Anger at pension levy puts recovery talks in jeopardy
LOWER-PAID civil servants will get a €100m rebate of pay lost due to the pension levy -- but the Budget has dealt a severe blow to talks on a national recovery deal.
Finance Minister Brian Lenihan's announcement of a "slight recasting" of the levy was not enough to prevent a widespread condemnation of the "draconian" emergency Budget by union leaders.
The head of the biggest union, SIPTU general president Jack O'Connor, cast serious doubt last night on the prospect of the social partners agreeing a national recovery plan, at talks that resume after Easter.
"I cannot see how you can come from this Budget to an agreement on a social solidarity pact," he warned.
Unite called for a general election and asked how a blanket doubling of income levies could be considered fair to the lowest paid.
Brian Lenihan seemed to move closer to union aims when he announced he would review the pension levy "to address issues of fairness" and "reduce somewhat" the impact on the lowest-paid public servants.
He promised a "slight recasting" of the levy and a small increase in the levy on higher earners, at a net cost of €100m this year.
Imposition
He acknowledged that the Government's imposition of the levy in February represented a "considerable contribution" by public servants.
However, there was a muted response to his proposal.
The Civil and Public Services Union, which has already taken strike action over the levy, said that the proposed adjustment "appears so minor as to be insignificant".
The biggest public sector union, Impact, was also unimpressed by the minister's attempt to row back on the levy, claiming it was merely an acknowledgement by the Government that it "went too far" in its original approach.
It has argued that the levy, imposed by the Government in February, was unfairly weighted against the lower paid.
A worker on €39,000 will pay €2,120 a year after tax, while a worker on €48,000 will pay €2,094.50 a year, because tax relief is higher for the better-paid employee.
A spokesperson said the income levy increases were draconian and would hit public service workers like everyone else, "with the promise of more to come".
The union also denounced Mr Lenihan's plan to bring in a public service early retirement scheme, claiming it would create "massive instability".
The minister said the new scheme was needed to control public sector numbers, which have grown by 11pc in the last five years.
Employers' groups, meanwhile, complained that there was not enough "slash and burn" right across the public sector.
- Anne-Marie Walsh Industry Correspondent
