Pay deal is the first step in Coalition's bid for re-election
Published 30/05/2015 | 02:30
The Coalition has stepped up its bid to buy re-election by promising to deliver a pay deal that demands little in return from the country's 290,000 public servants.
State employees are to receive an average of €2,000 each over the next two years - on top of the USC cuts and tax reductions due to feature in October's Budget.
Thousands of workers will see a significant reduction in their pension levy as well as pay rises of up to 2.5pc - without having to give anything back in terms of productivity.
And the Irish Independent can reveal that Taoiseach Enda Kenny's officials made an 11th hour intervention to prevent further income boosts for higher paid public servants through additional reductions in the deeply unpopular pension levy.
Both Mr Kenny and Finance Minister Michael Noonan were concerned of creating a "perception" that the public sector pay talks would favour higher earning civil servants instead of the working classes.
A late decision was also taken to exempt government ministers from the 'Lansdowne Road Agreement', which will cost the State €566m over three years.
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A senior source involved in the negotiations described the package, which requires approval from all public sector unions, as a "vote for industrial peace".
But business group IBEC said the deal does not contain specific measures that illustrate that greater productivity and service improvement is on the cards.
The pay restoration side of the agreement will be delivered over three phases and is predominantly targeted at low-middle income earners.
In January, the pension levy thresholds will be lifted from €15,000-€24,750 in a move that will benefit all workers within the public service.
And public servants earning below €31,000 will receive pay increases of 1-2.5pc with the lowest paid set to benefit most.
A second wave of pension levy reductions will be introduced in September 2016, this time bringing the threshold up to just below €30,000.
"The combination of these measures in 2016 will improve all public service full time incomes by around €1,000 per annum," said the Impact Trade Union.
The third phase will see workers on salaries of up to €65,000 receive a pay rise of €1,000.
In terms of the higher paid workers, the pay deal sets in stone a previous clause in the Haddington Road Agreement to partially restore pay.
The pay deal was cautiously welcomed by most union leaders but Impact went further and described the package as achieving the "essential objective of fairness".
However, the Irish Medical Organisation (IMO), which represents doctors, said the deal does nothing to address unsafe conditions and reduced resources in hospitals.
Government sources argued the deal ensures the extension of hours agreed in Haddington Road remain in place, and that there is also an agreement surrounding binding resolution in relation to disputes.
Minister Brendan Howlin said the deal "reinforces the ongoing commitment of public servants to the wider reform agenda in the public service". But IBEC said it is concerned about overly-restrictive rules around out-sourcing.
"It sends out a negative signal in terms of the Government's attitude to the role of the private sector in delivering services. It's quite protectionist actually," Head of Policy and Chief Economist Fergal O'Brien told the Irish Independent.
The deal must now be ratified by union members.