Call for public sector pay rise to be withheld

The Department of Finance has told the benchmarking body it should consider withholding a special pay increase for public sector workers when it reports later this year.

In a submission to the body, the department argues that public servants enjoy a range of advantages over those in the private sector, and may not be entitled to any special increase.

The public service benchmarking body sets pay rates for civil and public servants by making comparisons with jobs in the private sector.

It is chaired by senior counsel Dan O'Keeffe, and is due to report in the second half of 2007.

The previous benchmarking body, chaired by Mr Justice John Quirke, recommended an average pay increase of 8.9 per cent for public servants in July 2002, which was implemented by the Government.

This was in addition to the basic "cost of living" increases negotiated by both public and private sector unions in national partnership talks.

In a submission to the current body, however, the Department of Finance said it was unaware of any clear evidence of significant upward drift in pay levels in the wider economy since 2002.

It urged the body to recommend no pay increases for some or all grades if it considered none to be warranted.

The department said a number of reports had indicated that public sector pay had moved ahead of that in the private sector.

"While these reports tend to deal with the public service in general, rather than job-specific terms, taken together they constitute an important viewpoint which merits serious consideration."

It said there had been very few recent private sector settlements that were above the terms of the national pay deal.

At this stage there was nothing to suggest that "there is any broad disparity between the rate of increase in the public service and in other sectors".

The submission is published on the benchmarking body's website www.benchmarking.gov.ie

The department also said there was strong prima-facie evidence that the relative value of public sector pensions was greater now than in the recent past.

It said the existing public service pension - which sets a defined benefit based on final salary, with post-retirement increases based on that pay level - was obviously very attractive in the light of the move in the private sector towards less certain defined contribution schemes.

The department also said it was essential that the benchmarking body took full account of the additional pension costs to the Exchequer that would be generated by any pay increases that it might recommend.

It said that, before allowing for future pay rises, the State pension bill was expected to increase by 50 per cent over the next seven years, to double in 15 years, and to almost treble by mid-century, ie to increase from €2 billion in 2006 to some €6 billion in around 50 years.

It argued that the benchmarking body should also have regard to the security of tenure in the public sector.

It said that in terms of conditions of employment, particularly in relation to family-friendly and work-life balance issues such as flexible working times, leave arrangements, subsidised creches etc, the public sector was "at the leading end of what is available in the economy generally".

The department also pointed out that recruitment of public sector staff has not been a problem.