News Politics

Wednesday 1 October 2014

Private sector 'won't be left behind' - Minister

All workers will share in the benefits of economic recovery

Niall O'Connor and Fionnan Sheahan

Published 12/08/2014 | 02:30

  • Share
Paschal Donohoe
Director of the Parnell summer school Felix Larkin with Billy O'Brien, Chairperson of the Woodenbridge memorial park,
SenatorJillian Van Turnhout

A FINE Gael minister has moved to reassure 1.6m private sector workers they won't be left behind as the economy improves.

  • Share
  • Go To

Transport Minister Paschal Donohoe's pointed emphasis on spreading the benefits of recovery across society came after Public Spending Minister Brendan Howlin's announcement on the restoration of pay cuts to the public sector made during the economic crisis.

Mr Howlin has stressed not all the 'emergency' pay cuts will be restored and any reversals will be done over time. Talks will begin next year with the first pay rises for public sector workers expected in late 2016 or 2017.

Although not publicly disagreeing with Mr Howlin's stance on the public sector, Mr Donohoe said the benefits of the recovery have to be "shared by everybody". He also stressed the need to preserve financial stability and the importance of meeting budget deficit reduction targets.

"What Minister Howlin was referring to was the end of an agreement that was negotiated between unions and government.

"And I believe that as that agreement comes to an end, we have seen our country begin to recover due to the huge sacrifices that everybody has made and that any benefit that accrues from that recovery should be shared with everybody," he said.

While Mr Howlin's comments will be welcomed by the 300,000 public sector workers, Mr Donohoe's comments were viewed as a message to the 1.6m workers in the private sector.

As the Coalition prepares for the end or reversal of measures undertaken in the economic collapse, the Government has been warned it also needs to set out its long-term plan for the Universal Social Charge - the crippling emergency tax of the financial crisis.

The USC is a tax on all sorts of income - not just on wages, like PAYE - and was brought in as an emergency measure during the crisis as a way of increasing taxes, without hiking income tax.

On top of restoring public sector pay, the head of the country's leading business group says issues such as the future of USC, investment in capital projects and pay expectations had to be dealt with.

IBEC chief executive Danny McCoy says the USC may have to be integrated with the income tax system. But taxpayers need to know the direction of policy of the USC, which he described as a "dead weight", even if it might take up to five years to resolve.

He said the idea USC will get abolished is "probably fanciful", but it needed to make more sense as part of the taxation system.

"Fundamentally, the USC was an emergency tax. It is an income tax. It should be integrated into income tax at some stage.

"It's too easy to say emergency over, no USC needed. But we need to stop it being a heavy burden on people," he added.

Mr McCoy said the USC could become a fund for capital projects, which had been dramatically cut over the course of the crisis. The IBEC chief also said any pay restoration in the public sector had to be based on continued reform.

"I think it has to be contingent on normal ongoing change - as is the case in the private sector," he said.

Mr Howlin said in an interview with the Irish Independent last weekend that the reversal of public sector pay and pension cuts, made during the economic crisis, is up for discussion as the Coalition prepares for the end of the "financial emergency".

He said the cuts will not be reversed as a "big bang" as that would undo the efforts to reduce the budget deficit over the past three years. "There has to be an orderly wind-down, as opposed to a sudden ending," he told this newspaper.

Mr Donohoe reiterated that the government must use any room for manoeuvre to benefit all workers.

"The first objective is that we maintain the financial security that the State has built up in recent years due to all the hard changes that people have undergone. It's just vital that we maintain that because that's the bedrock on which we will continue to see more jobs being created," he said.

"The second objective that I believe is very important is, as our economy continues to recover, that any benefits available due to this are broadly shared across society. Society as a whole has undergone huge and very difficult sacrifice to get our country back to this point. And as our country recovers, due to more jobs being created, and as these benefits materialise, they should be shared out equally with everybody," he added.

Mr Donohoe also warned against the introduction of "unfunded" tax cuts and schools and hospitals being paid for through long-term borrowing.

Irish Independent

Read More

Editors Choice

Also in this section