GIVING GOOD example can be a difficult and thankless task, especially when it involves a reduction in living standards, but such behaviour is now required from the elites within society. When the recession hit in 2008 and government revenues collapsed it was broadly agreed that Sweden provided a model for what should be done. There, the public had grudgingly accepted higher taxes and lower living standards because everybody was seen to carry a fair share of the burden.
Their economy recovered rapidly. Similar sacrifices are required here.
Minister for Public Expenditure and Reform Brendan Howlin has published proposals to cap future public service pay rates at €200,000 and he has appealed to existing highly paid staff to waive 15 per cent of their salaries. A similar approach has been taken in relation to the chief executives of commercial State companies where maximum pay of €250,000 has been suggested. Minister for Health James Reilly is to hold talks on remuneration levels with hospital consultants. The pay of judges will fall dramatically if a constitutional referendum is adopted in the autumn.
The timing and content of these announcements are significant. They come as Minister for Enterprise Richard Bruton briefed members of the parliamentary Labour Party on wage-setting reforms in the private sector involving overtime and weekend working for hotel, catering, security and other workers. It signals that all sections of society, and particularly those that gained excessively during the Celtic Tiger years, have a duty to contribute to competitiveness and to economic recovery. Mr Howlin has already indicated that further cuts in public spending and public service numbers will be unavoidable under the Croke Park agreement, even if greater flexibility in relocation and working hours are forthcoming. A review of spending across all Government departments is due to be completed by September and outside experts will be recruited to drive necessary changes in public administration.
The Government has been criticised for adopting a dilatory approach to reform. But the situation is extremely complex, partly because of divisions of ministerial responsibility but also because of the multiplicity of interests involved. Cabinet members set the tone for the present exchanges, last March, when they agreed to voluntary pay cuts and set a ceiling of €200,000 for the Taoiseach’s pay. Now other public servants are being asked to measure up to that high standard. It is to the credit of serving secretaries general in all Government departments that they have already done so.
Public sector pay and pensions cost the exchequer nearly €19 billion last year, amounting to about one-third of all State spending. If the budget deficit is to be reduced and remuneration in key areas brought into line with our EU partners, significant savings will have to be made. The alternative would involve placing a greater burden on those citizens who depend on already-inadequate services. A fair and effective response from all sections of society is required.