Ireland promises to end pay cuts to avert strikes

DUBLIN (Reuters) - The Irish government agreed with trade union leaders on Tuesday that it will not cut public sector pay further for the next four years to try to avert strikes and end work-to-rule protests.

Lower-paid civil servants, teachers and hospital staff have threatened to strike in protest at the government's fiscal reforms, which they say have caused real hardship.

But the cut-backs have helped Ireland to win back investor confidence compared with other heavily indebted euro zone members and opinion polls have shown little sympathy for any escalation in a series of low-key protests.

The lead negotiator of the trade unions' umbrella group said the deal offered a real chance to end the disruption, which has consisted of refusing to answer phones and early office closures, following on from November's one-day all-out strike.

He expected all unions would put the agreement to a ballot.

"The outcome presents everybody in the public service with the real possibility that we can find an alternative to the industrial conflict that has dominated the landscape in recent months," the Irish Congress Of Trade Union's (ICTU) Peter McLoone told national broadcaster RTE.

Public service salaries were reduced by 5 to 15 percent to achieve a quarter of the 4 billion euros (3.58 billion pounds) saved in last December's budget.

SOFTER STANCE

Under Tuesday's deal, the government said it would review pay on an annual basis and could derive further budgetary savings from other reforms to be detailed in coming days.

Dara Calleary, the minister charged with public service transformation, said lower-paid workers could even claw back some of the earlier pay cuts if all of the savings sought through a "very significant programme of reform" were achieved.

"I think this is a very good deal. It provides certainty for the first time in relation to public sector pay," Calleary told Newstalk Radio, adding there would be reductions in headcount throughout the sector.

"We have given assurance that, barring any serious deterioration in the economy, between now and 2014 there will be no further reductions in public sector pay and conditions."

Analysts said Tuesday's agreement was a breakthrough, but it still had to be agreed by public sector workers and nurses, for instance, who may face unpaid overtime.

"The deal is significant. There's no denying it's a big step on the way to industrial peace," said Theresa Reidy, specialist in public finance at University College, Cork. "There's still some work left to be done in getting this through."

She said the timing of the resolution in the early hours of Tuesday morning was significant -- ahead of announcements on how much the government will spend to rescue banks.

"They don't want to have trade unions on the radio all week complaining about how much is being paid to the banks," she said.

(Additional reporting by Barbara Lewis; Editing by Louise Ireland)