Forced redundancy and public sector pay cuts expected if bailout proceeds
Published 17/11/2010 | 05:00
PUBLIC servants may face further pay and pension cuts and compulsory redundancies in the event of an international bailout.
Economists last night predicted the Croke Park deal would be scrapped and state employees would be unlikely to get previous pay cuts refunded if the IMF and EU step in.
The Croke Park agreement guarantees their pay and pensions cannot be cut before 2014 and they cannot be made compulsorily redundant.
Economists said it would be difficult for the Government to justify the almost €19bn payroll, which makes up more than a third of spending.
Fears are growing that the IMF and EU could insist on other drastic cuts -- including increases in corporation tax and VAT rates -- if they step in to sort out the debt crisis.
However, the head of the largest public sector union, IMPACT general secretary Shay Cody, said he believed the agreement could withstand a bailout.
But chief economist at Friends First Jim Power said it was highly unlikely that the agreement would survive a bailout.
"If the IMF considers the conditions that come with a bailout and looks at the Croke Park agreement, I believe it will be found to be totally incompatible with its aims and will be scrapped."
Professor of banking and financial services at University College Dublin, Ray Kinsella, said the IMF wanted to "quarantine Ireland".
"They want to take out the Irish problem," he said.