Demands on public purse very large, warns Donohoe ahead of pay talks

Demands on the public purse are very large, Minister for Public Expenditure Paschal Donohoe has said, reacting in advance of pay talks after publication of the Public Service Pay Commission report today.

The document, published today, says tens of thousands of State employees should contribute more towards their pension arrangements.

It suggests this should be achieved by converting the existing public service pension levy into permanent greater contributions to pensions.

Public purse

Speaking to reporters at Government Buildings, Mr Donohoe stressed the demands on the public purse in advance of negotiations on pay.

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“The demands on available resources to the State are very, very, very large . . . every euro that is available to the exchequer can only be spent once. This agreement has to be in the context of the other things that the country at large wants me to deliver,” he said.

Mr Donohoe made clear the findings of the report will be a subject for the negotiations, stressing the Government would make the decisions, not the commission.

Public sector pensioners enjoy significantly greater benefits than most private sector employees, with guaranteed pensions of 50 per cent of final salary plus a 150 per cent tax-free lump sum for public servants retiring with a full 40 years of service. However, many pensioners retire with less than full service.

Pay talks will also take in account that about 15 per cent of public servants recruited since 2013 have less generous pensions based on career, rather than final, earnings.

It is understood the Department of Public Expenditure is prepared to offer public servants wage increases of about 6 per cent over three years. Additional pay rises could also emerge from local bargaining arrangements.

On the public sector premium, Mr Donohoe said public sector earnings remain in general ahead of those in the private sector. He added that wages in the Irish public sector are either on a par or ahead of EU averages.

“There does continue to be a differential between public service earnings and those in the private sector, but it’s likely that this differential has narrowed,” he said.

“It puts public service payments in an international setting, and by sector compares where we are versus the European average.

"Some parts of our public service are ahead in Ireland versus the EU average. [The report] says for other parts of our public sector, they are closer to the EU average," Mr Donohoe said.

The ICTU Public Services Committee meanwhile called for early talks on recovery of public service pay after publication of the pay report.

The committee noted the commission’s conclusions that there is now near-parity between average public service pay and private sector earnings, and that average public service earnings were now 8 per cent lower than in 2008.

More valuable

The committee said it had anticipated the commission’s finding that public service pensions were, on average, more valuable than the average available in the private sector, and that pay negotiations should address this in the context of the unwinding of FEMPI [Financial Emergency Measures in the Public Interest] measures, including the pension-related deduction, or so-called “pension levy”.

A spokesperson for the committee said: “We welcome today’s publication of the report of the Public Service Pay Commission which, among other things, provides a good summary of the sacrifices public servants made in the years following the economic crash.

“It’s now time to move swiftly into negotiations with a view to accelerating pay recovery for workers whose incomes are significantly lower than they were nine years ago.

“Our priorities in the talks will be to restore incomes as quickly as is sustainably possible, and to protect the value of retirement incomes.”

The spokesperson noted that public servants currently pay over 20 per cent of their earnings above €28,750 towards their pensions, once pension contributions, PRSI and the so-called pension levy are taken into account.

Report welcomed

Fianna Fáil spokesperson on Public Expenditure & Reform Dara Calleary welcomed the Public Sector Pay Commission report.

“The establishment of the PSPC was a key achievement of Fianna Fáil in the Confidence and Supply agreement. Unwinding FEMPI on a fiscally sustainable basis has always been a core policy objective of our party and this report reflects that.

“It should form the evidence-based foundation of upcoming negotiations in unwinding the FEMPI legislation and setting out a viable replacement to the Lansdown Road agreement,” he said.

“The PSPC is clear on the need to ensure that any future pay rises are based within the fiscal rules and limits of the State’s resources. Simply put, the next agreement must be placed on fiscally prudent and sustainable basis.”