TAOISEACH BRIAN Cowen has confirmed that public pay and pensions are likely to be targeted for further cuts in December’s budget.
Mr Cowen said the budget would result in cuts “right across the board”, including public-sector pay and pensions. He also all but ruled out any major new taxes in December’s budget except for a carbon tax.
Mr Cowen’s comments were in response to the latest Economic and Social Research Institute (ESRI) report which identified a 25 per cent gap between public- and private-sector pay rates. It also questioned the basis for increases in the public sector. Unions rejected the findings and warned the Government any further cuts in pay and pensions would be fiercely resisted by employees in the public sector.
In interviews before he departed last night for the United Nations General Council meeting in New York, Mr Cowen said one-third of State spending was pay and pensions. He would not be drawn on the nature of the adjustments he would seek.
Mr Cowen said the Government was committed to a carbon tax. In comments taken as ruling out any other new taxes, he added the Commission on Taxation report would take a number of years to implement.
Later, he told TV3 News the Government could simply not ignore public pay: “To have a sustainable budget going forward, we have to in some way control public expenditure on the pay and pension side . . . The bottom line is that there is not enough money coming in from taxpayers to make the payments on all of these fronts . . . There will be a tough budget.”
According to the ESRI, public-sector employees earned in excess of 25 per cent more than those in the private sector in 2006, when pensions were taken into account. The research, however, does not reflect the effect the economic downturn or pension levy may have on the gap.
The research finds the gap increased greatly from under 10 per cent in 2003 and to 21.6 per cent in 2006 (pensions excluded). This occurred when Mr Cowen was minister for finance. It was particularly marked among junior grades.
The largest public service union, Impact, yesterday rejected Mr Cowen’s comments on cuts and also challenged the basis of the ESRI report.
Impact spokesman Bernard Harbor suggested it was part of a “softening up exercise for public service pay cuts in the forthcoming budget”. Blair Horan of the CPSU, which represents lower-paid public-sector workers, warned his union would fiercely resist the cuts.
Fine Gael’s finance spokesman Richard Bruton said the report vindicated its stance on benchmarking and its argument there was no justification for an award not linked to performance or change.The Labour Party reiterated its opposition to across-the-board cuts in public pay.