The rate of increase in the public sector pay bill, which has risen by 50 per cent since 1995, cannot be sustained in the future, the Minister for Finance, Mr McCreevy, warned yesterday.
The Government would make a determined effort to reform the current system of public service pay determination in negotiating a successor to Partnership 2000. Mr McCreevy conceded, however, that this would prove very difficult.
"There are particular difficulties in relation to public service pay which will need to be tackled in the negotiations," he said. "It is already clear that the negotiation of a new programme will prove even more challenging on this occasion. "It is obvious that we need a new system of public pay determination in the public service. We should try to get away from leapfrogging."
He said a performance-driven system offered the best if not the only means of reconciling the pay aspirations of public servants, the responsible management of public spending, and demands for improvements in services.
Mr McCreevy said he accepted comments last week by SIPTU's vice-president, Mr Des Geraghty, who said private-sector workers looked with some envy at the increases enjoyed by those in the public sector.
Some 235,000 workers are expected to be employed by the State on January 1st next, about 20,000 more than at the beginning of this year.
The Budget Estimates provide for an Exchequer pay and pensions bill of £6.62 billion next year, an 8.6 per cent increase of £527 million on the projected bill for this year. This represents 51 per cent of the total current expenditure estimate of £12.93 billion next year.
The provisions do not account for changes which may arise following completion of negotiations on the successor to Partnership 2000.
At £6.62 billion, the pay bill will have increased by 50 per cent in the five years since 1995, when pay and pensions cost £4.44 billion.
The £527 million increase in the provision for pay and pensions next year includes salary increases of £216 million.
Of this, general round increases under Partnership 2000 will cost £135 million and a further £60 million will be needed to fund local bargaining increases. The remaining £21 million will fund outstanding PCW increases, in particular the final phase of the Garda local bargaining pay rise agreed last year.
Expanded services in the education and health sectors will add £207 million to the pay bill.
In health, the estimated increase will be £127 million, covering the recruitment of 3,000 workers in 2000 and the full-year cost of workers recruited this year.
Pay will increase by £50 million in the education sector. This will fund the recruitment of new teachers and other staff in 2000 and meet the full-year cost of extra staff hired this year.
The pay bill this year will be £6.1 billion, £136 million higher than estimated. This was partly offset by expected savings of £38 million in non-pay expenditure.
Savings of £86 million were expected due to substantial reductions in the Live Register reflecting the bouyant labour market, Mr McCreevy said. However, health spending would be £34 million greater than estimated and agricultural spending would be £41 million more than estimated.
Of the increased pay bill this year, some £108 million was needed to cover the cost of the Labour Court recommendations on nurses' pay, allowances and conditions.
