TODAY, senior officials from my department, along with officials from all the public service sectors, will open negotiations on a new agenda for savings and reform with representatives of all public servants.
The task the Government has set its representatives can be expressed very simply. They are to seek an agreement that secures an additional reduction of some €1bn in the cost of the pay and pensions bill by 2015, alongside an agenda for substantial productivity and workforce reform measures.
The aim is to ensure a proportionate contribution from the public service pay and pensions bill to the remaining adjustment in public expenditure levels. And, in addition, to secure productivity measures to maintain the delivery of public services as the number of employees continues to fall.
Any discussion about pay with employees is complex. When the agenda is between an employer in a difficult financial position and their staff about immediate reductions in payroll costs, the level of complexity increases exponentially.
Add the fact that we are talking about the pay of more than 290,000 people at all pay levels and in all roles in the public service – from hospital cleaners to third-level academics – and you can understand why the negotiations will be enormously complex.
In my view, this is one of the most important challenges facing the Government and the country. The prize, though, is clear – a further move away from the current troika funding arrangements.
The Government has a difficult message to communicate. On the one hand, things are getting better. People need to understand that to see further confidence return to the economy. On the other hand, we have still some distance to travel on our path to sustainability.
The scale of that challenge is clear. The deficit for 2012 was still just under 8pc of GDP, or more than €15bn in exchequer terms. We have to reduce that to less than 3pc by 2015. Failure to do so will see more of our expenditure going on long-term debt servicing, not on services our citizens need.
The pay and pensions bill of state employees, which makes up 35pc of all exchequer spending, has to contribute accordingly. It is not possible to expect that such a large part of Government spending can be immune from the further large reductions we will have to achieve in the coming three years.
I recognise that public servants have seen their take-home pay substantially impacted by a range of measures since 2008. They have already made a significant contribution from their pockets to our fiscal correction.
In addition to paying all the new taxes, their pay was cut twice in 2009 in a progressive fashion; public sector pensioners have had their pensions reduced; and overtime provision has been cut radically.
Public servants have mostly kept their jobs, but they are also working harder. They have cooperated with all the changes necessary to deliver the Government's plans to reduce numbers from peak by 37,500 and by 20pc in overall cost. Despite the substantial fall in their numbers, they are dealing with more people who are unemployed, treating more patients and teaching more children.
This has been achieved under the auspices of the current Croke Park Agreement. The agreement has proven to be the best enabler of reform in the public service since the State was founded. There are changes taking place now in the public service, including to such basic items as sick and annual leave, which were never deliverable before the agreement and would be inconceivable in its absence. Although it is often taken for granted, industrial peace has been maintained, contributing to the sense of stability allowing Ireland to reclaim its international standing politically and economically.
However, it is clear that the suite of measures still to be implemented under the existing agreement, however successful, will not deliver savings to the extent required.
The Government has identified the need for an additional €1bn in savings through 2015, with €300m to be achieved this year. It is simply not possible to envisage achieving that level of saving through head count reductions alone while maintaining adequate levels of public services.
The Government has therefore developed proposals to save costs, deliver productivity improvements and implement a set of workplace reforms. Based on these, we will be opening negotiations today.
We have consistently said we are willing to explore all options to secure the necessary savings in the period to 2015 and that everything is on the table.
My preference has been that we should ensure there is a reasonable distribution of the proposed savings measures so that everyone makes a fair contribution to the overall challenge, while aiming to reduce the impact on the lower paid.
NO ONE is underestimating how difficult reaching an agreement will be. No one in the talks should underestimate the Government's determination to meet our fiscal targets or our desire to see Ireland's public service meet the challenges of a new era in a flexible and responsive fashion. And we would prefer to do so through a negotiated agreement if one can be reached.
I believe public servants would also prefer a negotiated solution, rather than the uncertainty that a breakdown in industrial peace in the public service would bring.
Their pragmatic approach and their delivery of comprehensive industrial peace across the public service since 2010 have made a significant contribution to the improvement in this country's fortunes.
The Government is asking them to accept that they must make another contribution to our collective recovery and to engage with the Government agenda for change. It is in all our long-term interests.
Brendan Howlin is Minister for Public Expenditure and Reform