With the improvements in the public finances, and the economy envisaged to return to a period of regular growth, a new system for determining pay in the public service in the future will have to be introduced.

However, this will be a matter for the next government.

Last week a Fine Gael think tank urged that an independent commission be established to recommend levels of public service pay and pensions, as well as ways to increase productivity.

It proposed that this body should operate along the lines of the Low Pay Commission, which was set up by the Government to review the rate of the national minimum wage.

Minister for Public Expenditure and Reform Brendan Howlin, who has responsibility for public service pay, said he would read with interest the proposals put forward by the Collins Institute.

He said it would be up to the next government to decide on a new mechanism for objectively determining public service pay.

Lansdowne Road

Mr Howlin said the Government had signalled at the time of the recent Lansdowne Road pay deal that public service pay-determination mechanisms would have to be addressed in the future.

In the past, top-level pay was examined by the Review Group on Higher Remuneration in the Public Service. It made recommendations on pay for groups such as senior public servants and hospital consultants. This body was stood down a number of years ago following the economic crash.

Pay levels for low- and middle-income staff in the public service in recent times had been determined by the controversial benchmarking process . The benchmarking exercise, established by Fianna Fáil-led governments, was strongly criticised by senior Fine Gael figures when in opposition.

Since the economic crash, pay levels in the public service had been governed by financial emergency legislation, which underpinned cuts to rates and allowances introduced since 2009.

Croke Park

Negotiations on pay issues, such as the original Croke Park agreements and the subsequent Haddington Road and Lansdowne Road accords, have been carried out on a centralised basis with the

Department of Public Expenditure and Reform

taking the lead role for the Government side.

However, while the financial emergency legislation is being dismantled on a phased basis, it is likely to be a number of years before it disappears completely.

In the interim, and as the economy improves, there is recognition within the Government that some form of mechanism for determining public service pay will have to be put in place.

Among the options would be a commission involving independent personnel to make a recommendation to the Government of the day.

Alternatively, there could be negotiations on a sectoral basis within the public service, although the downside is that this could lead to leap-frogging claims if one group was perceived to have done better than others.

Centralised negotiations

A third option would be for centralised negotiations headed by the Department of Public Expenditure to continue into the future.

The issue of public service pensions, including the rate of contribution by staff as well as the retirement age and the level of benefits are also likely to be assessed in the years ahead.

The Collins Institute has suggested that a public service pay commission would make “detailed and specific proposals for how productivity improvements can fund a significant proportion of future increases in public sector remuneration”.