The movement in the dispute between Government and Unions over pension contributions is to be welcomed, but the way the negotiations are heading this still feels like an opportunity missed.

Some Unions, commencing with NHS Unions (including Unison), appear to have signed or be close to signing heads of agreement which allegedly provide that there will be no further strike action whilst the Unions consider the Government’s latest proposals. Other Unions appear to have joined the nascent consensus, including the GMB. Various teaching Unions have yet to sign up, though the Government is confident about their participation, and Mark Serwotka’s PCS is sitting outside the process altogether, with its leader calling for fresh industrial action and the Union consequently barred from the talks.

The initial optimism around these developments was immediately dampened by a spat caused by a rogue letter from Communities Secretary, Eric Pickles which appeared to impose fresh conditions, but this letter was hastily withdrawn by Danny Alexander and apparently will be replaced by a fresh letter.

So, let us assume some progress is being made. What can we say about the negotiation process?

1. The climate seems to have improved. Initially the Government seemed to have decided on the outcome of the issue on pension reform before engaging in a negotiation process. One of the consequences of this was that the climate was very hostile with Unions and their members feeling excluded from the outcome even though they are key stakeholders. In the wake of the strikes there does seem to have been a concerted effort to improve the climate so that at least it is now a “cool” climate – very objective and data driven. Brendan Barber, TUC General Secretary, talked of a more constructive “new atmosphere” in the talks.

2. It has been easier for the Government to pick off less militant Unions as a result of the Union side seemingly not being united in its desired outcomes. The Unions have straddled a range of views from tactical adjustment of the pensions deal through to outright opposition to the Government’s programme of debt reduction generally. When one side is not united in a negotiation then the other side will always gravitate to the weakest link, and that link will often be the least committed member of the other side. This may have helped the government to get agreement initially from Unison, and then build out consensus from there.

3. However, the projected solutions being mooted merely seem to tinker with the existing “content” issues which have dogged the dispute. The Government is apparently open to revisiting the basis of the accrual rates on which pensions accrue. It is also prepared to provide relief in 2012 to lower paid workers whose contributions would otherwise have increased.

None of this really reframes the issue in a more positive way – for example, it would be much easier for both sides to sit on the same side of the table if the issue was framed as “How can we address funding of pensions so that future public services and jobs are best protected”.

This kind of tinkering with the surface issues also does not address the underlying emotional needs of Union members. From a negotiating point of view there is a pronounced need for public sector workers to feel some sense of “reassurance” that things could be ok in the end. A deal which provided for increased contributions but, say, a fund for extra pension credits if workers come up with schemes to improve resource allocation or innovate might help provide this kind of negotiation reassurance. These kinds of measures do not seem to be on the table – instead the debate seems resolutely focused on cost reduction only.

The Government may end up prevailing in this dispute with its current proposals – though there is a difference between Unions suspending strike action, and accepting the proposals. However, if that acceptance is grudging and resented, because Unions feel they don’t really have any choice, then the consequences of that need to be borne in mind. Nobody likes losing in a negotiation and resentment tends to linger and find an outlet. Unions may seek covertly to undermine the operation of the deal, or refuse to co-operate with Government in relation to other areas. Their members may carry their resentment through to the ballot box in relation to local and national elections.

No doubt the government will be justly pleased at the progress it has made this week, but prevailing in the dispute without winning the hearts and minds of Union members is not necessarily the same as winning…