THE GOVERNMENT is to greatly reduce the estimated €1 billion or more it pays in allowances, premium pay and overtime for staff in the public service.
Government departments have been asked for plans on how the savings can be generated, a move which could bring them into conflict with public service unions which will seek full adherence to the pay guarantees of the Croke Park agreement.
The Irish Times understands the Cabinet has decided that cuts of 5 per cent in the amount spent overall on allowances and premium pay will be introduced next year. There will be further significant cuts of possibly up to 10 per cent in the amount spent on allowances in 2013.
The current rate paid in various allowances to individual staff, including doctors, nurses, teachers, gardaí and other public service workers will not be affected by the the Cabinet’s decision.
However, the payment of allowances for new entrants seems less certain. Government departments have been told that they will have to produce a justification or business case if they want to pay allowances to new staff employed in the future.
Government expenditure on overtime is to be cut by about 10 per cent next year with deeper cuts earmarked for the following year.
It is understood that the exchequer allocation for each Government department will be reduced for next year to take account of the projected savings that will be made under the cuts to payments in allowances, premium rates and overtime.
Management in Government departments will be expected to make arrangements to live within the reduced budgets.
The Department of Public Expenditure and Reform, led by Minister for Public Expenditure and Reform Brendan Howlin, has asked departments to draw up a report on the main drivers of expenditure on allowances, premium payments and overtime. Departments have also been asked to set out how they will deliver the savings in these areas under the terms of the Croke Park agreement.
The Croke Park deal guarantees that there will be no further pay cuts for staff in the public service in return for co-operation with reforms. Unions have argued that the definition of pay under the terms of the agreement includes items such as the rates for overtime, allowances and premium payments.
The McCarthy (Bord Snip) report recommended that the Government revise the system of allowances in various parts of the public service.
It particularly highlighted the “liberal system of allowances” paid to gardaí on top of basic pay and overtime and urged reform in this area.
The report said that the State paid €217 million on various allowances – including €58 million on rent allowance paid to every member up to chief superintendent – as well as €80 million in overtime.
The report said that 52 per cent of teachers received management allowances at a cost of €236 million.
It is estimated that €600-€700 million is paid out by the HSE on overtime, premium rates and allowances to its staff annually.
In a statement last night the Department of Public Expenditure and Reform said: “Clearly there is scope within Croke Park for ongoing reductions in the cost of delivering public services. Management need to continuously identify all opportunities to deliver reforms and greater efficiencies and cost savings. This was a key element of the comprehensive review of expenditure.
“An example of how this has been implemented is the recent restructuring of payments for the work done in the med labs [medical laboratories]. Similar discussions are nearing conclusions with the radiographers.
“A core priority is to continue to tackle and reduce the overtime bill across the public sector after significant savings have already been achieved through better management and work place changes,” it said.