Wednesday 26 October 2016

'We are not clear of all danger' - Paschal Donhohoe says reversal of pay cuts premature

Published 08/07/2016 | 16:32

Paschal Donohoe. Photo: Frank McGrath
Paschal Donohoe. Photo: Frank McGrath

Public Expenditure Minister Paschal Donohoe has said that the immediate reversal of emergency public service pay cuts would be "premature" because the country is "not clear of all danger".

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Mr Donohoe was speaking in the Dáil this afternoon about the Financial Emergency Measures in the Public Interest (FEMPI) Acts - brought in amid the economic crash.

He said that the annual review of the operation and effectiveness of the measures confirmed that it is necessary to maintain them.

The minister pointed out that the FEMPI acts have reduced the pay and pensions bill by €2.2bn and thanked public servants for their contribution to the economic recovery.

"Without their contribution we would not have exited the bailout programme," he said.

He added: "But we are not clear of all danger.

"Our economy, though growing strongly, is still vulnerable to economic shocks, particularly international shocks such as those posed by Brexit," Mr Donohoe warned.  

He also said he has been "struck by the fact that those calling for the removal of FEMPI are also the ones calling for more money for housing, more money for health and more money for myriad other social issues our country faces.

"In so doing, they forget the political choices that I, as a Minister, must make. There is no limitless pot of money from which I can draw. Decisions must be made. Priorities must be identified."

According to Mr Donohoe the immediate repeal of FEMPI legislation would be "premature and unaffordable".

He said: "Instead, the phased approach of the Lansdowne Road Agreement provides the mechanism to deliver pay restoration over the next three years at a total cost of €844m in 2018.

"The Lansdowne Road Agreement allows the Government to hire more public servants to meet increasing demands for public services."

Mr Donohoe also said that the Programme for Government commits to the establishment of a Public Service Pay Commission to examine pay levels across the public service including any issues relating to new entrants' pay.

He concluded: "I fully appreciate the impact of the pay reductions on individual public servants, but now is not the time to jeopardise our economic progress with the premature, and unaffordable, immediate repeal of the FEMPI legislation."

"This Government remains committed to the implementation of the Lansdowne Road Agreement which has commenced the necessary and sustainable unwinding of the FEMPI legislation."

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