Semi-State pay: Lenihan imposes €250,000 cap on salaries across public sector
Published 08/12/2010 | 05:00
PUBLIC servants cannot earn more than €250,000 in the future -- but there is no guarantee the state sector's most highly-paid bosses will accept a drastic cut to bring their wages down to this level.
Finance Minister Brian Lenihan announced that state employees' basic pay would be capped at this amount in yesterday's Budget.
The Government will be able to impose the new maximum rate on recruits, but may have a fight on its hands if it tries to slash the pay of senior executives who enjoy salaries far in excess of this.
Unless commercial semi-state bosses like ESB chief executive Padraig McManus -- whose basic pay is almost double the new ceiling -- voluntarily accept a pay cut, the Government will face a legal minefield if it tries to impose the cap.
Wage rates in legally-binding contracts of employment are heavily protected under Payment of Wages legislation.
However, the Finance Minister indicated the Government's stake in the semi-state sector could be used to force, or perhaps shame, these highly-paid bosses into accepting a cut.
"While there are issues about the contractual position of incumbent post-holders, I think the position of the Minister for Finance as a shareholder or statutory stakeholder in these companies can be used to enforce the objective of the maximum salary within a reasonable time frame," he warned.
Mr Lenihan said the Government believed there should be a maximum salary rate of €250,000 in the public sector.
Although only a few officeholder posts enjoyed salaries above this level at present, he noted that there was a larger number in the state agencies.
They include the ESB's McManus, whose basic pay of €432,688 last year was part of a total package that included an annual bonus, pension contributions and a once-off payment of just over €100,000 for completing his seven year contract, of €752,568. He would have to take a cut of more than €180,000 to bring his basic pay in line with the new rate.
Other commercial semi-state chief executives whose pay far exceeds the Taoiseach's are Declan Collier of the Dublin Airport Authority, who gets basic pay of €320,000, Donal Connell of An Post, who is on €386,000, and the head of forestry body, Coillte, David Gunning.
The minister confirmed that the new maximum rate would apply to the next President and new members of the judiciary, who will also take the planned 10pc cut in pay for new recruits.
The Department of Finance said the President and a "handful of judges" currently earned above €250,000 while at least 16 semi-state bosses earned more than this.
Last night, the ESB would not comment on whether Mr McManus intended to accept a cut that would bring his pay in line with the new rate.
RTE management may have to negotiate with top earners like Pat Kenny, Marian Finucane and Joe Duffy in a bid to cut their salaries which are protected by water-tight contracts between the broadcaster and its staff.
Meanwhile, the €250,000 semi-state pay cap won't apply to bankers in charge of state-owned institutions, the Irish Independent has learned.