Thursday 8 December 2016

Watt's warning on 'politics' of Central Bank pay changes

Honohan was alerted to potential row

Published 07/02/2016 | 02:30

Robert Watt - the Secretary-General of the Department of Public Expenditure and Reform Photo: Steve Humphreys
Robert Watt - the Secretary-General of the Department of Public Expenditure and Reform Photo: Steve Humphreys

One of the country's most senior civil servants has warned of the need to be mindful of the "political considerations" of proposed new working and pay arrangements for staff at the Central Bank.

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Robert Watt - the Secretary-General of the Department of Public Expenditure and Reform - also told the then Central Bank Governor Patrick Honohan last June that any proposals for changes in pay would have to first get the Government's blessing before any further presentations to staff at the Regulator, according to documents released to the Sunday Independent under the Freedom of Information Act.

The Central Bank became embroiled in controversy in November after it emerged that a select number of managers were being paid secret bonuses in a bid to retain top talent in a policy that dated back to 2014.

The bank has also been planning to introduce a performance-related pay structure and scrap increments as part of a redesign of the organisation.

In June of last year, Mr Watt wrote to Mr Honohan, who has since retired, making reference to a conversation the two men had about changes to work practices that included a "reward element".

He said he welcomed the bank's efforts to modernise its approach to areas such as reporting structures, but added that the "reward element" of the proposals may require further consideration.

Mr Watt reminded Mr Honohan that the pay structures in the bank are subject to the provisions of the Financial Emergency Measures legislation, or FEMPI act, restricting pay increases.

And he said any presentation to Central Bank staff of any work practice or reward structure would need to be consistent with the FEMPI acts.

"In the circumstances, I suggest that it will be necessary for the Government to be comfortable that the detailed proposals of the bank are in full compliance with the Acts," Mr Watt wrote in the email, which was released under the Freedom of Information Act.

"I know that you will do this when you are further advanced with your plans - in advance of any further presentation to staff that suggests substantive changes to pay structures.

"As you know, we are supportive in principle of your plans for changes in working arrangements but need to be mindful of the legal, wider industrial relations and political considerations."

A spokeswoman for the department told the Sunday Independent that the purpose of the meeting between the two men was to brief department officials on the bank's thinking on work practices and the general salary structure but did not answer, when asked, if it was appropriate for senior officials to raise the issue of political considerations.

In a separate letter from Mr Honohan to Public Expenditure and Reform Minister Brendan Howlin last November, the former Governor said the bank was undertaking an organisational redesign which included the introduction of performance-related pay.

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