The Government is to introduce tiered pay cuts of between five and eight per cent for most staff in the public service as part of an overall plan to reduce the public sector pay bill by over €1 billion next year.
However, higher earners face salary reductions of between eight and 15 per cent while the pay of the Taoiseach will be reduced by 20 per cent in line with recommendations of a recent report of the Review Body on Higher Remuneration.
The salaries of judges, which the Government has argued cannot be reduced on constitutional grounds, are to be frozen for the lifetime of the current administration.
The Government has also announced that it is to review the current situation whereby the pensions of retired public servants are linked to the pay of serving officials. In future it will consider rises in public service pensions being aligned to the cost of living.
Pending the completion of this review, the pay cuts announced in the Budget will not apply to existing public service pensioners.
In his Budget speech, Minister for Finance Brian Lenihan said that although public servants had already made a substantial contribution through the pension levy, the moratorium on recruitment and pay increases foregone, more was required.
"The country can no longer afford a pay and pensions bill that accounts for more than a third of all current spending", he said.
On foot of the Budget the pay of public servants earning up to €125,000 will be reduced from January 1st by five per cent on the first €30,000, by 7.5 per cent on the next €40,000 of salary and by 10 per cent on the next €55,000.
The pay of members of the Oireachtas, which is linked to grades in the civil service, will also be reduced according to this formula.
In relation to higher earners, the Government is to introduce pay cuts of eight per cent for those with salaries ranging from €125,000 to €165,000.
Those earning between €165,000 and €200,000 will face pay reductions of 12 per cent. For those earning more than €200,000 the salary reduction will be 15 per cent.
Mr Lenihan said that these reductions, which were based on the report of the Review Body on Higher Remuneration, would apply to all public servants in the higher pay bands including hospital consultants.
He said that these reductions were permanent and would be reflected in future pension entitlements.
The Minister said that those at the top would lead by example in the downward adjustment of pay. He said the largest percentage reduction would be taken by the Taoiseach, who will face a 20 per cent cut in salary. He said that this reduction in addition to the pension levy introduced earlier this year meant that the Taoiseach's salary will be cut by close to 30 per cent in total.
"Ministers and secretaries general of Government Departments will take a pay cut of 15 per cent: an overall cut of close to 25 per cent when the pension levy is taken into account", he said.
Mr Lenihan said the Review Body had concluded that the Constitution precluded it from recommending a reduction in pay for judges. Had the body not been so precluded it would have considered a cut in judicial salaries, he said.
“For the same reason the pension levy was not applied to the judiciary, though many judges have contributed an amount on a voluntary basis. I can inform the House that the Chief Justice and the Presidents of the Courts have urged all judges to make the appropriate pension contribution. I will make provision in the Finance Bill to facilitate these payments.”
“Since the Review Body would have considered a reduction of judicial salaries, I have decided that there will be no increase in judges' pay during the lifetime of this Government. Future Governments may choose, as in the past, to continue this course of action,” the Minster said.