the Fórsa trade union and the chair of the Public Services Committee of the Irish Congress of Trade Unions (ICTU), previously told the Business Post that any formula would have to apply to the duration of the new agreement “where increases are related to the experience in relation to CPI at a certain date.”

This would require the provision of a “reference point” within a multi-annual pay agreement whereby the rate of inflation wages would be linked to is decided based on existing levels.

SIPTU, Forsa and the INMO are all collecting ballots from members, while the teachers unions are expected to begin balloting in the first week of September. Sources indicated that once initial ballots were received, decisions would be made promptly on potential actions, including potential work stoppages in the autumn.

Daniel Murray

August 19, 2026

We are indebted to Jack Lane for this story from the Business Post.  Ed.