Public sector pay deal helps workers without stoking inflation, Donohoe says

Minister for Public Expenditure announces Government approval for new pay deal which will see 385,000 civil and public sector workers pay rises of 10.25 per cent over 2½ years

Minister for Public Expenditure Paschal Donohoe said the latest public sector pay deal strikes the right balance “between helping workers with the cost of living but also not adding to inflation this year and next year and making things even worse for all of us”.

Speaking after he had secured Government approval for the deal that gives more than 385,000 civil and public sector workers pay rises of at least 10.25 per cent over 2½ years, Mr Donohoe said the agreement was “weighted towards lower-paid public servants”.

Over the lifetime of the deal, lowest-paid public servants will see cumulative benefits of up to 17.3 per cent inclusive of a local bargaining provision, he said.

“It’s progressive, it’s fair,” Minister Donohoe said, noting the overall cost to the exchequer will be €3.6 billion over four budget years.


Workers will receive pay increases of 4.25 per cent this year, 4 per cent in 2025, and 2 per cent in 2026, he said.

“As public servants engage in ballots in the coming weeks on acceptance of these proposals, I hope they will consider all elements in the agreement, which offers security and reward for their continued commitment to serving the people of Ireland,” he said.

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The new Public Service Agreement 2024-26 has still to be endorsed in ballots by 19 public sector unions over the next two months. The outcome of all these ballots and the ultimate acceptance of the deal by workers should be known by March 25th.

In the wake of the public sector pay deal, Irish Congress of Trade Unions (Ictu) said it was recommending unions in the private sector seek pay increases of between 4 and 6 per cent in 2024, which is higher than the anticipated rate of inflation.

“It’s very much a matter for other unions and their employers regarding what happens in the private sector,” Minister Donohoe said.

The private sector committee of the Ictu said its guidance for private sector unions was based on an analysis of the prevailing economic conditions. With several economic forecasts projecting inflation of just under 3 per cent in 2024, Ictu indicated that pay increases would need to exceed that figure as workers were playing catch-up following the erosion of real income in 2022 and 2023.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times