Reduce number of employees and cut salaries, says OECD
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THE Government was advised yesterday to cut the numbers working in the public sector and reduce pay in line with the private sector.
A permanent reduction in the public payroll is an "essential element" of any repair of the public finances, the OECD report given to Finance Minister Brian Lenihan said.
The public sector has over-expanded and there is now scope to increase efficiency, according to the major international financial think tank.
Its proposed reforms of the public sector also include more outsourcing of services.
The OECD says the largest items of public spending are wages and social welfare.
"Public sector wages should be reviewed independently in the light of the developments in the private sector and falling price levels, and wages and government employment should be reduced," it says.
On public sector pay, the OECD report says public service pay costs and pensions should have a role as part of the overall package or reductions.
"Reduced wage costs have been an important part of consolidation to date on the expenditure side.
"In February 2009, the Government introduced the public sector pension levy, which resulted in an average deduction of 7.5pc from the salaries of public servants," it says.
The OECD says it is also necessary to control public sector numbers.
"A combination of major reforms is necessary, which should include ending the pay parity link for public sector pensions, where public servants are guaranteed pensions based on the ongoing salary of the job they held."
Pensions for retired public sector workers are in the firing line of the OECD. "Public sector pensions should be overhauled in the light of private-sector arrangements," it says.
Modernisation
The OECD says further modernisation of the public service is required.
"And measures to improve efficiency, including implementation of recommendations made by the OECD in the Towards an Integrated Public Service report, would help to maintain and improve services even as overall spending is reduced.
"These include measures to increase mobility, managerial flexibility, the effectiveness or staff performance management and the use of e-government."
Public sector management should be further strengthened, the think tank recommends, adding that the "the number and effectiveness of agencies should continue to be reviewed".
- Fionnan Sheahan
Irish Independent
