There is a smoke and mirrors aspect to the latest report by the Review Body on Higher Remuneration in the Public Service. What appears to be an average salary increase of 7.3 per cent for top public service posts represents a notional rise of more than 22 per cent. Deciding that the value of a public service pension amounted to 15 per cent of a private sector salary, the review body immediately set higher pay levels but included a discount to take account of the pensions benefit.
The Taoiseach will receive a pay rise of more than €38,000, bringing his salary to €310,000 per year, the Tánaiste will see his pay rise by 15.6 per cent to €270,000 while salaries for other Cabinet Ministers and for Ministers of State will increase by 12 per cent to €240,000 and €165,000 respectively.
The alacrity with which the Government moved to give effect to the recommendations should not surprise. The Minister for Finance Brian Cowen is beginning to talk of belt-tightening. But othe basis of interim and other increases recommended for this higher group of 1,600 people, salary values will have risen by almost 50 per cent since 2000, not counting national pay increases.
The Celtic Tiger has brought great and sudden wealth to our society. And many people in the private sector have become rich. Ministers, judges and public servants are doing much the same work as they did 10 years ago, but the volume has increased dramatically. They should be paid for increases in responsibilities. And their conditions of employment should be attractive. As things stand, however, is there evidence of a significant brain drain to the private sector? For, in addition to particularly valuable pension rights, most public servants enjoy an even greater benefit - that of permanent positions.
The report will have consequences that go far beyond this group. In laying down the terms of reference for the review body in 2005, then minister for finance Charlie McCreevy directed it to liaise closely with the benchmarking body on pay in the public service, particularly in relation to pension values. If, as seems likely, the value of public pensions has now been set at 15 per cent of salary, there would appear to be no scope for other pay increases. Especially as public pay levels already lead the private sector.
This exercise has been clever, assuaging the top level in the public service while preparing for general pay retrenchment. Under social partnership, hairshirts should involve a common ownership. The last general review set top salaries at a minimum of 85 per cent of the lower quartile for the private sector. This time, the review body declared that salary levels would henceforth be set at 100 per cent of the lower quartile, thereby providing space to discount pension values. It meant no increase for a small number of people on lower grades. The Taoiseach and Chief Justice emerge again as top earners in the public sector as it should be.