Dr Jim O'Leary has delivered a stinging attack on the benchmarkingbody writes Una McCaffrey, in Kenmare.

The benchmarking process has come under stinging attack from a dissenting member of the group which earlier this year recommended a 9 per cent pay rise for the average public-sector worker.

Dr Jim O'Leary, an economics lecturer in NUI Maynooth, said the Public Service Benchmarking Body had provided "no evidence whatever" in its report that the public service had suffered recruitment and retention problems, or that there was inequity between public and private sector pay.

Addressing an audience at the Dublin Economic Workshop in Kenmare, Co Kerry, Dr O'Leary said he had resigned from the body before the publication of its report because his skills as an economist were redundant in drawing up the body's final recommendations.

He said the body's work, which had cost €3 million, appeared to have represented "extraordinary value for money" since it had offered "precious little" justification for the pay awards it recommended. He said available data strongly suggested that problems of recruitment had been no more severe in the private than the public sector, and criticised the benchmarking report for not exploring this, and other, issues.

He suggested that the body, as a "creature of the Programme for Prosperity and Fairness (PPF)", had been a hostage to the sensibilities of public-sector unions and employers. In particular, he criticised the body's reluctance to discuss the implementation of a performance-related pay policy in the public sector.

He claimed that the absence of such a policy was a source of inequity within the public service itself.

"The truth is that a report setting out this sort of position would have been unacceptable to the pubic-sector trade unions," said Dr O'Leary.

He was also critical of the benchmarking body's vagueness on the "modernisation and change" on which the awards it recommends are contingent. In this light, he said, it seemed as if the body was simply increasing awards for changes that already been agreed under the PPF.

"At the end of the day, the benchmarking exercise tells us a lot more about governance in this country, and about the nature of social partnership in particular, than it tells us about the state of the labour market," said Dr O'Leary.

He acknowledged, however, that repudiation of the report now looked unlikely, noting that its implementation appeared to present the "least worst option" on public-sector pay evaluation. He urged the Government to extract "every available ounce" of modernisation from the public sector when making awards.

Earlier, Dr John FitzGerald of the Economic and Social Research Institute had argued that a significant increase in public-sector wage rates would go well beyond the direct costs of the pay bill, once an indexation of welfare rates to wage rates was considered.

If this were to be funded through taxation, an increase in personal taxation rates of more than 3 per cent would be required, according to Dr FitzGerald.

In such a scenario, he said, the private sector would essentially be funding public-sector benchmarking, a theory which could see private-sector wages rise and the Republic losing competitiveness.

He estimated that the combined effects of benchmarking could see about 1.3 per cent being cut from gross national product by 2005, with greater falls coming in gross domestic product. "The loss of competitiveness would be felt most acutely in the manufacturing sector," said Dr FitzGerald.

"These results leave some doubt about the long-run sustainability of the changes for the economy," said Dr FitzGerald. "Even by 2007, profitability would still not be restored to its base level."

Ms Frances Ruane of Trinity College later agreed with Dr O'Leary's view, noting that in an extensive review of economic data, she had failed to find any strong prima facie case for a significant differential in private and public-sector wages.

"Given the €3 million spent on the report, it would have been worthwhile ascertaining just what might have been done for the same funding, using an economic rather than a human resource management approach," said Ms Ruane, delivering a paper jointly written with Mr Ronan Lyons.

"In our view, no one should be allowed back to the negotiating table without a full understanding of the present economic realities and no further wage increases should be paid to the public sector without prior implementation of much-needed reform," Ms Ruane concluded.