Ending two-tier pay system in public service would cost €200m

Lower-paid staff in the public service are paid considerably more than their counterparts in the private sector, the Department of Public Expenditure and Reform has said in a new report .

The report found just over 60,000 people have been affected by the lower pay rates introduced for public service personnel recruited since 2011 but that these measures have not impacted on recruitment in general.

It estimates that it would cost €200 million to end this two-tier pay system.

However the report deals only with the fall-out from the decision of the then government in late 2010 to reduce pay rates for new entrants. It does not take account of subsequent, separate moves to abolish allowances which have also contributed to the pay gap between those employed before 2011 and those taken on afterwards.

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The department said the new report, which Fianna Fáil had pressed the Government to compile under public pay legislation introduced late last year, would provide support for further engagement on the new entrant pay issue with trade unions.

Minister for Public Expenditure and Reform Paschal Donohoe said the report had found "reduced pay points introduced during a time of crisis have not prevented very significant recruitment to our public service in the years since".

He said the report showed that there has been strong recruitment since 2011 to the estimated 237 recruitment grades across the public service, with over 60,500 so-called “new entrants” taken on. He said the “new entrants” on the reduced terms of employment accounted now for 19 per cent of staff.

The report says: "This confirms the finding of the Public Service Pay Commission that there was no general recruitment problem, and that at lower pay levels there is a substantial pay premium in favour of public servants."

The new report says the costs involved in adjusting the salaries of the 60,000 staff concerned by two points on their incremental pay scales would be “significant”, at approximately €200m.

It says this would equate to an additional €3,301 on average for new entrants, on top of the existing pay benefits under the the recent public service pay deal.

Haddington Road deal

The report says that following the economic crash the then government put in place a 10per cent salary scale reduction for new entrants in the public service with effect from January 1st 2011. It says that the Haddington Road agreement in 2013 sought to address this issue by merging the new scales and existing scales - typically by adding the lower two points of the new scale to the existing scale.

“As such there are no new entrant scales anymore, there are just longer scales.

“Ultimately, while new entrants are recruited at a lower salary point, over time they arrive at the same salary level.”

The trade union movement said it had secured agreement for new talks with the Government on new entrants’ pay for public sector workers.

The chairman of the public services committee of the Irish Congress of Trade Union (Ictu) Shay Cody said on Friday the e outstanding issue was the existence of two additional scale points for staff employed since 2011.

“Unions want to see the length of these scales reduced by two points to improve new entrants’ incomes and equalise the time it takes to reach the top of pay scales. “

Ictu general secretary Patricia King said that securing new talks on the issue marked "a significant step towards the resolution of this long standing problem.

“At its most basic, this was and remains a simple issue of fairness and equality. The decision to cut entry grade pay across the public service was never endorsed or accepted by trade unions and we have consistently sought to bring this injustice to an end.” Ms King said.

Fianna Fianna spokesman on Public Expenditure and Reform Dara Calleary said the publication of the report examining pay scales in the public sector "must be seen as a first step in a process to bring about pay equality".

“This report must not be seen in isolation and must be followed with real commitment from the Government on how it plans to deal with pay inequality in the public service.”