The following is the full text of the statement on the pay talks issued by the Government tonight.
The Government has made it clear for some time that the public finance position is unsustainable. Our tax revenues have fallen sharply back to 2003 levels. This means that we will have a deficit in the region of €22 billion this year. To bridge this gap, we are borrowing over €400 million per week. This cannot continue.
By the end of this year, the National Debt will be about €76 billion, double the level at end-2007. Our main priority now is to stabilise the public finances and to get those who are unemployed back to work.
The Government is clear that the public service pay bill must make a significant and proportionate contribution to the necessary adjustment in the public finances in 2010 and subsequent years. The Government were keen that this significant adjustment would be achieved by agreement.
We initiated discussions with the trade unions represented by the Public Service Committee of the Ictu in response to their proposal that the necessary adjustment could be found by means other than cuts in rates of pay.
Unfortunately, the proposals put to Government do not provide an acceptable alternative to pay cuts. Therefore, the Government were unable to agree to the terms they had proposed.
In good faith, the Government facilitated the trade unions with detailed information about the composition of the pay bill and the implications in cost terms of various potential changes. Discussions have also taken place with the Associations representing the Garda Siochana and the Defence Forces.
Arising from those discussions, the Taoiseach and the Minister for Finance met representatives of the Ictu on Tuesday morning last. Ictu presented their proposal which was based on pursuing payroll reductions through the accelerated implementation of an agenda for change and transformation of the public service.
This is a positive vision that would reflect in many respects the Government’s own vision of the public service of the future, which it had provided at the request of the unions. Such savings would arise over time from a more flexible and integrated public service, with easier redeployment, changed work practices and the facilitation of further reductions in numbers through increased productivity.
Given that such changes would take some time to put in place, it was suggested that an interim approach would be taken by deducting payments from the payroll in 2010 on the basis that staff would take 12 days of unpaid leave in a way which would minimise disruption of services.
This approach was discussed by Government on Tuesday. Because the amount of the savings in 2010 was less than the minimum amount required, it did not provide a basis for agreement and the Government reserved its position. The Government informed the public service unions that this was not the basis for agreement.
The public service unions responded by indicating that they wished to develop their proposals further.
In the Dail on Wednesday last, the Taoiseach confirmed that a basis for agreement would only exist if the scale of the reduction in the public service pay bill were sufficient, if it were permanent in character, and that any transitional arrangements did not impact negatively on services to the public.
In discussions that followed, the unions felt that they would be in a position to increase substantially the level of savings to be offered in 2010 on the basis of the structure which had already been proposed, namely a voluntary reduction from pay associated with 12 days of unpaid leave.
Discussions with management in the various sectors of the public service also clarified the nature of the change agenda which would be undertaken by agreement and these are, indeed, significant and worthwhile. The unions also indicated their agreement that the arrangements for the taking of unpaid leave could be spread over a period of years to minimise the risk of disruption to services.
It is clear that the level of savings generated in 2010 would need to be sustained, and indeed increased, in 2011 and subsequent years. Accordingly, the proposals would require an assessment to be made of the level of savings generated from the change process and further discussions next year on other steps which would be necessary to secure the necessary level of saving.
The Government considers that the proposals do not constitute a basis for agreement. This is because of the combination of the requirement that the pay savings in 2010 be accompanied by a reduction in days worked, albeit over an extended period, and that there would be no certainty about the specific basis upon which the necessary savings would be achieved in 2011 and thereafter.
The Government has made it clear that the fiscal adjustments to be made in 2010 must stabilise the public finances, must reduce on a permanent basis the structural element of the deficit, and must form part of an overall package of adjustment measures which are balanced in terms of their certainty and effect.
We now have to proceed to implement our plan to reduce the Public Service pay and pensions bill by €1.3 billion next year compared with 2009.
The Government is appreciative of the constructive and dedicated effort of trade union officials over recent days to develop proposals which would be helpful overall.