Brendan Howlin signals ‘last ask’ for public service pay and pensions reductions

Public servants were facing the "last ask" in pay cuts, Minister for Public Expenditure and Reform Brendan Howlin told the Dáil.

He said that if the proposals were accepted, the Government’s view was that it would be possible to make future savings without having to make additional and deeper pay cuts.

“This can be done in part through major increases in public service productivity and through widespread work practice reform, in co-operation with staff,” said Mr Howlin.

Core elements and protections of the Croke Park agreement would also remain in place, he said. Industrial peace in the public service could be secured at a critical time in Ireland’s path to recovery.

Reduction in pensions
Mr Howlin said the Financial Emergency Measures in the Public Interest Bill, which he was introducing, was an integral part of the architecture of such an agreement. Its primary purpose was to implement the proposed pay reduction for public servants earning salaries of €65,000 or more and the parallel but lesser reduction in pensions above €32,500.

Contingency measures that might be deployed to secure reductions in the public service pay and pensions bill, such as provision for a universal freeze in pay increments, were also included.

Mr Howlin said the legislation also provided a facility for unions and representative associations to conclude collective agreements with their public service employers which would avoid the need for the measures to be used.

The Bill, he said, “represents, I believe, one of the major final steps to the restoration of our economic sovereignty”.

Coalition commitment
He said a key condition for balanced economic growth was sustainable public finances. The Coalition was committed to cutting the deficit and putting the debt ratio on a downward path.

“Considerable progress is being made in this regard. This is lowering the cost of borrowing, helping to put the public debt on a declining path and is contributing to increased investor confidence.”

He said that everybody in the House was aware there remained a considerable gap between what we got in revenue and what was spent. This situation was unsustainable.

As well as the requirement to bring the deficit to below 3 per cent of gross domestic product by 2015, it made sense that balance be brought back to the public finances and the debt burden reduced.

Mr Howlin said consolidation measures amounting to about €28 billion, or more than 17 per cent of estimated GDP this year, had been implemented since the crisis began, representing about 85 per cent of the total consolidation required.