Ministers will meet today to consider the benchmarking report on public sector pay in a climate of worsening Government finances.
The Taoiseach, Mr Ahern, warned that pay increases would have to be linked to reforms and modernisation within the public service and said that negotiations would begin immediately with the public service committee of the ICTU.
Mr Ahern declined to speculate on a time-scale for the implementation of the report in advance of those negotiations. The cost would have to be carefully assessed, he said, but it was inevitable that it would be huge.
Recommending increases ranging from 3 to 25 per cent, with an average of 9 per cent, the benchmarking report will affect an estimated 230,000 public service workers. It was described as "a very important development in how public service pay is determined" by the Minister for Finance, Mr McCreevy, who said that, for the first time, the appropriate pay for key public service grades had been linked to equivalent jobs in the private sector.
Mr McCreevy will report today to Cabinet on the implications of the report for the Government's finances, in the context of falling revenues and rising expenditure.
An initial assessment suggested that full implementation of the recommendations would give rise to a full year cost of over €1 billion, Mr McCreevy said. He described the budgetary implications as "significant" and "a factor to which regard will have to be had in any discussions with the public service unions on the implementation of the report".
The Fine Gael spokesman on finance, Mr Richard Bruton, said the cost of full implementation of the report would add two percentage points to income tax rates. It was very difficult to judge the merit of the awards, he said, because the analysis on which they were based had not been published.
Three-quarters of the proposed payments were conditional on better-quality services being provided as a result of flexibility, change and modernisation.
Mr Bruton accused the Government of engaging in a stalling operation, rather than a reform process. The opportunity of combining serious reforms with a period of substantial expansion in the public service had been missed, he said, and change would now have to be introduced against a background of potential cutbacks.
The Labour Party spokesman on finance, Mr Brendan Howlin, welcomed the report and urged the Government to honour its commitments as an immediate priority. In particular, he said 25 per cent of each recommended pay increase should be paid at once and the Government should set out a process of consultation and discussion in relation to implementing the balance of the report.
The Green Party spokesman on finance, Mr Dan Boyle, described the findings of the report as "perverse" because senior staff were awarded higher pay increases than their lower-grade counterparts. The benchmarking process would sow seeds of discontent, he added.