Government must hold firm on pay
Published 13/11/2016 | 02:30
Public servants have suffered significant reductions to their incomes over the past eight years which they never expected to suffer. This has been difficult for many people and it would be unfair not to acknowledge that. The effects of that income loss have been confounded by a sense that some of the criticism of the public sector in national discourse has been less than fair.
That said, adjusted for inflation, Ireland's public sector pay bill doubled between 2000 and 2008, six times greater than the real increase in spending on public pay across the Eurozone, where the aggregate bill rose by only 17pc. As the country emerged from recession, Ireland's public pay bill was down from its 2008 peak, but it had only returned to levels recorded between 2006 and 2007.
Despite still being deep in debt, the Government last year announced that it planned on giving its 300,000 employees a pay rise. The announcement was timed to relate to the fortunes of the then coalition, particularly Labour, ahead of the election. The bottom line then, as now, is that the planned increase in pay will have to be funded with borrowed money. This gain for public-sector workers will, therefore, be paid for by everybody else, as taxes will have to be used to pay the interest on this borrowing and, ultimately, to repay it.