Pension levy cut to be priority in public service pay talks

Government and union talks on public sector pay are likely to centre on reducing the pension levy introduced in 2009. The talks are scheduled to begin next year.

Consultations have been taking place over recent months within the trade union movement in advance of the talks. They will be the first talks since 2008 that focus on improving terms and conditions.

One highly placed source said the pension levy was likely to be the “main currency” in the negotiations, although it was expected other issues would also be discussed.

The pension levy, which averages about 7.5 per cent, was one of the first of a number of measures introduced by successive governments since 2009 to reduce the public service pay and pensions bill.

Boost

A cut in the pension levy would increase take-home pay of public service staff.

Some sources say boosting income by reducing the pension levy could prove less controversial for the Government than introducing a pay increase for the 300,000 staff in the public service.

Unions have argued that between the pension levy and pension contributions staff in the public service are paying 16.5-17 per cent on every euro earned over €24,000.

Another issue the unions will have to examine is how the talks could deliver on commitments that priority would be given in any pay restoration to staff earning below €35,000.

The current Haddington Road agreement on public service pay and productivity is scheduled to run until mid-2016.

Public finances

Unions warned before the deal was signed that if it achieved its target of bringing the deficit in the public finances below 3 per cent they would lodge a pay claim at an early date.

Minister for Public Expenditure and Reform Brendan Howlin said this year he expected to engage in talks with the public service unions in 2015 on a wind-down of financial emergency legislation which underpinned the public service pay and pension cuts.

Highly placed union sources believe there will only be a relatively brief window for the new talks given that the process will have to be completed before the budget next October.

It is not expected the talks will get under way until after the union conference season in April and early May.

Sources suggested this would leave a period from the end of May to the end of July, with possibly an extension into September, to reach a deal.